Dan Churney Aug. 18, 2016, 3:30pm

An Illinois appellate court has upheld a decision by the Illinois Commerce Commission defining the terms that govern how ComEd can tweak its power rates. 

The Aug. 11 ruling was penned by Justice Margaret McBride, of the Illinois First District Appellate Court in Chicago, with concurrence from justices Cynthia Cobbs and Nathaniel Howse Jr.  

In 2014, ComEd proposed a change in the definition of the "formula rate structure." The definition determines which changes to the company's rate structure are made in annual rate update proceedings before the ICC and which are made in separate proceedings. The utility giant said the redefinition would bring "specificity, standardization, and transparency" to the formula rate process and would make the formula "more readily understood." 

The definition change would allow the company to include more factors in calculating how much revenue it required. The ICC must approve ComEd's rates. 

The ICC held a hearing at which the definition was hashed out. The ICC arrived at a definition that did not increase the number of factors as desired by ComEd. The company's request for a rehearing was denied in January 2015, prompting the utility to appeal. 

Justice McBride saw the issue as revolving around the question of whether or not the state statute covering the formula rate is ambiguous, because if it is ambiguous the appellate court bows to the ICC's interpretation. ComEd argued the statute was in “plain language” and thus subject to examination by the appellate court. 

Justice McBride disagreed with ComEd, finding the statute ambiguous and fair game for appellate review. 

“In light of its expertise and experience in the complex field of utility regulation, we accord deference to decisions of the Commission. We will not substitute our own construction of an ambiguous statute for a reasonable interpretation adopted by the agency charged with its administration,” McBride wrote. “We give substantial weight and deference to the Commission’s interpretation. The Commission has the authority to interpret the ambiguous term ‘formula rate structure.’"

McBride was also persuaded by the Commission’s contention ComEd’s proposed redefinition would delay implementation of rate adjustments favoring consumers, with the Commission estimating that under the proposal, almost two years could elapse before an adjustment was reflected in rates. ComEd countered that the ICC was engaging in speculation, but McBride concluded it was right for the Commission to consider the “natural and probable consequences of the interpretation of the term.” 

McBride was further swayed by the fact the Commission’s definition of “formula rate structure” was consistent with its recent and similar decision involving another power company, Ameren. 

ComEd was represented by Chicago lawyer John Ratnaswamy. The ICC was represented by its own attorneys, designated as Special Attorneys General for the proceedings. 

Editor's Note: A previous version of this article incorrectly reported the ICC was represented in the referenced court proceedings by Illinois Attorney General Lisa Madigan's office. 

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John P. Ratnaswamy
321 North Clark, Suite 2800
Chicago, IL 60610

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