Executive Report

Commerce Commission grants Illinois Power rate increase for Clinton project

A UTILITY spent $250,000 to $500,000 and a consumer group $20,000, producing 50 witnesses over five months in one of the most complicated rate increase cases ever heard by the Illinois Commerce Commission (IlCC).

The five-member IlCC ruled unanimously November 28 to allow more than half the rate increases sought by the Illinois Power Co. (IP). However, IlCC chairman Michael Hasten said the appointive regulatory agency had set a precedent for interfering with a utility's management practices when it ordered monthly progress reports on the construction of IP's nuclear power plant near Clinton.

Appeals by the consumer group may take the case to the Sangamon County Circuit Court. Citing the lack of a contingency plan, IP did not appeal. However, pleading a financial crisis that could jeopardize its AA bond rating, IP said it would be forced to ask for additional rate increases in 1980, rather than waiting until 1982.

IP asked to raise rates $92 million for its 500 electric customers and 370,000 gas customers in central, northwestern and southern Illinois. The IlCC granted about two-thirds, or $62.6 million. The rate increases took effect November 30, 1979. However, IP also asked to include $240 million in construction costs at Clinton, about half of what the utility has spent there, in the base used to figure the rates. The IlCC allowed about one-third, or $97 million. The Clinton case centered on the inclusion of the cost-of-work-in-progress, the so-called CWIP, in the rate base.

Citizens for a Better Environment (CBE), a Chicago-based consumer group, said the rate increases were unfair because consumers would be paying for power not yet generated; it would be especially unfair to the elderly and poor customers who pay a much larger percentage of their incomes for utilities. CBE said stockholders, not consumers, should assume the financial risk of constructing a nuclear power plant. Armed with a $20,000 grant from the Governor's Office of Consumer Services, which received about $250,000 for such grants from the federal Department of Energy, CBE said IP wouldn't need more money if it had not mismanaged the Clinton project. CBE said the IICC would destroy any incentive for good management if it allowed CWIP to be figured into the rate base. CBE said that a two-and-a-half-year delay and a 200 percent increase in costs at the Clinton project was due to mismanagement.

IP argued that because of its declining financial condition, increasing rates now would mean more efficient, ultimately lower cost service to its customers and fewer and smaller rate increases in the near future. IP flatly denied any mismanagement in connection with the Clinton project.

The IlCC said that while CBE failed to prove mismanagement, it did raise questions, and the IlCC ordered monthly progress reports on the construction in Clinton. The IlCC also asked IP for another cost estimate report on the Clinton project. The regulatory agency, however, refused to grant CBE's request that construction workers be allowed to testify anonymously at closed hearings on the mismanagement charges.

When construction began in 1975, IP predicted completion in June of 1980 at a cost of $439 million. In 1978, IP had predicted a December 1982 completion at $1.28 billion. CBE claimed internal IP documents showed it may be 1984 or 1985 before the plant is completed and the cost may run over $2 billion.

IP argued that the revisions are due to factors beyond the utility's control: inflation, changing government regulations and higher wages for construction workers. IP said it would still finish by the December 1982 deadline and bring the project in at $1.28 billion.

At issue is the first of two boiler water nuclear reactor units IP plans for Clinton.

New Department of Human Rights

The Thompson administration's second major reorganization for 1979 took effect December 6 when the governor signed S.B. 1377 (P.A. 81-1216), sponsored by Sen. David C. Shapiro (R., Amboy), which creates the Illinois Department of Human Rights and streamlines the state's anti-discrimination laws.

The new department merges the former Fair Employment Practices Commission the Department of Equal Employment Opportunity and the Commission on Human Rights. The new cabinet-level department will administer the Illinois Human Rights Act. But an independent, nine-member commission to be appointed by Thompson with the approval of the Senate, will hear the anti-discrimination cases, assess penalties and award relief.

"This legislation will fortify our ability to fulfill the state and federal constitutional mandates of freedom from discrimination in the areas of employment, housing, financial credit and public accommodation," Thompson said. However, the governor did not have the solid support of blacks in the Illinois General Assembly. Some charged the new department will jeopardize existing standards.

The new law streamlines 11 antidiscrimination statues, Thompson said. Among the biggest improvements will be the state's first open housing law. Previously housing cases could go only to federal courts. Other improvements will extend the scope of the law to financial credit and public accommodations as well as employment. Protection will be provided for those discriminated against because of age, marital status, race, color, religion, sex, national origin, physical or mental handicaps and unfavorable military discharge.

Thompson originally proposed creation of the Illinois Department of Human Rights in his March State of the State address.

28/February 1980/Illinois Issues