Illinois Smart Grid Street Fight

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The comedic opera that played out in Illinois from the legislative battle over smart grid is typical of the Land of Lincoln where everything is political and everything has its price.  But while the outcome is not what was planned or predicted it may end up being an interesting lab experiment on whether smart grid can earn its keep.

In full disclosure I spent five years working for the Illinois Commerce Commission as Manager of its Public Utilities Division and then my last year there as General Manager of the agency.  I learned to navigate the Illinois political calculus including “freeze exceptions” for hiring state employees which served as a pretext to send me a list of patronage candidates to consider. If I would agree to hire one from the list I got my freeze exception.  If not I had to wait.  I was never forced to hire anyone but there clearly was a cost for not doing so.

I also learned that just because utilities were regulated by the Illinois Commerce Commission did not mean they were helpless subjects to be trifled with.  There was always a political way to fix a problem.  That is the situation with Exelon’s need to move forward with smart meter deployment and smart grid implementation.  It was not a matter of whether this was a good idea only how much it would cost to implement—and to win the approval needed to do so. Ameren thought it could piggyback on a good deal and ended up being caught in the crossfire.

The problem was smart meter deployment got caught up in a series of other issues including the extended power outages from a string of storms that made customers mad and put politicians on the defensive.  Then there is the minor problem that Governor Pat Quinn has been an unabashed ratepayer advocate and frequent opponent of utilities for more than 30 years.  Then there was the concern of the utilities that the ICC might not approve their smart meter costs as “prudent” after the fact so they wanted approval in advance rather than rolling the dice. No dice said the Commission. Add to that the political sparing between the Governor and Legislature and you have the classic makings of a Chicago-style fight.

When the utilities went to the Legislature over the heads of the ICC to get legislative approval for the terms they worried the Commission would not approve—the fight was on!  Everyone who wanted or needed to score points found reasons and ways to do so.  Governor Quinn got his points scored by vetoing the bill.  Take that!

But that enraged the Legislative leaders who cobbled together another political deal with a veto-proof majority and sent it back to the Governor.  To get that veto proof majority the trailer bill, as these things are called, was loaded to the gills with favors for those who delivered the votes to rub the Governor’s nose in the mess.

What does this have to do with the final outcome of a bill that sets performance standards for smart grid implementation?  In street language this might be called “stink control” in the halls of the Illinois General Assembly this is getting the people’s business done.

So the utilities (Commonwealth Edison and Ameren) will get their smart grid deployment but the amount is reduced from $3.2 billion to $2.6 billion and they must spend one-half on upgrading the transmission grid to reduce power outages.  Yes customers will pay more—that was never in doubt. But the performance metrics have more to do with predefining the terms of regulatory approval to take away some of the discretion the ICC exercised than they do with setting a model for anyone else to follow.  And the price the utilities are paying for this new ‘model of smart grid accountability’ is that they must use the smart grid approved revenue to fix the outage problems that give politicians headaches AND THEN still perform to make smart grid work.