This week, the Illinois Commerce Commission (ICC or Commission) launched NextGrid, an initiative to explore the utility of the future. It will be an 18-month statewide collaborative aimed at transforming Illinois’ energy landscape and economy. The study will focus on finding new technologies, utility business models and regulatory strategies to transform the state’s grid into a more flexible and efficient resource. NextGrid will be managed by the Commission. An independent third-party facilitator will assist the Commission in engaging electric utilities, communities and stakeholders such as industry, academia, ratepayer advocates and environmental advocates as they examine the following areas:

  1. Consumers, Communities and Economic Development
  2. Grid Design, Digital Networks and Markets 
  3. Regulation and Encouraging Innovation
  4. Climate Change and the Environment

Anne Pramaggiore, ComEd President and CEO, addressed this development:

“We commend the Commission for taking a leadership role in establishing a forum for designing the future-oriented business model and joining ComEd’s effort to maximize the smart grid and deliver new value to customers. We see NextGrid as an opportunity to find common ground on critical issues facing our industry and as a driver of the clean, lean, ultra-resilient energy future our customers want.”

All members of the energy stakeholder community are encouraged and invited to provide input and suggestions regarding the selection of a facilitator and topics to be considered as a part of NextGrid by filing comments in response to the Resolution by April 30, 2017. Comments can be emailed to nextgrid@icc.illinois.gov

The quest to bring the smart grid to Illinois did not stop with the first veto override of the Energy Infrastructure Modernization Act in 2011. In many respects it fueled the clash between regulators, utilities and Governor Quinn. Enter Senate Bill 9 ending the debate. It is designed to:

(i) be a restatement and clarification of existing law,
(ii) give binding effect to specified legislative intent, and
(iii) supersede specified final orders of the Commission. 

So there is no doubt as to who won the battle, Senate Bill 9 provides:

that each participating utility shall be deemed to have been in full compliance with all requirements of certain provisions of this Act and all Commission orders entered pursuant to specified provisions. Provides that the Commission shall not undertake any investigation of such compliance and no penalty shall be assessed or adverse action taken against a participating utility for non-compliance with Commission orders associated with this Act.

In a statement released by Ameren Illinois, the company says after the original law was passed, Ameren Illinois launched its Modernization Action Plan (MAP) to create 450 jobs and invest an additional $640 million over a 10-year period to improve the reliability and performance of its electric delivery infrastructure. The plans included hiring hundreds of workers to install advanced meters, strengthen poles, replace cables and deploy new technology, such as intelligent switches and sensors that can detect and isolate outages for faster service restoration.

The job creation element of the bill received the support of the nearly 900,000-member Illinois AFL-CIO. Its president, Michael T. Carrigan, said, “Modernizing the electric grid will put Illinoisans back to work in good-paying jobs.”

ComEd also released a statement celebrating the veto override. No doubt, investors will be pleased.

In the past, customer education typically meant nothing more than a bill insert and perhaps an additional public notice. Then came the smart grid and suddenly more is required… much more. Ameren Illinois conducted a quantitative study to measure its customers’ baseline awareness about AMI. Key findings revealed:

  • 63% of customers have heard the term “smart grid.”
    Among the 63% hearing the term:
    • 40% don’t know much about what it means
    • 34% have a favorable impression
    • 29% are neutral
    • 16% have an unfavorable impression
    • 21% don’t know
  • 45% of customers have heard the term “smart meter.”
    Among the 45% hearing the term:
    • 25% of those who have heard the term don’t know much about what it means
    • 35% have a favorable impression
    • 28% are neutral
    • 23% have an unfavorable impression
    • 14% don’t know
  • 46% of all customers feel that smart meters would be “mostly an advantage,”
  • 40% seeing the meters as “having no impact,” and
  • 8% as “mostly a disadvantage.”

Customers indicated that improving reliability, bill accuracy and customer service and providing them with more control of home energy usage as the top smart meter benefits. The study will help guide the development of Ameren’s stakeholder and customer education plan. You can learn more about Ameren’s plan and ComEd’s plan by reading their Annual AMI Reports filed with the Illinois Commerce Commission on April 1, 2013. Ameren and ComEd also filed jobs creation reports as a result of the Energy Infrastructure Modernization Act.

Not far from the City of Naperville, where smart meter opposition is in full force, customers in Chicago have filed a class action suit against ComEd due to smart meter delay! No, this is not a tardy April Fool’s joke. Several ComEd customers allege the Company violated an Illinois Commerce Commission (ICC) order that called for smart meter installation to begin by fall 2012, yet ComEd unilaterally pushed back deployment until 2015.

To cover the Smart Grid upgrades, in 2011 ComEd filed for a formula rate increase of $1.915 billion with the ICC. When the ICC reduced that amount by $168 million, ComEd filed an Application for Rehearing (Docket No. 12-0298) to delay installation of smart meters due to financial constraints caused by the Formula Rate Order. ComEd’s original smart meter plan included the installation of 500,000 new smart meters on Chicago’s South and West sides by 2013. The suit says ComEd’s decision to not install the smart meters while the Application for Rehearing was pending cost customers about $182 million in savings and other benefits they would have received had deployment occurred according to the original schedule. (Attention utilities: This figure was taken from ComEd’s testimony regarding lost benefits due to delayed deployment.) In December of 2012, the ICC approved ComEd’s revised schedule allowing smart meter deloyment to be delayed until 2015.

The suit is an interesting change of pace from those cases around the country and even in ComEd’s own backyard (Naperville) where customers are rejecting smart meters and seeking to ban smart meter deployment. I guess ComEd customers were listening during the debate to get the Energy Infrastructure Modernization Act enacted.

Most people in the industry agree the electric infrastructure is outdated and requires extensive upgrades. It’s when you get to the “How?” and “Who pays for it?” that the war begins in many jurisdictions. And if you think that having a law that supports the upgrades and implementation of the smart grid settles the matter, think again. Last year, Illinois passed the Energy Infrastructure Modernization Act (“EIMA”), yet implementation has been anything but routine. In a show of force between regulators and law makers, electric utilities in Illinois found themselves holding the cost recovery bag. Last May the Illinois Commerce Commission (“ICC”) found that Ameren’s Smart Grid Plan failed the customer cost benefit test. The ICC also disallowed key costs in ComEd’s first formula rate case under EIMA. According to ComEd, it will now face a reduction in funding of nearly $100 million per year in 2014 and beyond. These are dollars that cannot be recovered and subsequently reinvested into the system, jeopardizing the grid modernization programs and related customer benefits. ComEd has appealed the ruling in court, but that decision may take up to two years.

In a battle between regulators and law makers, on November 29, 2012 the Illinois Senate passed Senate Resolution 821 which states in part:

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 Order, entered on May 29, 2012 in Commission Docket No. 11-0721, fails to reflect the statutory directives and the intent of the Illinois General Assembly by: (1) not allowing Commonwealth Edison Company to earn a return on what is commonly referred to as, identified in the FERC Form 1 as, and what the General Assembly referred to as a pension asset in subparagraph (D) of paragraph (4) of subsection (c) of Section 16-108.5; (2) 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; and (3) determining rate base and capital structure using an average, rather than  the year-end amounts as reflected in FERC Form 1…

Not sure if the resolution swayed regulators, but in true Chicago-style politics, the ICC issued an order on December 5, that allows ComEd to proceed with its revised smart grid deployment plan in 2015 but makes it clear it is not happy about the delay:

Allowing the Revised Plan to go forward is accepting, at least for now, that meters will not be installed until 2015. This is regrettable, because the benefits to ratepayers are greatly reduced with the delayed deployment. But because of the impossibility of implementing the Original AMI Plan and the shortcomings of the proposed Revised Plan, the Commission is left with only bad options. – ICC Order page 32

One thing is clear, the battle in Illinois will continue. The order requires ComEd to describe in detail their efforts accelerate implementation when the company files its April 2013 AMI Plan Progress Report.

Facebook, the Natural Resources Defense Council (NRDC) and Opower along with 16 utilities recently launched a social energy app to help customers become more energy efficient. Leveraging the Facebook platform, the app allows people to quickly and easily start benchmarking their home’s energy usage against similar homes, compare energy use with friends, enter energy-saving competitions and share tips on how to become more energy efficient. With an initial reach of 20 million households, the effort is one of the most significant to date, enabling people to take action and become more energy efficient.

Although anyone can use the app by logging in with a Facebook account, customers within the 16 participating utilities’ territories listed below will be able to take advantage of the app’s “Utility Connect” feature, allowing customers to choose to have their energy use automatically update each month. These utilities and energy providers include:

  • Austin Utilities (Minnesota)
  • Burbank Water & Power
  • ComEd
  • Connexus Energy
  • Consumers Energy
  • Direct Energy (coming soon in 2012)
  • Glendale Water & Power
  • Loveland Water and Power
  • National Grid (New York and Massachusetts)
  • New Jersey Natural Gas (coming in 2012)
  • Owatonna Public Utilities
  • Pacific Gas and Electric Company
  • City of Palo Alto Utilities
  • PPL Electric Utilities Corp.
  • Rochester Public Utilities
  • Utilities District of Western Indiana REMC

Hey, where is my utility?! Okay, I am feeling left out of the coolest thing to hit the energy scene. Hopefully the list of participating utilities will expand. With the growing need for energy efficiency and customer engagement by utilities, this product is a home run…just in time for Opening Day!

Fresh off of an overnight flight from attending the SmartEnergy International Summit in San Francisco, my cell phone rings this morning. It’s my mother with breaking news: “Hi Linda, I am calling to let you know we are getting the smart grid!” “Really.” “Yep. They voted to override the governor. Now I know you are just getting in so we can talk more about this later, the news reports say my rates will go up. Is that true?”

I went on to explain to my mother that yes her rates will go up, but the amount is small compared to the benefits. The increase would be about $3 a month during the first year, but reliability should improve. That is an important aspect of the plan for me since I live in Pennsylvania, hundreds of miles away from my 81-year-old mother. During outages, I’m very limited in my ability to help her. (I didn’t tell her that as a regulatory attorney, her daughter often raises rates. Not a conversation I wanted to have on very little sleep.)

Illinois legislators voted to override Gov. Pat Quinn’s veto of smart grid legislation, paving the way for smart grid technology in Illinois. The Senate voted 36-19 to override the bill, followed by the House, which voted 74-42 to override the bill. The Energy Infrastructure Modernization Act authorizes implementation of a 10-year, $2.6 billion investment program by ComEd to strengthen the existing electric system, while adding new digital smart technology. According to ComEd’s press release, this new law will bring the following benefits:

  • SB 1652 will put Illinois back to work with specific provisions that mandate more than 2,500 statewide jobs at the peak of the grid’s build-out. The investment also will spur job growth in construction, cable and electric equipment manufacturing and other key traditional industries.
  • A Smart Grid will improve overall system reliability, reducing outages and improving power restoration while allowing consumers to save money through a set of new Smart Grid-related efficiencies. Smart meters will help consumers save on energy costs by providing options for new pricing plans, better managing energy use and becoming eligible for new rebates by reducing power usage in peak hours.
  • It will contribute to a cleaner environment by increasing funding for energy efficiency programs and encouraging greater use of solar and wind power. Development of the Smart Grid will allow for the intelligent charging stations needed to encourage greater use of electric vehicles.
  • Under the trailer bill, ComEd will provide $50 million and Ameren will provide $10 million in programs designed to help low-income families and seniors over the 10-year program laid out in SB 1652. This overall $60 million assistance fund is in addition to $50 million already designated in SB 1652 for education outreach to all residential energy consumers.
  • The trailer bill also re-directed $200 million toward targeted “undergrounding” of overhead lines, tree-resistant overhead conductors and other storm hardening solutions to strengthen the distribution system in the wake of the historic storm season of 2011. These solutions are in addition to the inspection and replacement of residential underground cable and mainline cable programs that are also a prominent piece of SB 1652.

On March 8, 2011, ComEd’s president, Anne Pramaggiore, testified before Illinois lawmakers on the urgent need to enact The Infrastructure Modernization Act. “We live our lives and conduct our business on the grid,” said Pramaggiore, as she describes a customer’s experience during a winter storm. “A few days after the blizzard of February 2011, a customer related to me his family’s blizzard preparation. Hours before the blizzard hit, he and his three children plugged in all their technology – iPhones, iPads, BlackBerries – to charge them fully in case they lost power. Their preparations did not involve flashlights, candles or canned goods but iPhones, iPads and BlackBerry charging. This is a big change.

This vivid description underscores the digital and technological advancements that our economy and our teens depend on. Yet as Pramaggiore points out, the electric grid and related policies have not advanced in 100 years. I agree with Pramaggiore regarding the need for urgent action and regulatory certainty. Alexander Graham Bell would be amazed that you can now buy movie tickets, check the weather and have a videoconference from a wireless device called a cell phone. Unfortunately, Thomas Edison would be bored with today’s electric grid because most of it would look familiar to him.

With investments required to update the grid well into the billions, stable regulatory policies and clear cost recovery models are essential. Pramaggiore testified about the swings in ComEd’s rate case results in previous years, one as low as 17 percent of the requested increase. Such regulatory uncertainty is bound to have a chilling effect on smart grid investments. HOUSE BILL 14, also known as the Infrastructure Modernization Act, is a policy-based approach that:

  • Identifies and directs appropriate investment.
  • Reforms the traditional regulatory structure to better enable the investment while preserving essential consumer safeguards
  • Creates a regulatory framework that includes performance requirements designed to ensure that utility investments deliver on the benefits they promise to consumers

I will be following this one closely as I grew up in suburban Chicago and most of my family still lives there. (HB 14 was amended the day after Pramaggiore testified.)