ComEd Plants Win Rate Base Treatment

Fortnightly Magazine - April 15 1995
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The Illinois Commerce Commission (ICC) has approved a $303.2-million rate increase for Commonwealth Edison Co. In approving a rate of return on equity (ROE) allowance of 12.28 percent, the ICC chose an ROE presentation that "equally weighs the quarterly DCF and risk-premium based results." The increase reflects the ICC's finding that the company's Byron 2 and Braidwood 1 & 2 nuclear generating facilities are fully used and useful and eligible for rate recovery. It rejected a proposal to modify its existing "need and economic benefits test" for rate base treatment of utility investment. The state Citizens Utility Board (CUB) had proposed a rate base disallowance to reflect the high cost of the nuclear plants, arguing that the ICC should disallow "uneconomic" plant costs even if a utility needs the facilities for reliability purposes.

To further support its used and useful determination, the ICC approved an increase in the reserve margin used to test for plant need, from 20 to 22 percent. It also reduced test-period demand-side management (DSM) spending levels proposed by the utility, finding that they might result in a windfall because the utility historically spent significantly less than budgeted for DSM. Re Commonwealth Edison Co., No. 94-0065, Jan. 9, 1995 (Ill.C.C.).

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