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R-1105 - 06/14/2011 - GENERAL LEGISLATION - Resolutions Supporting DocumentsAGENDA ITEM Regular Board of Trustees Meeting of June 14, 2011 ITEM 10.13.1) ILL SUBJECT: Com Ed Smart Grid Bill- Resolution Urging Governor to Modify Bill FROM: David Niemeyer, Village Manager BUDGET SOURCE/BUDGET IMPACT: N/A RECOMMENDED MOTION: Motion to Approve Resolution 2011- GL -CWE -1105 A Resolution Urging Governor to Modify Smart Grid Bill. Background/History: The General Assembly has approved legislation Senate Bill 1652 that could increase electricity rates over the next five years in return for $2.6 billion in power grid upgrades, including installation of "Smart- meters" in homes and businesses. The bill would reduce the authority of state utility regulators over electricity rates. ComEd estimates a typical consumer that pays $82 per month for electricity would have to spend an extra $3 per month for 10 years. However, ComEd believes that the efficiency of the smart-grid technology could help consumers save money by running appliances at off -peak hours. The bill is supported by groups including the DuPage Mayors and Managers Conference (DMMC) and the Oak Brook Area Chamber of Commerce. However, the bill is also opposed by the Citizens Utility Board, AARP, the Illinois Attorney General and other organizations. An analysis of the current bill by DMMC is attached. As noted in the analysis, the bill includes provisions for ComEd to set aside funds for underground and other local improvements and increase its goals for reliability and power quality. The Village supports the part of the ComEd smart grid bill that upgrades its system and reliability but believes that improvements can be made to the bill. The attached article in the Chicago Tribune today describes some of the improvements that have been made to the original bill but also outlines additional concerns. ComEd can earn a rate of return of 6 percentage points N� over the 30 year Treasury rate, or a profit of more than 10 percent at present. The regulatory process for reviewing and approving rate increases is easier than in the past. This week, Senate President filed a motion to reconsider the Smart Grid Bill. Governor Quinn has threatened to veto all or part of the bill. The resolution the Board is asked to approve urges Governor Quinn to work with the General Assembly to modify the bill so that it ensures a rate review process that protects Com Ed consumers. Recommendation: I recommend the Village Board approve the Resolution GL -1105. RESOLUTION 2011- GL -CWE -1105 A RESOLUTION URGING THE GOVERNOR TO MODIFY SMART GRID BILL WHEREAS, the Illinois General Assembly recently approved Senate Bill 1652, which could increase electricity rates over the next five years in return for power grid upgrades ( "smart grid "); and WHEREAS, this legislation would reduce the authority of State utility regulators over electricity rates; and WHEREAS, Commonwealth Edison (ComEd) estimates that a typical consumer who pays $82.00 per month for electricity would have to spend an extra $3.00 per month for ten years; and WHEREAS, ComEd believes that the efficiency of the Smart Grid technology could help consumers save money by running appliances at off -peak hours; and WHEREAS, although certain groups including the DuPage Mayors and Managers Conference (DMMC) and the Oak Brook Area Chamber of Commerce support this legislation, it is opposed by the Citizens Utility Board, AARP, the Illinois Attorney General's Office and other organizations; and WHEREAS, the Village of Oak Brook supports the portion of the ComEd smart grid legislation that upgrades its system and reliability, but it believes improvements can be made to this bill; and WHEREAS, it is anticipated that Governor Quinn will veto all or part of Senate Bill 1652. NOW, THEREFORE, BE IT RESOLVED BY THE PRESIDENT AND BOARD OF TRUSTEES OF THE VILLAGE OF OAK BROOK, DU PAGE AND COOK COUNTIES, ILLINOIS as follows: Section 1: That the Village of Oak Brook calls on Governor Quinn and the members of the Illinois General Assembly to modify the Smart Grid Bill so that it ensures a rate review process that protects ComEd consumers. Section 2: That the Village Clerk is hereby directed to send copies of this Resolution to Governor Quinn, the legislative leaders of both chambers of the Illinois General Assembly and members representing the Village of Oak Brook. APPROVED THIS 14th day of June, 2011. Gopal G. Lalmalani Village President PASSED THIS 14th day of June, 2011. Ayes: Nays: Absent: ATTEST: Charlotte K. Pruss Village Clerk RESOLUTION 2011 -GL- FED -R -1106 Opposing Congressional Redistricting Page 2 of 2 DMMC ANALYSIS The Conference supported the original legislation proposed by ComEd, and also offered ComEd our observations and suggestions to improve the legislation. These observations and suggestions are listed below, and include notes about changes made in the final legislation. • If ComEd agrees to invest a substantial amount of the $2.5 billion into the local distribution system for substation automation, circuit looping, smart isolation switches, communications, and smart switches, then consumers and municipalities would benefit substantially from the significant reliability improvement. We continue to support the need to invest in the infrastructure of the electric system. It is imperative that the proposed ComEd legislation result in measurable and dramatic improvements to local reliability and power quality. Instead of 15% improvement target, the goal should be to achieve first quartile performance on the following reliability performances: • Suburban — SAIDI 100 minutes (System Average Interruptible Duration Index — the measure of outage duration) • Suburban — SAIFI 0.5 (System Average Interruption Frequency Index — the measure of outage frequency) ComEd increased its goals for reliability and power quality from 15% to 20%. In addition, the legislation set penalities if those metrics were not attained This is still below our requested performance, but the legislation includes customer metrics, such as bill accuracy. • Municipalities would benefit if this new investment was mostly focused on the local distribution systems, as implementation costs can be reduced through joint local planning and coordination of electricity system investments with other major infrastructure projects. ComEd must annually Me a plan with the ICC approval requiring sstakeholders input in the planning. • It is critical that ComEd reporting include details concerning reliability performance and spending by community. No provision in the current legislation. The legislation should also include a budget dedicated to the undergrounding of a reasonable percentage of the system each year. Ultimately, the distribution system will need to move to ground or underground levels in order to prevent the constant ravaging of the system by storms, and to improve neighborhood local aesthetics. We understand that this process could take a very long time; however, this transition needs to start through the passage of the new legislation. Through rider LGC, municipalities could assist to accelerate this process. $2.1 billion will be set aside for underground and other local improvements. Finally, in order for smart meters to benefit consumers and municipalities, meters should provide direct real -time access to 15 minute interval data, and a wide array of dynamic pricing options, including real -time pricing. The legislation creates a stakeholder advisory board and provides an ICC process for approval of the smart meter program In addition, it requires the utility to offer a rebate program to customers who want to reduce usage during periods of peak demand Feel the power - chicagotribune.com www.chicagotribune .com/news /opinion/editorials /ct- edit - comed- 20110609,0,6483555. story chicagotribunexom Feel the power 6:38 PM CDT, June 9, 2011 Illinois needs a smart grid, the digital system for transmitting electricity in efficient, 21 st century style. It also needs more sensible utility regulation. If he plays his cards right, Gov. Pat Quinn can deliver both, at a reasonable price for consumers in Illinois. Over Quinn's objections, the General Assembly approved legislation sought by ComEd and Ameren to cut through the usual red tape and pay for a smart grid. Quinn has vowed to veto the measure, saying it fails to protect customers and costs too much. In the final vote of state legislators, the utilities came up short of the number needed to override a Quinn rebuff. advertisement via Ad Page 1 of 2 So the governor holds some aces. If he overplays his hand, the utilities could bypass him and take their chances at winning the necessary four votes in the House and five in the Senate when the fall veto session begins Oct. 25. But they don't want their momentum to cool under a veto cloud. They want a deal now. The bill has improved a lot since the utilities started lobbying for it long ago. Gone is a self - serving provision for automatic rate increases that would have neutered the Illinois Commerce Commission. Worries about handing the utilities a "blank check" and a "guaranteed profit" have faded. The current version of the bill has rate caps, spending caps, performance metrics, check -ins, sunsets and an annual, eight -month -long ICC review. Significantly, it would enable consumers and businesses to better manage their electricity use. As it stands, we buy electricity every time we turn on a light, but we have no idea how much we're using or what it will cost. The digital meters at the heart of smart-grid technology measure the energy we consume, identifying how much juice it takes to run a dishwasher, air conditioner or office computers. Customers can use the data to cut their bills. In addition to promoting conservation, the upgrades would open the Illinois grid to wind and solar energy. Imagine a warehouse owner installing rooftop panels to spin the meter backward whenever the sun shines. No wonder the Sierra CIub supports this legislation. The governor's office and other critics of the bill correctly point out its many valuable benefits for the utilities. It would make investing in the power grid much more attractive, by streamlining the regulatory process to eliminate delay and uncertainty. That's worth a lot. Governor, this is where you can help by driving toward a bargain. The utilities stand to earn a return of 6 percentage points over the 30 -year Treasury rate — that's a profit of more than 10 percent at present. The http:// www. chicagotribune. cominewslopinionleditorials /ct- edit - comed- 20110609,0,759204... 6/10/2011 Feel the power - chicagotribune.com Page 2 of 2 profit could soar if interest rates rise, and apart from a weak provision written into the measure, the sky's the limit. The bill also has a rate cap that applies only to part of the period it covers. The formulas for both return on equity and rate caps should be strengthened. The governor also voiced concerns about oversight. To hear the ]CC tell it, the agency's reviews would be restricted by law to filling in blanks and checking boxes. We don't think the legislation reins in the ICC's authority as drastically as it claims. As it is, the ICC sees the utilities only when they choose to bring rate cases. Under this bill, the utilities would appear before it every year. And to the extent the measure reforms the regulatory process to make it faster and more narrowly focused on issues that matter, well, it's about time. ComEd and Ameren should be commended for pushing a plan that will give our state a modern power system. The government of Illinois doesn't have the money to undertake this huge infrastructure project any other way. The state can't expect to get something so valuable for nothing. Governor, don't overreach, revise this bill in cooperation with the utilities and you will set out a reasonable path for getting us where we need to go to remain competitive. Copyright © 2011, Chicago Tribune http:// www. chicagotribune. cominewslopinionleditorialslct- edit - comed- 20110609,0,759204... 6/10/2011 �� ✓DIY\ ". \1\\ r s �i 44 Office of Governor Pat Quinn Vote NO on SB 1652 "Yes, there have been changes, but where it matters most this bill Is still a bad deal for consumers" - Doug Scott, ICC Chairman • Guaranteed Annual Rate Hikes with Weak Consumer Protections: o SB1652 hurts consumers by exposing them to guaranteed annual rate increases, while only providing a limited rate cap for the first 3 years of a 10 year program. This will subject consumers to potentially even higher rate increases after 2014 ($34 per month more for Ameren customers). • The investment requirement in SB1652 will push delivery rates up about 9% per year. This is on the heels of a $156 million rate increase ComEd received this week. • SB1652 strikes 100 years of Illinois law protecting consumers. • SB1652 is Not lust about Smart Grid o SB1652 includes billions of dollars of rate hikes that have nothing to do with smart meters or smart grid. Executive bonus pay, charitable donations, legal costs, and pension packages are all included in the rate hike. o. SB1652 locks in ComEd and Ameren profit margins at a high 10.25% variable rate. At best these profits are too high and at worst they are corporate windfalls at the expense of consumers. o Exelon CEO admitted that he was skeptical of smart grid (See John Rowe comments to investors in March 2011). • SB1652 Could KILL more lobs than it will Create: o The utilities are claiming that this bill is an annual 2.5% rate increase. However, just last year these same utilities claimed that a 2% rate increase would cost Illinois thousands of jobs and harm our recovery. o Why does a jobs bill contain a provision for $10 million in "workforce reduction program severance costs?" ($3.7 million for Ameren) o The rate increases in SB1652 will disproportionately hurt seniors, minorities, and low- income households. PROTECT YOUR CONSTITUENTS' POCKETBOOKS —VOTE NO ON SB 16521 Opponents Include: • Governor Pat Quinn; • Lt. Governor Sheila Simon; • Attorney General Lisa Madigan; • AARP; • Environmental Law & Policy Center; • Citizens Utility Board; • Citizen Action /Illinois; • SEW HealthCare; • Illinois Petroleum Council; • Illinois Industrial Energy Consumers; • Chemical Industry Council of Illinois; • ..Heartland Alliance.for Human Need & Human Rights; • Shriver Center on Poverty Law; • Association of Condominium, Townhouse and Homeowners Associations; Low Income Utility Advocacy Project; • South Austin Coalition; • Illinois PIRG; • Mobile Homeowners Association of Illinois; • A and C Electric Co., Inc; • Core Energy Group LLC; • Hartmann Electric ENVIRONMENTAL Late a POLICY CBNYEq PROTECT YOUR CONSTITUENTS': POCKETBOOKS— VOTE.ND ON SB 16521 int story CHEAGOSU19NESS Print Story — wVOINE8Et.syck W's— Home > This Week's Crain's > News > From this week's In Other News http://www.chicWbusiness.coni(arficle/20110529/[SSUEO 1/305299... Printed from ChlcagoBusiness.com Pilot test of ComEd's smart grid shows few consumers power down to save money By: Paul Merrion May 3a, 2011 ShareThis 14 Share Print i Email 10 comments While Commonwealth Edison Co. is wiring Springfield to profitably recoup its upooiring $1.5- billion smart-grid investments, the utility's first Chicago-area test of the new technology did not conned very well with consumers. A new report by independent researchers shows that less than 9% of about 8,000 randomly selected households used their newly installed smart meters to save money by adjusting thermostats or turning off appliances during the afternoon or on hot days. As part of the test, ComEd imposed higher rates or offered rebates during peak- demand hours to encourage consumers to cut back. Overall, reduced demand from those paying variable rates was "statistically insignificant," the report says. In a few loses, some households inexplicably used more energy during peak hours when rates were higher, which the report called 'counterintuitive' and possibly a statistical fluke in the still- preliminary findings. But much is riding on the promise that smart-grid legislation will reduce energy costs significantly for consumers and businesses in the long nun. "It's devastating to their plan; says Susan Satter, senior assistant Illinois attorney general for public utilities. The report shows "zero statistically different result in usage, compared to business as usual." GUARANTEED HIKES The bill, which would increase ComEd's electricity rates to pay for up to $2.6 billion in new equipment over the next decade, is near veto -proof approval by the Illinois General Assembly, despite strong opposition from consumer interests, Attorney General Use Madigan and Gov. Pat Quinn. At press time, the final version was still a work in progress, but votes were expected soon. That kind of increase would be slightly higher than the hard - fought rate hike the Chicago -based utility won from the Illinois Commerce Commission last week, which raises the monthly bill of the typical household by $3.15, starting June 1. The report covers only the first three months of smart-meter operation last year, from June to August. ComEd installed about 120,000 of the meters, which display energy consumption in far greater detail, allowing consumers in Oak Park, Humboldt Park and other areas to track how much they use by the hour, day, month or year. All but about 8,000 remained on flat rates, opting out of the test. 01 think given more time and general awareness you'd see that participation rate go up," says Anne Evens, executive director of CNT Energy, an arm of the Chicago -based non -profit Center for Neighborhood Technology, which is working with ComEd to field questions and educate participants in the smart-grid test area. 'A lot of people are really hungry for more information on how they use energy in their homes." Anecdotally, people in the Chicago -area smart-meter test are reducing their monthly electric bills, she says, but statistics aren't available yet. Downstate, where CNT Energy is working with Ameren Illinois on a test with 11,500 smart-grid households, the average monthly bill is down 16% and peak demand has been reduced by 20 %, Ms. Evens says. The report on ComEd's smart-grid project, conducted by the Electric Power Research Institute, a Palo Alto, Calif., bf2 5130/2011 10:14 AM nt Story http:// www. chicagDbusiness .com/article/20110528 /ISSUEO I /305289... utility industry think tank, did show that a small minority of consumers used the smart-grid technology to aggressively reduce their electric bills by anywhere from 12% to 37%. One reason few consumers embraced the technology may be that CorrEd essentially forced it on them, requiring them to "opt our rather than them volunteering to be smart-grid guinea pigs. That was a conscious decision to get a long -term view of how a cross - section of consumers would use smart meters in the future, says Val Jensen, right, vice - president of marketing and environmental programs for CorrEd. In ComEd's view, the 6% or so of homes that used the equipment roughly equals the number that would have opted in if participation had been voluntary. In the future, ComEd will target consumers who want to actively use smart meters to reduce their electric bills. 'it was a wake -up call; says Mr. Jensen, who supervised the smart-grid test project. 'It's important to learn how to engage with customers' ® 2011 by Crain Communications Inc. ShareThis 14 Share Print I Email Comments What do you think? Add a comment Uffi (Nom: Your Brat name and lost lnhlal wla appear wah your renarke.) 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