Illinois Adopts Order to End Subsidies in ComEd Supply Rate for Residential Electric Heating Customers

A final Illinois Commerce Commission order has established a process to remove subsidies to residential customers with electric space heating under Commonwealth's Edison supply rates (11-0498).

The final order adopts a Cap Approach to remove the subsidies. Specifically, residential space heating customers will be moved to the true cost of supply service under a gradual process, under which there will be a limit of 10% on the total annual bill increase for residential customers at the 75th percentile of usage.

Commonwealth Edison was ordered to file changes to Rider PE consistent with the Cap Approach within three business days, to be effective two business days after such filing.

Assuming that ComEd supply charges remained static, the Cap Approach would result in cost-based supply charges in four years.

Under the mechanics of the cap approach, an increase in ComEd supply charges would prolong the transition to cost-based supply rates; a decrease in ComEd supply charges would accelerate the process.

The 10% limiter is on a total bill basis, including delivery. Accordingly, changes in the amount of delivery charges would also affect the length of transition.

A 75th percentile customer refers to a customer in the 75th percentile level of annual electricity usage in a residential delivery class, meaning only 25% of customers in that residential delivery class consume more electricity annually than the 75th percentile customer. Choosing such a cap limits the bill impact from moving towards cost-based rates for a customer in the 75th percentile of each of the four residential delivery classes to no more than 10% on a total annual bill basis in any given year. Virtually all customers using less electricity than the 75% percentile customer will see bill impacts of less than 10% in any given year.

The final order adopted the Cap Approach for the transition, instead of a transition with a fixed number of years, because phasing out the subsidy to residential electric space heat customers over a fixed number of years could have a significant bill impact in any year or years where ComEd's overall cost to procure electricity supply increases substantially.

The final order only addressed residential customers. Although similar supply subsidies are provided to non-residential space heat customers and lighting (dusk-to-dawn) customers, the proceeding was initiated to address residential rate design issues, and non-residential issues will be addressed in a separate proceeding.

Currently, subsidies are provided to residential customers with electric space heat and to dusk-to-dawn lighting customers in the annual amounts of $57.4 million and $7.2 million, respectively. Residential customers without electric space heat and non-residential customers with demands that do not exceed 100 kilowatts bear the burden of paying for the vast majority of those subsidies in the current annual amounts of $45.9 million and $17.5 million, respectively.