SR0821enr 97TH GENERAL ASSEMBLY

09700SR0821 Enrolled LRB097 21881 CEL 70577 r

SENATE RESOLUTION NO. 821

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 debt 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 debt 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 Commerce Commission Orders, entered on May 29, 2012 and September 19, 2012, in Commission Docket Nos. 11-0721 and 12-0001, respectively, failed to reflect the statutory directives and the intent of the Illinois General Assembly regarding numerous issues, including, but not limited to, the pension asset, interest rate, and rate base issues described herein; and

WHEREAS, Commonwealth Edison Company sought rehearing on a number of wrongly decided issues, including the pension asset, interest rate, and rate base issues described herein, and the Illinois Commerce Commission granted rehearing with respect to only these 3 issues; and

WHEREAS, The Illinois Commerce Commission Order on Rehearing, entered on October 3, 2012, in Commission Docket No. 11-0721, reversed itself on the pension asset issue only; and

WHEREAS, On October 4, 2012, Commonwealth Edison Company filed its Notice of Appeal from the Illinois Commerce Commission's Order in Commission Docket No. 11-0721; and

WHEREAS, Ameren Illinois Company sought rehearing on a number of wrongly decided issues, including the interest rate and rate base issues described herein, and the Illinois Commerce Commission denied rehearing on October 17, 2012; and

WHEREAS, On October 26, 2012, Ameren Illinois Company filed its Notice of Appeal from the Illinois Commerce Commission's Order in Commission Docket No. 12-0001; and

WHEREAS, The revenue deficiencies caused because of the errors in the Illinois Commerce Commission Orders, entered on May 29, 2012 and October 3, 2012 in Commission Docket No. 11-0721 and on September 19, 2012 in Commission Docket No. 12-0001, may preclude the participating utilities from implementing their infrastructure investment plans, including, but not limited to, their advanced metering infrastructure deployment plans, according to the schedule set forth in subsection (b) of Section 16-108.5, Section 16-108.6, or in any Illinois Commerce Commission order entered thereunder; 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 their 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 Orders, entered on May 29, 2012 and October 3, 2012 in Commission Docket No. 11-0721 and on September 19, 2012 in Commission Docket No. 12-0001, fail to reflect the statutory directives and the intent of the Illinois General Assembly by (1) 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; (2) determining rate base and capital structure using an average, rather than the year-end amounts as reflected in FERC Form 1; and (3) departing in numerous other ways from the directives of subsection (c) of Section 16-108.5 of the Public Utilities Act; and be it further

RESOLVED, That the Illinois Commerce Commission correctly reversed itself in its Order on Rehearing in Commission Docket No. 11-0721 by allowing Commonwealth Edison Company to earn a debt return on what is commonly referred to as, identified in the FERC Form 1 as, and referred to by the General Assembly as a pension asset in subparagraph (D) of paragraph (4) of subsection (c) of Section 16-108.5 of the Public Utilities Act; and be it further

RESOLVED, That we urge the Illinois Commerce Commission to order Commonwealth Edison Company and Ameren Illinois Company to file changes to their performance-based formula rate tariffs that (1) apply an interest rate set at the utility's weighted average cost of capital as described herein; (2) set rate base and capital structure using final year-end values reflected in the FERC Form 1 rather than average numbers; and (3) correct other errors reflected in the Illinois Commerce Commission Orders entered May 29, 2012 and September 19, 2012 in Commission Docket Nos. 11-0721 and 12-0001, respectively, so that the tariffs reflect the statutory directives and the intent of the General Assembly in passing Public Acts 97-616 and 97-646 as reaffirmed in this resolution; and be it further

RESOLVED, That we urge the Illinois Commerce Commission to enter orders approving such changes no later than December 31, 2012; and be it further

RESOLVED, That each participating utility should be permitted, without penalty or being subject to any other adverse action, a reasonable time to ensure its infrastructure investment plan, including, but not limited to, its advanced metering infrastructure deployment plan, is in compliance with the schedule set forth in subsection (b) of Section 16-108.5, Section 16-108.6, or in any Illinois Commerce Commission order entered thereunder; 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.