As rate disallowances become more commonplace and capital requirements expand, infrastructure development will come with a higher price tag.
That’s how Exelon CEO John Rowe described his reaction when Illinois regulators disallowed nearly all of Commonwealth Edison’s (ComEd) requested $316 million delivery-service rate hike. In a unanimous vote, the Illinois Corporation Commission (ICC) in late July 2006 approved just $8 million in rate increases to cover delivery costs at the Exelon subsidiary. ICC Chairman Charles Box called it “a fair order” in advance of ComEd’s electricity supply auction in September, which at press time was expected to increase ComEd’s electricity rates by 25 percent.
ComEd promised to appeal the ICC’s order, and suggested that if it stands, it might trigger a material adverse-change clause in ComEd’s offer to defer and phase-in anticipated electricity cost increases over the next several years. In less polite words, if Illinois regulators want a fight, ComEd will give them a fight.
Such fights, moreover, are becoming disturbingly common in the U.S. utility industry:
• After approving a plan to phase-in a 59 percent increase in residential standard-offer prices, the Delaware Public Service Commission voted in June to reduce Delmarva’s distribution rates by $11.1 million. The PEPCO Holdings subsidiary had gone to the commission seeking a $5 million increase.