ComEd offsets 2018 rate increase with federal tax savings – Utilities News

on Apr17

16 April 2018 | 6:25 pm

Commonwealth Edison would have sought a 2019 rate hike double the one that went into effect in January were it not for the federal tax law that took effect at the same time. ComEd instead filed today with state regulators to keep its electricity delivery rate relatively stable. It only was able to do that by passing along to ratepayers $205 million in tax savings the utility expects to see next year.

Without the tax maneuver, ComEd would have sought about a $180 million increase after winning approval from state regulators late last year of a $96 million hike, executives acknowledged.

The maneuver, too, will help soften the blow of what is likely to be an increase on the energy side of the bill beginning in June. Higher costs of ensuring power plants are available to deliver during the highest-demand days of the year are expected to increase rates by roughly 3 percent this coming summer.

“The primary reason for (providing tax benefits to consumers a year ahead of time) is that we wanted to return the benefit to customers as soon as possible,” said Veronica Gomez, ComEd’s general counsel.

The rate filing comes as ComEd starts to wind down its $2.6 billion grid modernization program, authorized by the 2011 “smart grid” law. It will finish installing smart meters in all homes and businesses in its service territory this coming October. The investments, roughly half of which went for the smart meters and the other half for updated power infrastructure, has improved reliability at the utility in the form of outage frequency and duration.

It also has largely eliminated estimated billing, which at times created negative surprises for customers when their meters hadn’t been checked in months and the utility had underestimated their usage.

Energy and delivery price increases have combined to boost ComEd’s overall electricity rates by about 8 percent in the past two years.

The utility in January moved to quickly pass along 2018 tax savings from the new federal tax law, which it said then would shave between $2 and $3 per month from the average household’s monthly bill.

ComEd files annually with the Illinois Commerce Commission for delivery rate changes under the 2011 law. The rates are set per a formula that gives the regulators relatively little leeway to reduce the request. Formula rates are authorized until 2021 under the law. Illinois is one of the few states in the country that doesn’t give its utility regulators the authority to decide how much of a return utilities should earn on their operations and investments—a key lever used to keep rates affordable.

Energy charges are reset each June after a power-generator auction conducted by the Illinois Power Agency.

In addition, ComEd customers pay various surcharges to promote renewable energy, energy efficiency and to subsidize the nuclear operations of ComEd’s Chicago-based parent, Exelon. Those together currently account for about 6 percent of household electric bills.

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