Illinois rejects ComEd, Peoples Gas rate increase requests

Illinois State Regulators Reject Proposed Rate Increases and Infrastructure Plans by Chicago Utility Companies

State regulators in Illinois have rejected proposed rate increases and infrastructure plans by Chicago utility companies, dealing a blow to ComEd and Peoples Gas. The Illinois Commerce Commission rejected ComEd’s four-year grid improvement plan and slashed its proposed $1.47 billion rate increase, while turning down an emergency motion by Peoples Gas to restore $134 million of disallowed pipeline infrastructure funding for 2024.

The decisions by the Illinois Commerce Commission will hold down rate increases for Chicago-area gas and electric customers as they enter 2024, while putting more pressure on the utilities to justify infrastructure improvements going forward. The rejections come as a result of the utilities’ failure to show the cost-effectiveness of proposed system investments and not fully complying with the state’s clean energy goals.

ComEd’s grid improvement plan projected a fivefold increase in rooftop and community solar systems, increased demand for widespread electric vehicle adoption, and upgrades to prepare for more severe weather events caused by climate change. Similarly, Peoples Gas filed for a record $402 million rate hike in January, with more than half of the increase earmarked for its long-running pipeline program. A 10-year legislative surcharge enabling it to automatically pass the costs along to customers expires at the end of this year, and the ICC ordered a pause to the program, disallowing $265 million of funding to continue the work.

The rejections come amidst a history of controversy surrounding Chicago utility companies. In 2020, ComEd agreed to pay a $200 million fine in exchange for federal prosecutors dropping charges against the utility in a scheme to bribe former Illinois House Speaker Michael Madigan to pass favorable legislation. In September, ComEd parent company Exelon agreed to pay a $46.2 million civil penalty to the Securities and Exchange Commission to settle fraud charges in connection with the scheme. Additionally, former ComEd lobbyist Michael McClain; former ComEd CEO Anne Pramaggiore; former ComEd executive and lobbyist John Hooker; and Jay Doherty, the former president of the City Club of Chicago and a longtime ComEd lobbyist, were all found guilty in May of bribery and record falsification in a high-profile trial. Madigan is scheduled for trial in April on racketeering charges stemming from the ComEd bribery allegations.

While consumers and advocates have celebrated the rejections, the utilities are likely to request a rehearing. The ruling reflects an intention to accelerate the work of the state’s 2021 Climate and Equitable Jobs Act, which has set ambitious targets for transitioning to clean energy, and an increased focus on accountability for utility companies. The decisions are seen as a step towards ensuring that investments made by the utilities will genuinely improve the delivery of energy to people’s homes, rather than solely benefiting the investors and owners of the utilities.