*1 COMPANY, Petitioner-Appellant, CENTRAL LIGHT v. ILLI- ILLINOIS al., (Roland et Respondents-Appellees NOIS COMMERCE COMMISSION Burris, General, al., Attorney Respondents). et W. ILLINOIS — CENTRAL COMPANY, COMMISSION, Appellant, LIGHT v. ILLINOIS COMMERCE COMPANY, Appel Appellee. ILLINOIS PUBLIC SERVICE — CENTRAL lant, COMMISSION, Appellee. ILLINOIS —NORTHERN v. COMMERCE COMPANY, Appellant, v. COMMERCE COM ILLINOIS GAS ILLINOIS COMPANY, MISSION, Appellant, v. ILLI- Appellee . — ILLINOIS POWER COMMISSION, GAS AND Appellee.—IOWA-ILLINOIS NOIS COMMERCE COMPANY, COMMIS- Appellant, v. ILLINOIS COMMERCE ELECTRIC COMPANY, Appellant, v. SION, Appellee. EDISON — COMMONWEALTH COMMISSION,Appellee. ILLINOIS COMMERCE 3—92—0879,3—92—0887,3—92—0888, 3—92—0864, Third District Nos. 3—92—0967, 3—93—0201, 3—92—0957, 3—93—0200, 3—92—0955, 3—93—0238,3—92—0787cons. 29, 1993.
Opinion filed December *2 BARRY, J., dissenting. Seidel,
Edward J. Griffin Fiske, and W. Michael of both DeFrees of & Chicago, petitioner. for Blackwell, Counsel,
Eve M. of Springfield, Office of Public of for re- spondent Office of Public Counsel. Schiff,
Owen E. MacBride Hardin Hightman, and Carrie J. both of & Waite, Chicago, Pasek, of Gary Decatur, of Company, Illinois Power of respondent for Company. Illinois Power Woollums,
Cathy Gale, Lovig, Richard G. and Brent E. all of Iowa-Illi- nois Gas & Company, Davenport, Iowa, respondent Electric of for Iowa-Illi- nois Gas & Electric Company. Linton, Louis, Missouri,
David Company, of Union Electric of St. for re- spondent Company. Union Electric General, (James Burris, Weging, E. Attorney Springfield of
Roland W. General, Chicago, counsel), respondent for Attorney Special Assistant Commission. Illinois Commerce Odorizzi, Cohen, all of Mattson, J. E. and Michele
Stephen Barbara Platt, Illinois Chicago, respondent for Northern Gas Mayer, & Brown Company. Rosso, Flynn, J. all of Christopher W. and David
Boyd Springer, J. respondent Illinois Jones, Pogue, Chicago, for Central Reavis & Day, Company. Public Service Hinchliff, Light & Coke Peoples Gas T. Fox James both
Gerard Light Company. & Chicago, respondent Peoples Gas Coke Company, of Austin, Leeb, Sidley Jeffrey & Chi- Eugene E. both Bernstein and Company. respondent Edison cago, for Commonwealth Carmel, Bramlet, Bramlet, P.C., respondent of Mt. Roger Eric & Utility Company. Mt. Public Carmel *3 Lusson, Board, LaGrange, respondent for Utility Citizens
Raren Utility Board. Citizens court: opinion delivered
JUSTICE STOUDER (the 30, 1992, Commerce Commission the Illinois September On “Investigation a entitled an order in Commission) proceeding issued ***” (the expenditures tar clean-up related to coal concerning issues initiated on the Commis- had been proceedings The generic order). ba- industry-wide “generic” on an to determine sion’s own motion with clean- for costs associated ratemaking treatment proper sis the manufactured from former damage resulting environmental ing up of these costs). to as remediation (referred gas operations laws. and State environmental sites is Federal required by following util- rehearing, of petitions the denial Following utilities) for review petitions filed (hereinafter ity-appellants Northern Company, Light Central Illinois districts: appellate various North Company, & Coke Light Gas Peoples Company, Illinois Gas Common- Company, Electric Gas & Company, Iowa-Illinois Shore Gas Illi- Company, Service Illinois Public Company, Central wealth Edison and Union Utility Company, Mt. Carmel Public Company, nois Power addition, Electric the Office of Counsel Company. appellants, Public and the Utility (hereinafter OPC/CUB), Citizens Board filed petitions sought review. Subsequently, supervisory OPC/CUB order the Illinois Supreme seeking appeals Court have all consolidated in fourth district. The court denied this on its motion. own motion, the all court transferred this appeals ordered district. On review, we now affirm Commission’sorder.
The record shows gas plants (MGPs) that manufactured were op- erated in Illinois from the These plant oper- mid-1800’s the 1950’s. gas ations extracted from coal and coke for distribution to customers. Because of limitations in the" distribution system, plants could only serve small relatively quite area. there were num- ber of these plants. The record indicates over 100 oper- well MGPs ated in Illinois.
The process utilized to the gas extract varied. on the Depending process used, created, various by-products and residuals were includ- ing tar, liquor, clinker, coal ammoniacal light naphthalene, cy- oils anide. Some of these products were marketable thus were recov- ered during process, stored and later tar sold. Coal in particular in roofing, used road shampoo. construction and even The sale of these by-products encouraged and residuals was because they helped to reduce the cost of supplying service to utility customers. These substances were often stored on in underground site tanks. Those products which for one reason or were another unmarketable were treated as wastes and disposed of both on and off site.
With the advent of interstate natural gas pipelines 1950’s, gas manufactured process became obsolete. MGPs were phased out and decommissioned in the 1940’s and 1950’s. According record, testimony in the the general practice was to level unneeded aboveground fill structures and in below-grade structures with demoli- tion debris and other Underground fill. pipes and tanks were often left in place. Some of these underground structures were drained at least their liquid contents. 1970’s,
Beginning early 1960’s and following growing public awareness, the Federal government increasingly legislation enacted addressing (See, environmental pollution. e.g., Waste Disposal Solid (1965) Act (42 amended); U.S.C. Clean Air Act (1970) §6901 *4 (42 U.S.C. et seq. as amended); Federal Water Pollution §7401 Control Act (1972) (33 seq. (1988), amended).) U.S.C. et as §1251 Environmental (EPA) Protection was Agency established 1970. At time, about the same the Illinois Environmental Protection Agency It established. was until passage the Resource Conser- 1976, (1988))in and (42 seq. Act et Recovery vation and U.S.C. §6901 Com- Response, Environmental Comprehensive more importantly, seq. (1988)) U.S.C. et (CERCLA) (42 and Act pensation Liability §9601 and hazardous 1980, and of industrial regulation cleanup that the government. addressed the Federal comprehensively wastes was parties requires responsible (also Superfund) CERCLA known CERCLA, for the liability sites. contaminated Under up clean of a site operators owners or past extends to current and cleanup threat of has a release there is substantial from which there been substance, gen who parties as well as those a release a hazardous site. The State of Illinois at the present erate wastes that come Ill. Stat. ch. lines. See Rev. legislation along has similar enacted 111½, seq. 1022.2 et problem to address the 1980’s, began utilities Illinois
In the working in co- The record shows cleaning former MGP sites. up utili- Agency, Protection the Illinois Environmental operation By doing sites. voluntarily clean attempted up ties have involvement, avoiding government cleanup voluntary on a basis The record money. amount of to save a substantial the utilities stand in recent just begun has cleanup only process also reveals that the in the of years will continue for number and that the cleanup years utilized, some Thereafter, cleanup on the method depending future. monitoring for decades. require will sites faced each in- problem scope that the The record shows responsible cleaning utilities will be varies. Some dividual of 10 sites for which site, have in excess may others up one while only total cost of remediation type responsible party. they are utilities. between the required will also vary these costs recovery of 1990’s, sought some early Rehearing, CILCO—Order ratemaking (See through process. Company- North Shore Gas 1991); (August docket No. 90—0127 February 8, 1991).) In Order, (November No. 91—0010 docket proceed- initiate staff recommended the Commission’s entire utility to the issues common coal tar ings examine com- addressing after time that at the It was envisioned industry. facts and issues cleanup, utility-specific in the mon involved issues proceedings. in separate then be considered would initiating entered an order 6, 1991, the Commission On March in the spring held Hearings were “generic” proceedings. instant this generic that while noted it should be of 1991. summer being also issues were remediation coal tar underway, proceeding was to the Due cases cited above. rate utility-specific considered
881 on the power suspend proposed (see limitation Commission’s rates 1991, 111 2/3, Ill. Stat. eh. 201(b)), Rev. 9— findings reached certain related coal tar issues and the being to these issues in the prior generic remediation addressed on proceeding. Rehearing, See CILCO—Order docket No. 90—0127 2, 91— (August 1991); North Shore Gas docket No. Company Order,— 8, (November 1991) (referred to hereinafter as the CILCO and cases, North rate respectively). Shore case,
Germane to the issues in the presented instant Commis- sion, cases, found, in the CILCO and North Shore rate with three of dissenting, seven commissioners that remediation costs associ- ated coal tar recoverable fully The Meanwhile, CILCO rate case was to this court. appealed membership on the changed. joined Commission Two new members April Commission in On 1992. while the September court, CILCO rate case was before this pending the Commission en- tered its order in the instant generic proceedings. Unlike CILCO and Shore, Commission, decision, North again a four to three con- generic proceedings cluded in the that the remediation costs should be shared between and shareholders of the utilities.
On appeal, OPC/CUB contend the Commission erred in finding the utilities’ actions were and prudent operating and reasonable de- commissioning the MGPs. OPC/CUB assert utilities failed to carry their of establishing they burden acted and prudently reasonably they present because failed company-specific evidence. argue
OPC/CUB the Commission’s decision on this issue sup- is not ported by substantial evidence and is arbitrary capricious. and OPC/ CUB further contend evidence shows the dangers coal tar were time, known at the and this refutes the that the finding utilities acted and reasonably prudently operating decommissioning and MGPs. The utilities counter that this argument by OPC/CUB waived failing to raise the issue in their filed with applications rehearing the Commission following generic the issuance of the order. Whether or not waived, the issue is find conten- we no for OPC/CUB’s support tions. generic order,
In found had made prima showing decommissioning and prac- their facie tices had the industry practices been consistent with of the time. The Commission further found and nature the environ- scope dangers mental were not at known could have been known the time the MGPs were operated and then decommissioned. Commission stated the the industry’s practices evidence showed had light of the scientific prudent technological, reasonable and
been at the time. The Commission con- knowledge available and medical ex- presumption in future cases would company-specific cluded that of Illinois MGPs was operation decommissioning ist that the time, of the and that the practices compan- conformity-with industry reasonably prudently. ies acted findings issue is one of fact. Commission’s presented true and cannot be set aside accepted prima
of fact are to be facie weight the manifest of the evidence. against unless appeal the Public Interest v. Illinois (Business People & Professional 2d 1032.) By 146 Ill. stat Commerce Comm’n determining is limited to ute, of the Commission's order our review (1) scope statutory the Commission: acted within whether *6 decisions; its (2) findings adequate support set out fact authority; weight manifest supported by which were (3) findings issued not a evidence; infringe upon rendered decisions which do (4) and 1112/3, 1991, ch. 10— par. See Ill. Stat. right. constitutional Rev. 201(e)(iv). case, the ques the Commission was confronted with this 40 operations ago. which ceased years
tion of the prudency However, than complete. was less operations logically record those that witnesses Dr. Andrew utility the record in this case shows on Frank each studied available information Middleton and Mr. James 12 decommissioning sampling of a to MGP and operation during the MGPs’ disposal testified that the used They practices sites. time dismantled were consistent with and at the were operations that the They prac and of the time. testified knowledge practices potential con have now led to contamination present-day tices that at the time and were standard acceptable tamination were considered in the materials that Frank found no evidence Middleton and practice. had reason to believe that operators any of MGPs they reviewed that found safe. The Commission and were not operations practices their this was unrefuted. evidence the Commis- support more than sufficient
We find the evidence and reasona- prudently MGPs were general that in finding sion’s judged cannot be Those operated operations and decommissioned. bly proper Viewed hazards. knowledge environmental by today’s in- a that an context, supports presumption the evidence historical decommissioned, dis- and wastes and operated were dustry, MGPs had a manner. The witnesses of, and reasonable prudent in a posed necessary It on hand. was limited amount information general order reach reviewed in plant of each MGP be operation decommis- on the standard utilized in and finding practices only determined that in fu- sioning these Commission has plants. cases, ture will ex- company-specific presumption rebuttable operations prudent. tended to the that its reasonable The record this conclusion. supports unavailing argument
We find OPC/CUB’s that the Commission’s conclusion refuted the evidence of nuisance brought is cases against (See, 19th 20th early e.g., late centuries. Light 346; & v. (1864), Ottawa Gas Coke Co. Graham 35 Ill. Belvidere Gaslight 424.) & Co. v. 81 Ill. These App. Fuel Jackson cases involved smells water. per- noxious and contaminated actions, damage revealing pollution sonal while did ex- problems ist, do not show a of the knowledge nature of environmen- scope tal hazards close to which last developed even has in the 20 or 30 years. legislation Most environmental is less the 25 old. years EPA was not nearly established until two decades after most MGPs operations. ceased It was another CERCLA decade before enacted: enforcement of did not sometime commence until af- sum, terward. In it was for the Commission to determine the facts presented. based the record say findings We cannot on this is- sue are against weight manifest of the evidence. also argue
OPC/CUB in permitting Commission erred recov ery of remediation through rider mechanism. A rider is a form of tariff which modifies an otherwise standard rate under applicable specific circumstances. OPC/CUB is contend Commission without statutory authority Act) (Ill. under the Public Act (the Utilities Rev. 1112/3, Stat. ch. 1—101 et such a seq.) approve rider. allege OPC/CUB also the approval prohibition of a rider violates the *7 against ratemaking ratemaking, retroactive and and single-issue vio lates the Commission’s test rules. OPC/CUB assert that if year costs are at all from the only recoverable are recov ratepayers, erable in the context again of a traditional rate case. The utilities maintain many arguments of the by raised OPC/CUB this is sue were by the to them in the for re petitions waived failure raise hearing.
In order, the generic “preferred” the Commission stated that the method through for the of remediation costs was a rider recovery mechanism with a rather base review feature than rates. prudency The divergence Commission noted that the in the situation given wide involved, of each vis-a-vis the of utility, type cleanup amount and and the timing investiga- in the of difficulty forecasting scope, remediation, tion and general the Commission believed that in rider and efficient means of recover- to be the more accurate prove would the wide variation in circum- again noting costs. ing these the Commission concluded that companies, stances the between method of individual recovery was not the exclusive rider light in of other methods precluded proposing were particular their circumstances. an that a review was prudency further concluded Commission and costs to that a activities utility’s
essential feature ensure Thus, subject the remediation costs and cost-effective. necessary to out- paid to to limited to incurred costs prudently implementation concluded that the side The Commission also parties. in the context of a traditional of a tar rider need not be proposed coal case. rate contentions, to the Commission asserts
In OPC/CUB’s response has held that the Commission has stat- Supreme the Illinois Court to a rider mechanism recovery through cost utory authority approve v. City Chicago In Illinois Commerce in the situation. appropriate supreme 150 N.E.2d court Ill. 2d (1958), Comm’n case, to autho- power, proper had the held that Commission The court cost-of-natural-gas adjustment clause. rize an automatic set formula which by clause was a adjustment noted the automatic in the formula by inserting fixed price consumer was gas the Federal Power as established gas natural price wholesale statutory Commission’s The court held (FPC). Commission authority more than rate schedules embraced approve cents, legisla- and that the in terms dollars approve rates in- ratemaking function ture had vested the Commission adjustments.” making “pragmatic cluded the had on to consider whether court went In clause. adjustment the automatic approving abused its discretion discretion, noted the reasonableness the court finding no abuse record showed by the FPC. the wholesale rates was determined utility’s of the approximately 46% these costs amounted expenses. violate riders have been found maintain such
OPC/CUB vi- ratemaking, and to and retroactive single-issue prohibition against Co. rules, A. Finkl & Sons citing year” “test olate the Commission’s 3d 250 Ill. App. v. Commerce Comm’n Illinois broad terms opinion the Finkl However, we do not read 1141. asserted OPC/CUB. Finkl, reversed an order the first district to recover utilize rider Edison to
which had allowed Commonwealth *8 Although management costs demand-side programs. associated with the rider in to violate the prohibition court found the that case both and to contravene the against single-issue ratemaking, and retroactive the opin- we do not requirements, interpret Commission’s “test year” opinion ion all note the holding as that riders We prohibited. alleviating states that are useful in apparent approval riders or burden on utilities in imposed meeting unexpected, volatile fluctu- court, first ating in the case dis- expenses. before trict were of such management expenses found demand-side a nature as to rider treatment and could addressed require readily be through traditional rate proceedings. base we read Finkl as
Therefore, the Commission abused holding in allowing discretion the cir- recovery rider mechanism under of an management cumstances because demand-side costs are not un- expected, fluctuating volatile or nature as to so necessitate recovery we do not read Finkl rider. through Again, holding as Commission does not have the authority allow costs view the Finkl court’s through riders. our Given we holding, view the opinion’s discussion retroactive ratemaking test rules year as dicta. case,
In instant we find no of discretion on the part abuse of the Commission concluding tar coal remediation costs can recovered rider through mechanism. record shows these costs will from vary widely year year depending of re type mediation activities: relatively (in small sums in the thousands vestigation costs) (actual costs). millions dollars cleanup We view these costs type unexpected, volatile and fluctuating costs which are more efficiently through addressed a rider mecha nism. we find the Commission had the autho rize a rider as the preferred recovery, method and that under the circumstances such authorization did not an constitute abuse of discre tion. we
Finally, turn most difficult the issues raised on this appeal, and one to which we alluded above: the Commission’s decision that remediation costs should be “shared” between ratepayers utility shareholders. in the CILCO and North Shore rate Previously, cases, the Commission majority concluded that such costs cur- were rent legitimate expenses reasonably incurred and thus should be recovered from ratepayers. By the time the instant up decision, case came membership on the Commission had changed. The majority Commissioners now concluded that such either share- fully should not be borne
holders, but shared. dis- cost, majority the nature of this analyzing to the this cost was connected length the fact that
cussed at *9 shareholders, unlike The Commission noted that of land. contaminated property. Ratepayers pay interest in legal utility no have ratepayers Sharehold- property. from the use of that for the services derived only ownership, utility property of enjoy on the hand benefits ers other Thus, the ownership. with such bearing the risks associated while also from the sale profits enjoy that since shareholders found majority the risks asso- be to bear holdings, they required should utility land that consistent with The concluded ciated with that land. sales, be remediation costs should treatment of land the Commission’s to receive the benefit when they stand shareholders because by borne is the land sold. utility not neces- analysis this is that would
(One difficulty -with to found of contaminated land be owner present have be sarily CERCLA, utility responsi- could be cleaning up. it Under liable cases, owns, it and in some longer no for the cleanup property ble premised CERCLA is not under Liability it never owned. property land; is premised it of contaminated ownership on current solely site.) present at being for the hazardous waste who is responsible connection be- analyzed the Second, majority the Commission to rate- of current services the provision tween remediation costs and Act, can re- only utilities that under the majority The stated payers. of current for the necessary provision are costs which cover those “have no link to the costs found remediation majority service. The noting that to ratepayers.” service While of current provision laws, and State environmental from current Federal these costs result their compel alone should that this fact unpersuaded was majority expenses. treatment as recoverable v.Co. Slat- Light & Coke agreed that Gas majority Peoples that proposition for the stood Ill. tery (1939), 373 in rates. fully are recoverable operating expenses prudently incurred most tenuous even the “lacked remediation costs because not service,” per- was majority provision link to the current ratepayers. from fully recovered these costs should be suaded that 1112/3, 1991, ch. Stat. (Ill. Act Rev. Citing section 1—102 of the charged was that 102), the stated majority 1— majority Since the policies.” fashioning “equitable regulatory with responsible held be ratepayers no legal requirement could find “ample found there was costs, majority tar for “all” coal and between justification” sharing costs equitable analogized the situation the treatment shareholders. majority provide service to ra- of a cancelled which never utilized plant A to be sharing of remediation costs was achieved use tepayers. a five-year period a rider and the cost over spreading Thus, no costs on the unrecovered balance. while the utilities carrying particular year would recover the total cost incurred in any over rider not their five-year period, they under the would recover interest portions. on the charges unrecovered appeal, argue
On remediation are current legitimate from operating expenses fully law are recoverable are OPC/CUB assert remediation costs unrelated to the provision current customers therefore service unrecoverable i.e., from are not ratepayers, operating expense. an On they appeal, contending the Commission takes a third position, while remedia- business,” tion costs be a may doing necessarily “cost an operating expense and therefore treated may differently ordinary operating expenses. Commission denies brief being core, remediation costs are “shared.” to its issue Whittled this the question costs, involves how characterize these how thus *10 to them for regulatory treat In to diffi- purposes. appreciate order the cult aspect issue, theoretical of this some con- we set out of the main tentions of the parties below.
Again, as in the
the
mechanism,
case of
use of a rider
are con
we
fronted
the issue
(1)
of whether the
the
Commission has
author
ity to
sharing
authorize the
ratepayers
costs between
and share
holders,
(2)
and
the
whether
Commission
its
in
abused
discretion
ordering
sharing
remediation costs.
parties
The
contend the issue
is one
presented
Our
is
to
law.
review limited
whether
determining
the Commission:
the
(1) acted within
of its
scope
statutory authority;
(2) set out findings
decisions;
of fact
to
adequate
support
(3) issued
which
findings
weight
the
evi
supported
manifest
the
dence;
(4)
rendered decisions
infringe
which do not
a consti
upon
right. (Ill.
1112/s,
tutional
Rev. Stat.
201(e)(iv).)
ch.
We
10—
also
the
note
are to
findings
accepted
Commission’s
fact
prima
true and
they
against
cannot be set aside unless
are
the
facie
weight
manifest
of the
People
evidence. Business & Professional
the Public Interest v.
Ill. 2d
Illinois Commerce Comm’n
175,
On the regulatory utilities contend that under between their customers, they keep themselves and required the cost of service to the minimum for a rate required reasonable the utili part bargain, As of that
return on shareholder investment.
102(a)(iv)
language
found
section
argue, citing
prefatory
ties
1—
Act,
the rea
are allowed to recover
Ill.
ch.
(See
that service.
Rev. Stat.
providing
cost of
sonable
are enti
1112/3,
argue they
the utilities
102(a)(iv).)
par. 1—
remediation costs as a mat
incurred
prudently
tled to full
and North
cite the fact that
the CILCO
ter of law.
determined these costs to be current
cases the Commission
Shore rate
recoverable from
legitimate operating expenses fully
of taxes
this case is
to the treatment
argue
analogous
The utilities
citing
Light & Coke Co. v. Slat-
expense,
Peoples
as an
Gas
Peoples Gas
Slattery,
Ill.
rived from AT&T’s status ratepayers in Bell. The court held should sition an investor Illinois as to directly were shown pay they not these costs unless be required Illinois Bell. by services rendered ratepayers benefit purchases gasoline were The on to find that bulk court went operating expense. as an properly treated Candlewick, considered the Commission’s the second district case ex legal noting that rate expenses. treatment of certain While found expenses, the court allowed as penses properly are “extraordinary ex by incurred legal expenses utility other to (1) related cus arose out expenses proceedings These penses.” rates, Commission (2) the reasonableness tomer about complaints chapter 11 bank original (3) rate order and motion reconsider authority supporting found it had been cited no The court ruptcy. Bell, court stated: Citing Illinois expenses. allowance of such nonrecurring we with the Commission “Moreover, agree not to be to the benefit of expenses were shown show the reasonableness proof insufficient that there was ex any operating charges. utility proving The has the burden ratepay directly it seeks reimbursement benefits pense which Utili renders.” Candlewick Lake utility or the ers services which App. 122 Ill. 3d Comm’n ties Co. v. Illinois Commerce 1190, 1196. 460 N.E.2d arise from service and past OPC/CUB contend remediation therefore, are not recov- by ratepayers; current are not “caused” in Illinois The the costs denied argue from utilities ratepayers. erable discretionary in one extent or another Bell were to and Candlewick law. by are mandated nature, the remediation costs this case while that it is not argues, agree principle, The and we Commission (See rate cases. and North Shore the CILCO bound its decision (1953), 1 Corp. v. Illinois Commerce Comm’n Mississippi River Fuel the Commission contends 394.) On appeal, Ill. 2d shared, being not be- costs are under the order remediation generic is the loss the shareholders being the only cause “cost” absorbed of the remedi- portion on the unamortized money of the time-value asserts recov- The Commission i.e., carrying charges. expenses, ation denied, carrying being only costs are not ery of remediation is of these costs treatment resulting from Commission’s charges Commission maintains from being ratepayers. recovered for costs charging ratepayers it concerned with its brief that users, members as only but do not benefit them general the Commission struck a public. “policy compro- mise.” Slattery argues wrongly ascribe to that all costs of proposition doing operating expenses business
and therefore fully recoverable The Commission con- tends there is a difference an operating expense between and a cost of doing analogy business. Commission concedes that the between taxes and remediation costs is are a unrelated apt because both cost public utility service. taxes argues have always been treated as an operating expense, while remediation costs are “novel” and will at some end. point *13 argues Commission it appropriately took into account
whether utility customers were benefited remediation activities of the utilities. The Commission public states that utilities are not in of cleaning up sum, business coal tar pollution. In the Commission argues given the rather costs, character of unique these the Com- mission must utilize its policy-making function to protect both the ra- and the tepayers financial of integrity the utilities.
In Central Illinois Public Service Co. v. Illinois Commerce Comm’n (1993), 421, 243 Ill. App. 3d (CIPS), 1356 fourth district affirmed a similar “sharing” mechanism in the context CIPS, of rate case In expenses. the Commission excluded from rate base the unamortized portion of rate case expenses. As proposed by CIPS, rate case expenses were to be amortized over a five-year per- iod. amortization, As a result of CIPS claimed it incurred carrying costs associated with funds invested the unamortized balance of the expenses. The Commission’s order effectively denied recovery CIPS, citing Candlewick, these carrying costs. In Commission, contended that the unamortized balance of rate case expenses was not an asset which directly generation contributed to the electricity the supply gas, and, therefore, it was reasonable that ratepayers required be to pay a return on this balance.
The CIPS court affirmed the issue, Commission’s decision on this noting that rate case expenses benefited ratepayers both and share- holders, and was not directly related to the provision electricity and gas. The court also cited the Commission’s finding that it was reasonable shareholders as well as contribute to this expense. The court found CIPS would recover the entire amount of principle invested the rate case. The court concluded that based on the record it could not the Commission’s say decision was im- proper.
892 and ap in CIPS reasonable reasoning persuasive,
We find are incurred as case. Remediation costs present to the plicable They are cur regulations. environmental laws result current at particular site placed The fact that the materials rent costs. fact these sites have is irrelevant to the ago 50 or 100 years hand, found that today. On the other cleaned up ser provision link to the of current costs “have no remediation from ra no can be recovered Assuming that cost ratepayers.” vice to and is “re utility customers “directly” unless it benefits tepayers service, operating expenses these costs are not to current then lated” expenses, like the rate case ratemaking purposes. benefiting both shareholders in one sense can be viewed as author within the Commission’s we find it was costs. sharing of these and discretion work ity categoriz faced recognize the difficult task the Commission We As the Illinois Su rather nature. given these costs their unusual ing clause, adjustment of the automatic said in context preme Court rate-making func has vested the Commission legislature “The ’ (Fed adjustments.” making “pragmatic ‘involves the tion which Co., Gas 88 L. Hope Com. v. Natural 320 U.S. eral Power Co., Pipeline Power v. Natural Gas Federal Com. 333, 344; Ed. Chicago v. Illinois 1037, 1050.)” (City 575, 586, L. Ed. U.S. 607, 618-19, 150 13 III. 2d N.E.2d Commerce Comm’n leeway. to considerable 782.) Thus, is entitled reasonable minds rate cases illustrate and North Shore CILCO issue would resolution this this The ultimate can differ on issue. event, we cannot any by legislative settled action. perhaps best be *14 case. erred in the instant the Commission say reasons, “generic” affirm the Commission’s foregoing we For the 30,1992. of September order
Affirmed. J.,
SLATER, concurs. dissenting:
JUSTICE BARRY of the coal colleagues’ resolution my dissent respectfully I Light Illinois Central in in dissent my tar issues. As I earlier stated (CILCO 3d 577 App. 252 Ill. Co. v. Illinois Commerce Comm’n (1993), on to the util- pass to I), I authority lacks that the Commission believe no that bear remediating past practices for ity’s ratepayers charges it, the As I see services to current customers. providing relation to
893 charges less appropriate here at issue are even expenses remediation utility incurred the legal the expenses than ratepayers (1983), Commerce Comm’n Lake Co. v. Illinois Candlewick Utilities expenses 1190, lobbying or 219, 122 3d 460 N.E.2d App. Ill. in Illinois Bell ratepayers to recover from utility sought which the 461, Ill. 2d 303 (1973), 55 Co. v. Illinois Commerce Comm’n Telephone that the here in- expenses I am the fact swayed by 364. N.E.2d substantial, more those which were at issue far so than bemay volved fact, I dis- particularly Illinois am Lake and Bell. Candlewick remains un- cleaning up fact the cost sites turbed of an un- of the utilities’ approval known. majority’s “shared” not with the cost from whether or ratepayers, calculable or ad- shareholders, “policy compromise” “pragmatic utilities’ justment,” mandate. legislative violates that there expressly
The Commission this case noted majority legal justification ratepayers was no coal holding responsible Nonetheless, tar costs. chose to relieve the bearing investors from the full burden remediation costs utility’s part pur and to “share” of the costs based ported pursuant “equitable regulatory policies,” to fashion 1—102 of section 1— My section of the Public Utilities Act. review however, 102, authority. discloses no such broad policy-making health, legislature prosper declared that “the welfare specifically ity environmentally Illinois safe require provision all citizens which reflect public utility prices accurately and least-cost services at cost to all citi long-term of such services and which equitable 1112/s, end, (Ill. 102.) zens.” Rev. Stat. ch. To that par. 1— to the utilities to legislature granted authority regulate efficiency, reliability equity ensure environmental quality, provision charged. and the rates The legislature explicitly services stated, however, “the services public utility cost is supplying (Ill. allocated to those who cause the costs incurred.” [to be] 1112/3, Further, 102(d)(iii).) Rev. Stat. it is bur ch. 1— prove den of the rate utility seeking “any operating increases directly for which it seeks reimbursement rate expense benefits renders.” Lake Candlewick payers services at Comm’n, v. 122 3d App. Utilities Co. Illinois Commerce Ill. at Co. v. Illinois Com (citing Telephone 460 N.E.2d Illinois Bell Comm’n, 482-83). 55 Ill. 2d merce at In Governor’s Services v. Illinois Commerce Consumer Office 920, 923, 68, 72,
Comm’n Ill. 3d we ac App. knowledged that the cost” not defined in expression “long-term *15 recom- provided General had not or Attorney
the and that the statute mar- the an selecting appropriate a definition for of purpose mended ser- Company’s for Illinois Power electric ginal redesigning cost study In Governor’s equal an Office, provided Illinois Power vice rates. on five- (EPMC) utility’s cost based percentage marginal study of Gen- of to its energy system. Attorney of the cost year projection 10-year study, projection eral that its own based proposed ca- the effects excess costs, utility’s consideration of including treatment for residential customers. The would result in fairer pacity, improp- EPMC argued utility’s study that Attorney General in of the statute. on “short-term” considerations violation erly based that either arguments, we found Having parties’ considered the 10-year projec- or the General’s Attorney estimate utility’s five-year to “long-term,” and we deferred tion of costs could as qualify in approach proposed discretion the EPMC adopting Commission’s utility. the pro- Governor’s concerned the issue Obviously, posed by Office And, I have no doubt but providing costs of services. jection future “long-term its legislature contemplated expression to ser- relating to estimations of costs apply costs” would generally the fu- period vices to to customers over reasonable provided be adjust utility to granted authority ture. the legislatively not, my “long-term” cost of services does reflecting rates or view, to on to customers estimated pass empower (as in most management decisions future costs remediate unknown past. my in the distant here) by the utilities instances rendered that costs re- requiring be clearer in opinion, hardly the statute could provided to services not be unrelated utility may flected rates current ratepayers. de- up sites cleaning here at issue
The remediation costs Commission, moreover, ago. or 50 years commissioned some 40 “have no cleanup expenses the coal tar acknowledged in its order that Thus, to ratepayers.” link current service provision utility to the notwithstand- authority self-appointed policy-making Commission’s decision vio- “sharing” Commission’s ing, I remain convinced tar that no coal part lated statutory mere fact that remedia- charged costs may not, opin- does my of the utilities expenses tion are current treat- novel ion, expenses characterization hybrid require the remediation costs Inasmuch as ment for ratemaking purposes. and the in most instances management practices past relate solely customers, I find that would past services provision violating regulatory part or in without whole not be recovered may ratemaking. See single-issue retroactive prohibiting principles v. Illinois Interest the Public People Business & Professional *16 1032, 146 Ill. 2d Commerce Comm’n v. Public Interest People Business & citing Professional 192, 209, 555 N.E.2d Ill. 2d Comm’n (1989), 136 Illinois Commerce 693. otherwise, I find no legislature says and until
Unless rider tariff. of remediation approval for the Commission’s the reme- any part approval the Commission’s I would hold and an abuse unauthorized the coal tar rider was costs in diation matter of law. as a discretion Commission’s ROCK, COM v. THE INDUSTRIAL Appellant, THE GREEN CITY OF Green, (Howard Appellee). MISSION et al. Division) No. 3 — 93—0202WC (Industrial Commission
Third District 23, 1993. Opinion filed December