Testimony before the Senate Energy and Public Utilities Committee in opposition to SB311

Senate Bill 311 is the latest bill in a series of utility-driven initiatives to legislatively grant utilities overly broad authority to spend massive amounts of money with limited Illinois Commerce Commission (ICC) oversight, driving up customer bills with no guarantees of customer or public benefit.

Chairperson Hastings, Vice Chairperson Ellman, Spokesperson Rezin, honorable members of the committee: thank you for the opportunity to testify today. My name is Abraham Scarr and I am the Director of Illinois PIRG. Illinois PIRG is a statewide, citizen funded, non-partisan public interest advocacy organization that speaks out for a healthier, safer world in which we’re freer to pursue our own individual well-being and the common good.

Senate Bill 311 is the latest bill in a series of utility-driven initiatives to legislatively grant utilities overly broad authority to spend massive amounts of money with limited Illinois Commerce Commission (ICC) oversight, driving up customer bills with no guarantees of customer or public benefit.

While we object to numerous elements of this legislation, my testimony will focus on the troubling cost recovery provisions Ameren Illinois would be granted through this legislation.

First, alarmingly, the legislation extends the electrical formula rates, which were passed a part of the Energy Infrastructure Modernization Act, the first law passed in-part through ComEd’s bribery scheme. As we detailed in our December 2020 report, formula rates have guaranteed utility profits, driving up Ameren’s delivery rates by 25%, while failing to deliver promised customer and public benefits. 

Second, not only does the legislation extend the problematic electrical formula rates for another ten years, through 2032, but proposed new section 9-244.5 creates formula rates for Ameren’s gas utility as well. Not only does this mechanism remove almost all of Ameren’s cost recovery and profit risks (by shifting them onto its customers), it attempts to raise Ameren’s profit levels as if it had the average risk profile of gas utilities nationally, which it would not. The legislation uses a national average of gas utilities’ return on equity, an average for utilities that do not enjoy guaranteed profits as Ameren would under the formula rate.

Third, the legislation does not even require the ICC to investigate Ameren’s automatic profit increases for its gas spending. If, for some reason, the ICC declines to open an investigation into Ameren’s accounting actuals within 45 days of filing, this legislation deems the company’s costs prudent and reasonable. 

Finally, the legislation includes a requirement that appears on its face like increased transparency, but instead only creates the illusion of oversight. 

The legislation requires quarterly reporting on the utility’s capital spending and on various work orders both for the quarter and calendar year. However, this information may not be used in any way to regulate the utility: “The quarterly report provided will be used for informational purposes only, and any estimates therein shall not bind or limit the participating gas utility’s future decisions to invest in any utility plant or other projects and may not be used in any Commission proceeding to support any finding as to imprudence, unreasonableness, or lack of use or usefulness of any individual or aggregate level of utility plant or other investment.” (SB 311, p 173, lines 13-21, emphasis added)

This quarterly reporting cannot be used in an ICC proceeding to disadvantage the company. As the company would enjoy annual automatic rate changes it is unclear what purpose the quarterly reporting serves or what the ICC could do if the reports included troubling information. This legislation, however, goes further and specifically says that information cannot be used against Ameren. Like much of the formula rate regulatory process, the provision provides the impression of regulatory activity while taking away actual regulatory authority.

Again, we object to other aspects of SB 311, but have limited our testimony to these troubling regulatory provisions. Instead of passing SB 311, the General Assembly should end electrical formula rates and allow the utilities to come to the ICC and ask for future rate increases inline with a robust integrated distribution planning process. 

Again, thank you for the opportunity to provide testimony today. I will be happy to answer any questions the committee may have.

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Authors

Abe Scarr

State Director, Illinois PIRG; Energy and Utilities Program Director, PIRG

Abe Scarr is the director of Illinois PIRG and is the PIRG Energy and Utilities Program Director. He is a lead advocate in the Illinois Capitol and in the media for stronger consumer protections, utility accountability, and good government. In 2017, Abe led a coalition to pass legislation to implement automatic voter registration in Illinois, winning unanimous support in the Illinois General Assembly for the bill. He has co-authored multiple in-depth reports on Illinois utility policy and leads coalition campaigns to reform the Peoples Gas pipe replacement program. As PIRG's Energy and Utilities Program Director, Abe supports PIRG energy and utility campaigns across the country and leads the national Gas Stoves coalition. He also serves as a board member for the Consumer Federation of America. Abe lives in Chicago, where he enjoys biking, cooking and tending his garden.

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