ComEd inflated rates according to Illinois Citizens Utility Board

by Nicole Duarte

published by the Medill News Service, March 01, 2006

The Citizens Utility Board slammed the power delivery rate increase proposed by Commonwealth Edison in fresh testimony filed with the Illinois Commerce Commission.

ComEd, a division of Chicago-based Exelon Corp., disagreed with CUB's assertions and said it planned to submit rebuttal testimony later in March.

Citizen's Utility Board, an Illinois utility watchdog organization, analyzed ComEd's rate increase proposal and concluded the company "inflated its expenses and overstated its income by $457 million to justify higher prices for delivering power beginning in 2007," according to a CUB release.

In an e-mail a ComEd spokeswoman replied, "We disagree with CUB's claims. We've invested $3 billion in our system, and it's hard to imagine a scenario where we're not entitled to recover it."

CUB refuted ComEd's claim to need a delivery rate increase yielding $336 million, citing the profitability of ComEd's parent Exelon.

ComEd said its total revenue requirement for power delivery was $2 billion to cover operating expenses, labor costs and capital investments.

Additionally, CUB and the Illinois attorney general both reviewed ComEd's rate hike proposal. The attorney general's office found ComEd included a $193 million charge for installing infrastructure like electricity poles and wiring without accounting for the increased revenue earned by such capital investments.

CUB noted accounting methods that "in effect, count[ed] some investments twice," the organization said in a statement.

ComEd's proposed rate increase provides an 11 percent return on equity for shareholders, though the company's current rate of return is only 7.75 percent, according to Citizens Utility Board.

The City of Chicago, the Illinois attorney general and CUB in conjunction with the Cook County state's attorney proposed reductions totaling $121 million in future customer savings, CUB said.

ComEd said rates had been frozen at 1995 levels for more than nine years while its costs have increased. A ComEd spokeswoman said in an e-mail the company has committed to a "customer safety net plan that would limit residential rate increases to single digits in 2007, 2008 and 2009. That plan would keep residential rates at or below 1995 levels through the end of the decade."

The Illinois Commerce Commission, the state body that will ultimately decide by how much ComEd can increase its power delivery rates, will continue to hear and receive testimony throughout the spring. A ruling on the rate increase is expected in July.