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1
SENATE RESOLUTION

 
2    WHEREAS, The 97th Illinois General Assembly passed Senate
3Bill 1652 and House Bill 3036 with supermajority votes in both
4legislative chambers; Senate Bill 1652 became law on October
526, 2011 as Public Act 97-616 and House Bill 3036 became law on
6December 30, 2011 as Public Act 97-646; and
 
7    WHEREAS, Public Act 97-616, which is commonly referred to
8as the Energy Infrastructure Modernization Act, confers
9substantial benefits upon the State's electric utility
10customers; it established detailed infrastructure investment
11plans to modernize and upgrade the State's aging electric grid
12in order to ensure the continued provision of safe, reliable,
13and affordable service to Illinoisans; participating utilities
14that elect to undertake the infrastructure investment plan may
15recover their costs through a performance-based formula rate
16tariff mechanism, which was designed to increase
17predictability, stability, and transparency in the ratemaking
18process; and
 
19    WHEREAS, Public Act 97-646 was enacted as "trailer
20legislation" to Public Act 97-616 with the intent to amend the
21Energy Infrastructure Modernization Act to provide additional
22benefits to customers; and
 

 

 

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1    WHEREAS, To make this investment possible, the
2performance-based formula rate tariff must, among other
3things, establish and set forth certain protocols providing
4that participating utilities recover the costs of service and
5these investments, including, but not limited to, allowing for
6the recovery of an "investment return on pension assets net of
7deferred tax benefits equal to the utility's long-term debt
8cost of capital as of the end of the applicable calendar year",
9which is set forth in subparagraph (D) of paragraph (4) of
10subsection (c) of Section 16-108.5 of the Public Utilities Act;
11and
 
12    WHEREAS, In so providing, the General Assembly did not, and
13did not intend to, overturn or generally depart from Illinois
14Commerce Commission practice and law regarding the
15establishment of these protocols, including the electric
16utility's ability to continue to recover a return on its
17pension assets as the Commission has previously allowed; and
 
18    WHEREAS, No statutory authority was given to the Illinois
19Commerce Commission to deny recovery of a return on what is
20commonly referred to as, what is reported in the Federal Energy
21Regulatory Commission Form 1 (FERC Form 1) as, and what the
22General Assembly regarded to be a pension asset; and
 
23    WHEREAS, The Energy Infrastructure Modernization Act

 

 

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1further provides in subsections (c) and (d) of Section 16-108.5
2that those amounts to be credited or charged to customers
3following the annual reconciliation process under the
4performance-based formula rate shall be "with interest" so the
5utility will be made whole for unrecovered amounts that were
6prudently and reasonably incurred and customers will be made
7whole for amounts they overpaid, if any; and
 
8    WHEREAS, Such interest is intended to be set at the
9utility's weighted average cost of capital, determined in
10accordance with the statute, which represents the reasonable
11cost and means of financing a utility's investments and
12operating costs, so that the utility and customers are made
13whole when charges or credits are necessary to reconcile to
14actual prudent and reasonable investments and costs; and
 
15    WHEREAS, The Energy Infrastructure Modernization Act also
16provides that the final year-end cost data filed in FERC Form 1
17should generally be used to determine rates; and
 
18    WHEREAS, No statutory authority was given to the Illinois
19Commerce Commission to set rate base and capital structure
20using average numbers that do not represent final year-end
21values reflected in the FERC Form 1, and the Illinois Commerce
22Commission's use of such average is contrary to the statute;
23and
 

 

 

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1    WHEREAS, The Illinois Supreme and Appellate Courts have
2consistently held that, because the administrative agencies
3are creatures of statute, administrative agencies possess only
4those powers expressly delegated by law and may not act beyond
5its statutorily delegated authority; and
 
6    WHEREAS, The Illinois Supreme and Appellate Courts have
7consistently held that public policy in Illinois is expressed
8by the General Assembly, and it is not the province of an
9administrative agency to inquire into the wisdom and propriety
10of the legislature's act or to substitute its own judgment for
11that of the legislature; therefore, be it
 
12    RESOLVED, BY THE SENATE OF THE NINETY-SEVENTH GENERAL
13ASSEMBLY OF THE STATE OF ILLINOIS, that we express serious
14concerns that the Illinois Commerce Commission Order, entered
15on May 29, 2012 in Commission Docket No. 11-0721, fails to
16reflect the statutory directives and the intent of the Illinois
17General Assembly by: (1) not allowing Commonwealth Edison
18Company to earn a return on what is commonly referred to as,
19identified in the FERC Form 1 as, and what the General Assembly
20referred to as a pension asset in subparagraph (D) of paragraph
21(4) of subsection (c) of Section 16-108.5; (2) assessing
22interest on those amounts to be credited or charged to
23customers as set forth in subsection (d) of Section 16-108.5 of

 

 

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1the Public Utilities Act at an amount that is not based on the
2utility's weighted average cost of capital; and (3) determining
3rate base and capital structure using an average, rather than
4the year-end amounts as reflected in FERC Form 1; and be it
5further
 
6    RESOLVED, That we urge that the Illinois Commerce
7Commission rehear the matter and, upon rehearing, reach a
8decision that reflects statutory directives and the intent of
9the Illinois General Assembly in passing Public Acts 97-616 and
1097-646 as reaffirmed in this resolution; and be it further
 
11    RESOLVED, That suitable copies of this resolution be
12delivered to the Governor of the State of Illinois and the
13Chairman and Commissioners of the Illinois Commerce
14Commission.