Considering how Illinois lawmakers tend to vote first and ask questions later, it’s good to see the so-called smart-grid bill getting put through the wringer.
This legislation would clear the way for Commonwealth Edison and Ameren to make high-tech upgrades in the electricity network that will more than pay for themselves in coming years. It would streamline an inefficient regulatory process and encourage investment in an aging infrastructure that is acutely vulnerable to outages ― as many Illinois residents learned to their regret during the storms this summer. It also sets the stage for annual rate increases, which has made the bill a hard sell in Springfield.
The bill passed the General Assembly in May, and Gov. Pat Quinn vetoed it last month. The utilities have lobbied furiously to win the additional votes needed for an override. Democratic Sen. Don Harmon has crafted a trailer bill that makes positive changes, and the Senate last recently approved that bill on a 37-20 vote.
Looks to us that, in this case, the General Assembly is driving a hard bargain on behalf of Illinois citizens.
No one wants to pay more for power, and the utilities have asked for a lot. They want nothing less than a new system of regulation that locks in a rate of return, provided they meet performance standards. That’s a big ask. They also want a lot more money to pay for infrastructure upgrades.
We’ve heard dire predictions from consumer advocates such as Attorney General Lisa Madigan and from concerned regulators at the Illinois Commerce Commission. We’ve heard the governor blast the legislation as “over-reaching.” We take those concerns seriously. We haven’t, before now, endorsed the smart-grid bill.
On balance, this measure coupled with the changes offered in the trailer bill offers the best way available to secure the power system that Illinois needs for the future. Thanks to vigorous negotiations, what was once a lopsided bill in favor of the utilities has become a plus for Illinois businesses and citizens. We support it.
The smart grid is not some marketing gimmick, as the legislation’s critics would have it. Right now, Illinois relies on century-old electro-mechanical controls that are inexcusably dumb. Upgrading to interactive, digital technology would enable customers of all sizes to buy and use electricity more efficiently. Fast-growing, tech-savvy companies increasingly will require a smart grid as a prerequisite for locating in the state. A smart grid will be similarly essential for integrating renewable energy sources, such as solar panels, or accommodating electric vehicles.
Given ComEd’s inadequate reaction to summer storm damage, it is worth noting that smart-grid systems reduce the frequency and duration of outages. Smart technology would notify the utility of power disruptions, pinpoint the location of the problem and route electricity around the trouble spot. As it is, ComEd waits for customers to call in, sends a truck to search miles of wire for the break and restores the juice to affected lines in all-or-nothing fashion.
The regulatory changes embodied in the legislation make sense too. The current system centers on after-the-fact debates about whether the utilities spent their money wisely enough to be reimbursed at a profit. The process is backward-looking, and needlessly drawn out. The new system will give watchdogs and everyday citizens alike an opportunity to influence utility investments every year, before they occur. It also will reduce the risk that utilities now bear from second-guessing by a shifting cast of regulators.
We viewed this legislation with skepticism, and only now embrace it. We thought the formula for return on equity was too rich in favor of the utilities. With Tuesday’s trailer bill, it’s whittled down to a more reasonable level. We thought the requirements for hardening the grid against future storm outages were inadequate. The trailer bill addresses that too. ComEd even revived a good idea for a fund to cushion the impact of higher rates on the elderly and poor. As the legislation underwent a rigorous review, it got better. That’s how the legislative process is supposed to work.
If ComEd and Ameren do manage to pass this legislation, they take on a very significant commitment. The bill requires them to bring the state’s power system into the 21st century. But like all bills, it provides only a framework. The success or failure of the new law will come down to how the utilities implement it. They need to maximize the benefit to their customers. They need to deliver on the many important promises they’ve made. All of us will need to hold them accountable.
