CHICAGO, Oct. 3, 2012 /PRNewswire/ -- ComEd today announced delays to key elements of its grid modernization program under the Energy Infrastructure Modernization Act (EIMA), following the Illinois Commerce Commission decision that granted ComEd recovery of the cost of funding its pension, but denied cost recovery on two other key issues, which ComEd will appeal in court.
"With this ruling, we have no choice but to delay some elements of the grid modernization rollout, at least until we have an outcome in the courts," said Anne Pramaggiore, ComEd president and CEO. "The adverse rulings on the interest rate and rate base issues significantly impair ComEd's ability to finance long-term investment programs."
Last year, the General Assembly enacted EIMA, directing electric utilities to invest in the state's electric infrastructure, improve reliability, create jobs, and attract investment to Illinois. The law also granted utilities the right to recover the actual costs of investment.Today's ICC ruling is inconsistent with the legislation on two of three issues considered on rehearing.
After the ICC denied ComEd cost recovery on 13 issues in May, the company sought rehearing on all 13 issues but the ICC agreed to reconsider three, and today reversed its earlier decision on only one. The impact of these issues will be nearly $100 million per year in 2014 and beyond, costs that cannot be recovered and subsequently reinvested into the system.
"Although today's ruling will allow us to maintain a minimal level of investment of a few core programs, it is insufficient to fully fund our grid modernization efforts," said Pramaggiore. "While we remain committed to fulfilling the promise of EIMA and intend to meet our obligations under the law, we have to be judicious about making investments if we do not have full cost-recovery, as authorized by the legislation."
Because the ICC is not fully funding the grid modernization program, ComEd is forced to make modifications to its program to align the deployment of key infrastructure with the ICC decision. ComEd must delay installation of additional smart meters until 2015 as a result of today's ICC ruling. This new deployment schedule will be reflected in a ComEd filing at the ICC later today. In addition, some of the basic infrastructure programs as well as the Chicago training center will either be delayed or phased in more gradually.
The result is that more than $2.3 billion in customer savings and creation of 2,000 full-time equivalent jobs will be delayed.
The legislation authorized a 10-year, $2.6 billion ComEd investment program to drive value to customers through a stronger electric system with fewer outages, faster restoration and new digital "smart" technologies that provide customers with more information, a greater ability to control their electric bill and new ways to save money.
"Labor leaders enthusiastically supported EIMA, also known as the smart grid bill, and it has already resulted in many well-paying, skilled jobs for Illinois union workers while providing a boost to other local industries," said Dean Apple, president, IBEW Local 15. "This decision will have a negative impact on the union workers and others hired to do this important work, their families and our state as a whole. We hope this decision will be reversed in the courts."
ComEd had already begun the work of modernizing the grid. This year alone, ComEd had already invested hundreds of millions of dollars in smart grid technology and projects to improve reliability for customers. Significant efforts have been focused on storm hardening to further reduce the susceptibility of storm-related damage to power lines.
The ICC's ruling today on the pension cost recovery will increase the average residential customer bill by about 0.7 percent starting at the end of October. However, even with this change, the new rates are still 1.4 percent lower than 2011.
Commonwealth Edison Company (ComEd) is a unit of Chicago-based Exelon Corporation (NYSE: EXC), the nation's leading competitive energy provider, with approximately 6.6 million customers. ComEd provides service to approximately 3.8 million customers across northern Illinois, or 70 percent of the state's population.
Cautionary Statements Regarding Forward-Looking Information
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, that are subject to risks and uncertainties. The factors that could cause actual results to differ materially from the forward-looking statements made by Exelon Corporation and Commonwealth Edison Company (Registrants) include those factors discussed herein, as well as the items discussed in (1) Exelon's 2011 Annual Report on Form 10-K in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations and (c) ITEM 8. Financial Statements and Supplementary Data: Note 18; (2) Constellation Energy Group's 2011 Annual Report on Form 10-K in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations and (c) ITEM 8. Financial Statements and Supplementary Data: Note 12; (3) the Registrant's Second Quarter 2012 Quarterly Report on Form 10-Q in (a) Part II, Other Information, ITEM 1A. Risk Factors; (b) Part 1, Financial Information, ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations and (c) Part I, Financial Information, ITEM 1. Financial Statements: Note 16; and (4) other factors discussed in filings with the SEC by the Registrants. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this press release. None of the Registrants undertakes any obligation to publicly release any revision to its forward-looking statements to reflect events or circumstances after the date of this press release.