SR0821 97TH GENERAL ASSEMBLY

SR0821 LRB097 21881 CEL 70577 r

SENATE RESOLUTION

WHEREAS, The 97th Illinois General Assembly passed Senate Bill 1652 and House Bill 3036 with supermajority votes in both legislative chambers; Senate Bill 1652 became law on October 26, 2011 as Public Act 97-616 and House Bill 3036 became law on December 30, 2011 as Public Act 97-646; and

WHEREAS, Public Act 97-616, which is commonly referred to as the Energy Infrastructure Modernization Act, confers substantial benefits upon the State's electric utility customers; it established detailed infrastructure investment plans to modernize and upgrade the State's aging electric grid in order to ensure the continued provision of safe, reliable, and affordable service to Illinoisans; participating utilities that elect to undertake the infrastructure investment plan may recover their costs through a performance-based formula rate tariff mechanism, which was designed to increase predictability, stability, and transparency in the ratemaking process; and

WHEREAS, Public Act 97-646 was enacted as "trailer legislation" to Public Act 97-616 with the intent to amend the Energy Infrastructure Modernization Act to provide additional benefits to customers; and

WHEREAS, To make this investment possible, the performance-based formula rate tariff must, among other things, establish and set forth certain protocols providing that participating utilities recover the costs of service and these investments, including, but not limited to, allowing for the recovery of an "investment return on pension assets net of deferred tax benefits equal to the utility's long-term debt cost of capital as of the end of the applicable calendar year", which is set forth in subparagraph (D) of paragraph (4) of subsection (c) of Section 16-108.5 of the Public Utilities Act; and

WHEREAS, In so providing, the General Assembly did not, and did not intend to, overturn or generally depart from Illinois Commerce Commission practice and law regarding the establishment of these protocols, including the electric utility's ability to continue to recover a return on its pension assets as the Commission has previously allowed; and

WHEREAS, No statutory authority was given to the Illinois Commerce Commission to deny recovery of a return on what is commonly referred to as, what is reported in the Federal Energy Regulatory Commission Form 1 (FERC Form 1) as, and what the General Assembly regarded to be a pension asset; and

WHEREAS, The Energy Infrastructure Modernization Act further provides in subsections (c) and (d) of Section 16-108.5 that those amounts to be credited or charged to customers following the annual reconciliation process under the performance-based formula rate shall be "with interest" so the utility will be made whole for unrecovered amounts that were prudently and reasonably incurred and customers will be made whole for amounts they overpaid, if any; and

WHEREAS, Such interest is intended to be set at the utility's weighted average cost of capital, determined in accordance with the statute, which represents the reasonable cost and means of financing a utility's investments and operating costs, so that the utility and customers are made whole when charges or credits are necessary to reconcile to actual prudent and reasonable investments and costs; and

WHEREAS, The Energy Infrastructure Modernization Act also provides that the final year-end cost data filed in FERC Form 1 should generally be used to determine rates; and

WHEREAS, No statutory authority was given to the Illinois Commerce Commission to set rate base and capital structure using average numbers that do not represent final year-end values reflected in the FERC Form 1, and the Illinois Commerce Commission's use of such average is contrary to the statute; and

WHEREAS, The Illinois Supreme and Appellate Courts have consistently held that, because the administrative agencies are creatures of statute, administrative agencies possess only those powers expressly delegated by law and may not act beyond its statutorily delegated authority; and

WHEREAS, The Illinois Supreme and Appellate Courts have consistently held that public policy in Illinois is expressed by the General Assembly, and it is not the province of an administrative agency to inquire into the wisdom and propriety of the legislature's act or to substitute its own judgment for that of the legislature; therefore, be it

RESOLVED, BY THE SENATE OF THE NINETY-SEVENTH GENERAL ASSEMBLY OF THE STATE OF ILLINOIS, that we express serious concerns that the Illinois Commerce Commission Order, entered on May 29, 2012 in Commission Docket No. 11-0721, fails to reflect the statutory directives and the intent of the Illinois General Assembly by: (1) not allowing Commonwealth Edison Company to earn a return on what is commonly referred to as, identified in the FERC Form 1 as, and what the General Assembly referred to as a pension asset in subparagraph (D) of paragraph (4) of subsection (c) of Section 16-108.5; (2) assessing interest on those amounts to be credited or charged to customers as set forth in subsection (d) of Section 16-108.5 of the Public Utilities Act at an amount that is not based on the utility's weighted average cost of capital; and (3) determining rate base and capital structure using an average, rather than the year-end amounts as reflected in FERC Form 1; and be it further

RESOLVED, That we urge that the Illinois Commerce Commission rehear the matter and, upon rehearing, reach a decision that reflects statutory directives and the intent of the Illinois General Assembly in passing Public Acts 97-616 and 97-646 as reaffirmed in this resolution; and be it further

RESOLVED, That suitable copies of this resolution be delivered to the Governor of the State of Illinois and the Chairman and Commissioners of the Illinois Commerce Commission.