Commonwealth Edison Co. v. Illinois Commerce Comm'n

Illinois Official Reports
Appellate Court
Commonwealth Edison Co. v. Illinois Commerce Comm’n, 2014 IL App (1st) 130544
Appellate Court COMMONWEALTH EDISON COMPANY, Petitioner, v. ILLINOIS
Caption COMMERCE COMMISSION; AMEREN ILLINOIS COMPANY;
C3, INC.; COALITION OF ENERGY SUPPLIERS (Interstate Gas
Supply, Inc.; MidAmerican Energy Company; and North American
Power and Gas, LLC); CONSTELLATION NEWENERGY, INC.;
ENVIRONMENTAL LAW AND POLICY CENTER; EXELON
GENERATION COMPANY, LLC; FUTUREGEN INDUSTRIAL
ALLIANCE, INC.; ILLINOIS COALITION TO ADVANCE
RENEWABLE ENERGY (ACCIONA Energy North America
Corporation; EDP Renewables North America LLC; Iberdrola
Renewables, LLC; Invenergy LLC; and NextEra Energy Resources,
LLC); ILLINOIS COMPETITIVE ENERGY ASSOCIATION
(Ameren Energy Marketing Company; Champion Energy, LLC;
Constellation NewEnergy, Inc.; Direct Energy Services, LLC; Exelon
Energy Company; Integrys Energy Services, Inc.; MC Squared
Energy Services, LLC; FirstEnergy Solutions Corporation; Nordic
Energy Services, LLC; and Reliant); ILLINOIS INDUSTRIAL
ENERGY CONSUMERS; ILLINOIS POWER AGENCY;
NATIONAL RESOURCES DEFENSE COUNCIL; RETAIL
ENERGY SUPPLY ASSOCIATION (Champion Energy Services,
LLC; ConEdison Solutions; Constellation NewEnergy, Inc.; Direct
Energy Services, LLC; Energetix, Inc.; Energy Plus Holdings, LLC;
Exelon Energy Company; GDF Suez Energy Resources NA, Inc.;
Green Mountain Energy Company; Hess Corporation; Integrys
Energy Services, Inc.; Just Energy; Liberty Power; MC Squared
Energy Services, LLC; Mint Energy LLC; NextEra Energy Services;
Noble American Energy Solutions LLC; PPL EnergyPlus, LLC;
Reliant; Stream Energy; TransCanada Power Marketing Ltd.; and
TriEagle Energy, L.P.); WIND ON THE WIRES, Respondents.
District & No. First District, Second Division
Docket Nos. 1-13-0544, 1-13-0632, 1-13-0653, 1-13-1063, 1-13-1120
cons.
Filed July 22, 2014
Held An order of the Illinois Commerce Commission requiring petitioner to
(Note: This syllabus enter into a sourcing agreement to procure electricity for the retail
constitutes no part of the customers of alternative retail electric suppliers and recoup the costs
opinion of the court but through a “competitively neutral” charge, rather than requiring each
has been prepared by the alternative retail electric supplier to enter into its own sourcing
Reporter of Decisions agreement, was upheld on appeal over petitioner’s contentions that the
for the convenience of Commission made the decision without support from the record and
the reader.) violated the Rate Relief Law by requiring petitioner to enter into a
sourcing agreement to procure electricity for customers other than its
own “eligible retail customers,” since the Commission was entitled to
substantial deference with respect to its interpretation of the statute it
administers and the approach adopted by the Commission in the
instant case was within its statutory authority and was a cost-effective
alternative to administering the nearly 70 individual sourcing
agreements that would result from requiring each alternative retail
electric supplier to have its own agreement.
Decision Under Petition for review of order of Illinois Commerce Commission, No.
Review 1-12-0544.
Judgment Affirmed.
Counsel on Rooney Rippie & Ratnaswamy LLP (E. Glenn Rippie, of counsel),
Appeal and Jenner & Block LLP (Barry Levenstam and Irina Dmitrieva, of
counsel), both of Chicago, and Jenner & Block LLP, of Washington,
D.C. (David W. Debruin and Matthew E. Price, of counsel), for
petitioner.
Shefsky & Froelich Ltd., (John F. Kennedy, Jonathan B. Amarillo,
Barton J. O’Brien, Rachel L. Schaller, and Cary E. Donham, of
counsel), Illinois Commerce Commission, Office of General Counsel
(John P. Kelliher and Thomas R. Stanton, of counsel), Quarles &
Brady LLP (Christopher J. Townsend, Christopher N. Skey, and
Adam T. Margolin, of counsel), Law Offices of Gerald T. Fox (Gerald
T. Fox, of counsel), Husch Blackwell LLP (Douglas F. McMeyer, of
counsel), Lisa Madigan, Attorney General (Clifford W. Berlow,
Assistant Attorney General, of counsel), and Citizens Utility Board
(Julie Soderman and Orijit Ghoshal, of counsel), all of Chicago,
Lueders Robertson and Konzen LLC, of Granite City (Eric Robertson,
Ryan Robertson, and Drew Rankin, of counsel), and Husch Blackwell
LLP, of St. Louis, Missouri (Kyle C. Barry and JoAnn T. Sandifer, of
counsel), for respondents.
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Panel PRESIDING JUSTICE HARRIS delivered the judgment of the court,
with opinion.
Justice Pierce concurred in the judgment and opinion.
Justice Pucinski dissented, with opinion.
OPINION
¶1 Petitioner Commonwealth Edison Company (ComEd), Illinois Competitive Energy
Association (ICEA), and Illinois Industrial Energy Consumers (IIEC) appeal the order of the
Illinois Commerce Commission (Commission) that requires ComEd to enter into a sourcing
agreement to procure electricity for the retail customers of alternative retail electric suppliers
(ARES) and recoup the costs through a “competitively neutral” charge. On appeal, appellants
contend that the Commission violated section 16-111.5 of the Public Utilities Act (220 ILCS
5/16-111.5 (West 2012)) when it ordered ComEd to enter into a sourcing agreement to procure
electricity for customers other than its own “eligible retail customers” and rendered its decision
without substantial support from the record.
¶2 JURISDICTION
¶3 The Commission issued its final order on December 19, 2012. ComEd filed a timely
application for rehearing on January 22, 2013, and a joint motion for clarification of the final
order. On January 29, 2013, the Commission denied the application for rehearing but granted
the motion for clarification and, on the same day, issued an amendatory order. On February 22,
2013, ComEd filed a notice of appeal. Accordingly, this court has jurisdiction pursuant to
Illinois Supreme Court Rule 335(a) governing direct review of administrative orders by the
appellate court. Ill. S. Ct. R. 335(a) (eff. Feb. 1, 1994).
¶4 BACKGROUND
¶5 Under the Public Utilities Act, article XVI (titled Electric Service Customer Choice and
Rate Relief Law of 1997) (Rate Relief Law) sought to restructure the electricity industry in
order to create competition and introduce customer choice in the supply of electricity. 220
ILCS 5/16-101A(b) (West 2012). Prior to the passage of this article, electric utilities like
ComEd both sold electricity to customers and delivered that electricity through its distribution
network. Article XVI separated the two components so that ARES could now compete with
one another to sell electricity to consumers. 220 ILCS 5/16-115 (West 2012). Before an ARES
can serve any retail customer, it must first obtain a certificate of service authority from the
Commission in accordance with section 16-115. As part of its certification, subsection (d)(5)
requires an ARES applicant to source some electricity from clean coal facilities, and further
provides that “the required sourcing of electricity generated by clean coal facilities, other than
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the initial clean coal facility,1 shall be limited to the amount of electricity that can be procured
or sourced at a price at or below the benchmarks *** in accordance with item (1) of subsection
(c) and items (1) and (5) of subsection (d) of Section 1-75 of the Illinois Power Agency Act.”
220 ILCS 5/16-115(d)(5)(iii) (West 2012). ComEd, however, remains responsible for
delivering electricity to ARES customers over its distribution network. 220 ILCS 5/16-108
(West 2012).
¶6 Article XVI also requires ComEd to continue supplying electricity to residential and small
commercial customers within their service territory who have not chosen an ARES and who
purchase power from the utility “under fixed-price bundled service tariffs.” 220 ILCS
5/16-111.5(a) (West 2012). The statute refers to these customers as “eligible retail customers.”
Id. To guide ComEd’s procurement of electricity, the General Assembly passed the Illinois
Power Agency Act (20 ILCS 3855/1-5(1) (West 2012)), which created the Illinois Power
Agency (IPA). The IPA has the powers and duties enumerated in the Illinois Power Agency
Act. 20 ILCS 3855/1-15(a) (West 2012).
¶7 The goal of the Illinois Power Agency Act is to protect “[t]he health, welfare, and
prosperity of all Illinois citizens” in the “provision of adequate, reliable, affordable, efficient,
and environmentally sustainable electric services at the lowest total cost over time.” 20 ILCS
3855/1-5(1) (West 2012). To accomplish this goal, the General Assembly declared it
“necessary to improve the process of procuring electricity to serve Illinois residents, to
promote investment in energy efficiency ***, and to support development of clean coal
technologies and renewable resources.” 20 ILCS 3855/1-5(4) (West 2012). The legislature
established that by January 1, 2025, “25% of the electricity used in the State shall be generated
by cost-effective clean coal facilities.” 20 ILCS 3855/1-75(d)(1) (West 2012). It also
determined that “[p]rocuring a diverse electricity supply portfolio will ensure the lowest total
cost over time for adequate, reliable, efficient, and environmentally sustainable electric
service.” 20 ILCS 3855/1-5(5) (West 2012).
¶8 Pursuant to the Illinois Power Agency Act, the Illinois Power Agency is tasked with
procuring electricity for ComEd and Ameren Illinois Company (Ameren).2 To this end, the
Illinois Power Agency develops annual electricity procurement plans for the utilities and
submits the plans for final approval by the Commission. 220 ILCS 5/16-111.5(b) (West 2012)
(“[a] procurement plan shall be prepared for each electric utility consistent with the applicable
requirements of the Illinois Power Agency Act”). Relevant to this appeal, the clean coal
portfolio standard contained in the Illinois Power Agency Act states that the IPA’s
“procurement plans shall include electricity generated using clean coal.” 20 ILCS
3855/1-75(d) (West 2012).
¶9 On September 28, 2013, the Illinois Power Agency filed a proposed procurement plan with
the Commission. The plan required ComEd and ARES to enter into sourcing agreements with
FutureGen 2.0, a project of the FutureGen Industrial Alliance, Inc. (FutureGen Alliance). The
FutureGen Alliance is a nonprofit corporation “formed to create the world’s first coal-fueled,
1
The parties agree that an initial clean coal facility has never been established by the legislature and
therefore the statutory provisions dealing with the initial clean coal facility are not relevant in this
appeal.
2
Ameren is not a party to this consolidated appeal.
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near-zero emissions electric power plant.” The FutureGen 2.0 project consists of the
retrofitting of Ameren’s facility in Meredosia, Illinois, to utilize clean-coal technology. The
Illinois Power Agency determined that the utilities and ARES should purchase the facility’s
output in an amount consistent with their proportional share, or in a “competitively neutral”
manner.
¶ 10 The Commission found that, pursuant to section 1-75(d)(5) of the Illinois Power Agency
Act, it had the authority to compel both the utilities and ARES to enter into sourcing
agreements with retrofitted clean coal facilities approved by the Commission. However,
Commission staff expressed concern that, given the number of ARES involved (approximately
70), requiring each ARES to enter into a sourcing agreement with FutureGen 2.0 would
present an administrative burden. 3 The staff suggested an alternate approach whereby
FutureGen 2.0 would contract only with ComEd and Ameren, and each utility would purchase
FutureGen 2.0 power for its own eligible retail customers as well as the retail customers of
ARES. The utilities would then recover the additional costs through a competitively neutral
charge assessed to ARES’ customers for their share of the output.
¶ 11 On December 19, 2012, the Commission issued its final order approving the Illinois Power
Agency’s procurement plan, but modified the plan to reflect the staff’s alternate approach
regarding sourcing agreements with FutureGen 2.0. It concluded that the staff’s proposal was
“quite reasonable in light of the administrative burden that would be placed on FutureGen, the
Commission, Staff and ARES if a separate sourcing agreement were required for each and
every ARES as well as ComEd and Ameren.” Illinois Power Agency, Ill. Com. Comm’n
Docket 12-0544, at 236 (Order Dec. 19, 2012). The Commission found that while sections
1-75(d)(5) of the Illinois Power Agency Act and 16-115 of the Public Utilities Act did not
explicitly sanction the alternate approach, “the intent of the Legislature that all customers
equally bear the costs and benefits of the State’s clean coal portfolio standard is consistent with
the alternative proposal.” Id. Upon a motion for clarification, the Commission entered an
amendatory order on January 29, 2013, stating that under the alternate approach, ComEd
would be able to recover its costs incurred under the FutureGen 2.0 sourcing agreement
through a competitively neutral charge that is not a delivery services charge. Illinois Power
Agency, Ill. Com. Comm’n Docket 12-0544 (Amend. Order Jan. 29, 2013). After denial of the
petitions for rehearing filed on January 29, 2013, ComEd, ICEA, and IIEC initiated this action
for administrative review. This court consolidated the appeals.
¶ 12 ANALYSIS
¶ 13 Initially, we address a preliminary issue raised by the Commission. The Commission
contends that this court should disregard and strike the brief of Coalition of Energy Suppliers
(CES), and strike portions of ComEd’s brief in response to ICEA/IIEC’s appellant brief. It
argues that CES is an appellee, but CES’s brief attacks the Commission’s order. The
Commission contends that if CES seeks reversal or modification of the order, it must file its
own appeal or cross-appeal. The Commission also argues that this court should strike the
portion of ComEd’s response brief raising the dormant commerce clause argument, because
ComEd did not present the issue as a ground for error in its application for rehearing as
3
The majority of customers in ComEd’s service territory receive their electricity from ARES, not
ComEd.
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required, nor did it raise the issue in its main brief. The striking of a brief, in whole or in part, is
a harsh sanction and is proper only in cases where the alleged violations interfere with or
preclude our review. In re Detention of Powell, 217 Ill. 2d 123, 132 (2005). This consolidated
appeal involves numerous parties presenting, and responding to, arguments on complex issues
regarding the regulation of the electricity industry. The fact that this court ordered a specific
briefing schedule, pursuant to an agreement by the parties, underscores the unique nature of
this appeal. The briefs before us sufficiently set forth the issues, and we find that the alleged
violations identified by the Commission do not preclude meaningful review of the merits of
this case. Therefore, in the exercise of our discretion, we deny the Commission’s request to
strike and will address the arguments briefed in this appeal. Id.
¶ 14 On appeal, ComEd and ICEA/IIEC challenge the Commission’s order. Courts give
substantial deference to the Commission’s decisions for it is an administrative body with
expertise in the area of public utilities, and thus is qualified to interpret highly technical
evidence. United Cities Gas Co. v. Illinois Commerce Comm’n, 163 Ill. 2d 1, 12 (1994). The
Commission’s findings are considered prima facie reasonable and the burden of proof is on the
appellant on all issues raised in the appeal. 220 ILCS 5/10-201(d) (West 2012). In reviewing
the Commission’s orders, a court is limited to determining whether (1) the Commission acted
within its authority; (2) it made adequate findings to support its decision; (3) substantial
evidence supports its decision; and (4) any constitutional rights were violated. Commonwealth
Edison Co. v. Illinois Commerce Comm’n, 322 Ill. App. 3d 846, 849 (2001).
¶ 15 ComEd and ICEA/IIEC contend that the Commission’s approval of the procurement plan,
which compels ComEd to enter into a sourcing agreement with FutureGen 2.0 on behalf of
ARES, exceeded its statutory authority. The scope of the Commission’s authority is a question
of law, which we review de novo. City of Chicago v. Illinois Commerce Comm’n, 294 Ill. App.
3d 129, 134-35 (1997).
¶ 16 An administrative agency derives its authority to act solely from the statute creating the
agency. Resource Technology Corp. v. Commonwealth Edison Co., 343 Ill. App. 3d 36, 44
(2003). Therefore, the issue before this court is one involving statutory interpretation. In
interpreting a statute, a court’s primary objective is to ascertain and give effect to legislative
intent as indicated by the plain and ordinary meaning of the statutory language.
Commonwealth Edison Co. v. Illinois Commerce Comm’n, 328 Ill. App. 3d 937, 942 (2002).
However, courts appreciate an agency’s experience and expertise in a given area and therefore
will give substantial deference to its interpretation of an ambiguous statute it administers and
enforces. Illinois Consolidated Telephone Co. v. Illinois Commerce Comm’n, 95 Ill. 2d 142,
152-53 (1983). While not binding on the courts, an agency’s interpretations are an informed
source for ascertaining the legislature’s intent in enacting the statute. Id. at 153.
¶ 17 In construing a statute, courts must “ascertain and give effect to the overall intent of the
drafters.” Knolls Condominium Ass’n v. Harms, 202 Ill. 2d 450, 458 (2002). The Rate Relief
Law of the Public Utilities Act sought to restructure the electricity industry so as to create
competition and introduce customer choice in the supply of electricity. 220 ILCS
5/16-101A(b) (West 2012). Accordingly, section 16-111.5(a) of the Public Utilities Act sets
forth ComEd’s procurement of electricity for its customers. It states that an electric utility
“shall procure power and energy for its eligible retail customers in accordance with the
applicable provisions set forth in Section 1-75 of the Illinois Power Agency Act and this
Section.” 220 ILCS 5/16-111.5(a) (West 2012). “Those customers that are excluded from the
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definition of ‘eligible retail customers’ shall not be included in the procurement plan load
requirements ***.” Id. The Rate Relief Law further provides that utilities shall procure power
pursuant to procurement plans approved by the Commission. 220 ILCS 5/16-111.5(b) (West
2012).
¶ 18 Section 1-75 of the Illinois Power Agency Act grants the Illinois Power Agency authority
to “develop procurement plans and conduct competitive procurement processes in accordance
with the requirements of Section 16-111.5 of the Public Utilities Act for the eligible retail
customers of electric utilities.” 20 ILCS 3855/1-75(a) (West 2012). It also sets forth specific
provisions relating to the procurement plan requirements. Relevant to this appeal, section
1-75(d)(1) provides that such procurement plans “shall include electricity generated using
clean coal.” 20 ILCS 3855/1-75(d)(1) (West 2012). This section is referred to as the clean coal
portfolio standard.
¶ 19 Section 1-75(d)(5) provides that the Illinois Power Agency shall also “consider sourcing
agreements covering electricity generated by power plants” previously owned by Illinois
utilities “that have been or will be converted into clean coal facilities.” 20 ILCS
3855/1-75(d)(5) (West 2012). As part of the procurement planning process, owners of these
retrofitted facilities “may propose to the [Illinois Power] Agency sourcing agreements with
utilities and alternative retail electric suppliers required to comply with subsection (d) of this
Section and item (5) of subsection (d) of Section 16-115 of the Public Utilities Act.” Id.
¶ 20 The legislature included a corresponding clean coal electricity requirement in the
certification of ARES. Before servicing any customer in Illinois, an ARES “must obtain a
certificate of service authority from the Commission in accordance with this Section.” 220
ILCS 5/16-115(a) (West 2012). As part of the certification process, an ARES applicant must
source some of its electricity from clean coal facilities including retrofitted facilities. 220 ILCS
5/16-115(d)(5)(iii) (West 2012). This section provides:
“(d) The Commission shall grant the application for a certificate of service
authority if it makes the findings set forth in this subsection based on the verified
application and such other information as the applicant may submit:
***
(5) That the applicant will procure renewable energy resources in accordance
with Section 16-115D of this Act, and will source electricity from clean coal
facilities, as defined in Section 1-10 of the Illinois Power Agency Act, in amounts
at least equal to the percentages set forth in subsections (c) and (d) of Section 1-75
of the Illinois Power Agency Act. For purposes of this Section:
***
(iii) the required sourcing of electricity generated by clean coal facilities,
other than the initial clean coal facility, shall be limited to the amount of
electricity that can be procured or sourced at a price at or below the benchmarks
approved by the Commission each year in accordance with item (1) of
subsection (c) and items (1) and (5) of subsection (d) of Section 1-75 of the
Illinois Power Agency Act[.]” 220 ILCS 5/16-115(d)(5)(iii) (West 2012).
¶ 21 Appellants agree that these statutory provisions allow the Illinois Power Agency to
develop a procurement plan that compels ComEd to enter a sourcing agreement with a
retrofitted clean coal facility on behalf of ComEd’s eligible retail customers. However, they
argue for a strict reading of the statutory provisions. ComEd and ICEA/IIEC contend that the
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plain words of the procurement plan provisions of the Rate Relief Law and the Illinois Power
Agency Act refer only to ComEd’s eligible retail customers, which by definition excludes
ARES customers. Therefore, the IPA has no power to propose, and the Commission has no
power to approve, procurement plans requiring ComEd to procure electricity for ARES
customers. At most, the Commission can compel each ARES to enter into a sourcing
agreement with FutureGen 2.0, but it cannot compel ComEd to enter such agreements on
behalf of ARES.
¶ 22 We disagree. While the general statutory provisions relating to procurement plans for
utilities refer only to ComEd’s eligible retail customers, the specific provisions setting forth
ComEd’s required procurement of electricity from retrofitted clean coal sources make no
mention of eligible retail customers. We will not place undue emphasis on the statutory
construction rule that the inclusion of one term necessarily excludes other possible terms. See
Knolls, 202 Ill. 2d at 459. Instead, courts must construe statutes relating to the same subject
with reference to one another in order to give effect to all the provisions if possible. Henrich v.
Libertyville High School, 186 Ill. 2d 381, 392 (1998). If it appears a conflict exists between the
statutes, courts will try to construe the provisions harmoniously. United Citizens of Chicago &
Illinois v. Coalition to Let the People Decide in 1989, 125 Ill. 2d 332, 339 (1988). The intent of
the legislature is most significant. Id. at 338-39.
¶ 23 The legislature clearly found the use of electricity generated by clean coal facilities
important for both utilities and ARES. Both parties must utilize such electricity in their supply
to customers, and when the electricity comes from retrofitted clean coal facilities, procurement
by utilities and ARES must meet the same benchmarks set forth in section 1-75(d)(5). This
legislative intent is reflected in the clean coal portfolio standard which, by its terms, grants the
Illinois Power Agency and the Commission more authority in the procurement of electricity
from such sources. See Knolls, 202 Ill. 2d at 459 (where both a general statutory provision and
a specific statutory provision address the same subject, “the specific provision controls and
should be applied”).
¶ 24 The question is whether these provisions authorize the Illinois Power Agency to compel
ARES to enter into a sourcing agreement with FutureGen 2.0. ICEA/IIEC argue that the
statutes grant no such authority. The statutory procurement planning process, after all, is aimed
at the utilities and not at ARES. Also, the statutes do not expressly state that ARES can be
compelled to enter into a sourcing agreement with a retrofitted clean coal facility.
¶ 25 However, as part of the certification process ARES must source electricity from clean coal
facilities in amounts at least equal to those set forth in section 1-75(c)(1) and (d)(5) of the
Illinois Power Agency Act. Subsection (d)(5) provides that pursuant to the procurement
planning process, owners of qualified retrofitted clean coal facilities “may propose to the
[Illinois Power] Agency sourcing agreements with utilities and alternative retail electric
suppliers required to comply with” subsection (d) and section 16-115(d)(5) of the Public
Utilities Act. (Emphasis added.) 20 ILCS 3855/1-75(d)(5) (West 2012). The statute clearly
contemplates, at the very least, that the Illinois Power Agency can consider such sourcing
agreements with ARES in the procurement planning process. If the Illinois Power Agency can
consider such agreements, it is reasonable to presume that the Illinois Power Agency can
compel ARES to enter into sourcing agreements with such facilities as part of the procurement
planning process if doing so furthers statutory goals. The Commission contends that it has such
authority where compelling ARES to enter into sourcing agreements with retrofitted clean coal
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facilities furthers the goals of supporting the development of clean coal technologies, and
providing electricity at the lowest total cost. We acknowledge the Commission’s experience
and expertise in this area and give substantial deference to its interpretation of an ambiguous
statute it administers and enforces. Illinois Consolidated Telephone Co., 95 Ill. 2d at 152-53.
¶ 26 The Commission, however, adopted the alternate approach suggested by its staff. The
alternate approach requires only ComEd and Ameren to enter into sourcing agreements with
FutureGen 2.0 to purchase a pro rata share of the output based on the amount of electricity the
utilities deliver to its distribution customers (including ARES customers). ComEd and Ameren
then could recover the costs associated with procurement through a competitively neutral
charge assessed to all of their retail distribution customers (including ARES customers). The
Commission reasoned that this approach was a cost-effective alternative to the burdensome
process of administering and monitoring approximately 70 individual sourcing agreements.
¶ 27 We find that the Commission acted within its statutory authority. Pursuant to the Rate
Relief Law of the Public Utilities Act and the Illinois Power Agency Act, both the utilities and
ARES must source some of their electricity from clean coal or retrofitted facilities. As
discussed above, the Commission has the authority to compel both the utilities and ARES to
enter into sourcing agreements with retrofitted clean coal facilities as part of the procurement
planning process. Viewed within this framework, the Commission’s order approving a
procurement plan requiring ComEd to enter a sourcing agreement with FutureGen 2.0 on
behalf of ARES customers, while not explicitly condoned by statute, is within its “inherent
authority and wide latitude to adopt regulations or policies reasonably necessary to perform the
agency’s statutory dut[y].” (Internal quotation marks omitted.) Resource Technology Corp. v.
Commonwealth Edison Co., 343 Ill. App. 3d 36, 44 (2003).
¶ 28 ComEd argues, however, that even if the Commission has authority to approve the
alternate approach, it failed to support its finding with substantial evidence that the approach
was necessary to avoid administrative burdens on the parties. Upon review, courts consider the
Commission’s factual findings prima facie true and its orders prima facie reasonable. United
Cities Gas Co., 163 Ill. 2d at 11. Furthermore, the Commission need not provide findings on
each evidentiary claim; it is sufficient if the findings are specific enough for courts to review
the order. Commonwealth Edison Co. v. Illinois Commerce Comm’n, 2013 IL App (2d)
120334, ¶ 38. Substantial evidence is evidence that a reasoning mind finds sufficient to support
a finding. Central Illinois Public Service Co. v. Illinois Commerce Comm’n, 268 Ill. App. 3d
471, 479 (1994). Substantial evidence is more than a mere scintilla, but need not rise to the
level of a preponderance of the evidence. Commonwealth Edison Co., 2013 IL App (2d)
120334, ¶ 38. A party who argues that the Commission’s findings were not supported by
substantial evidence must show more than the mere fact that the evidence supports a different
conclusion. Instead, the party must show that the opposite conclusion was clearly evident.
Abbott Laboratories, Inc. v. Illinois Commerce Comm’n, 289 Ill. App. 3d 705, 714 (1997).
¶ 29 The parties agreed to proceed before the Commission without hearings and addressed any
issues by filing verified responses to comments and objections, and by filing replies. The
Commission’s staff contended that requiring the Illinois Power Agency to negotiate separate
sourcing agreements with an estimated 70 separate ARES, as well as with ComEd and
Ameren, would be burdensome. Specifically, the staff determined that the utilities would bear
the costs of providing FutureGen with billing records for each customer served by ARES,
ARES and FutureGen would bear costs associated with entering into and managing 70
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additional contracts, and the staff would need to devote extra time to review all of the annual
reports of compliance with the clean coal portfolio standard by each party and to ensure
compliance with the standard by each ARES. In support of its position, the staff presented
affidavits of the following staff members: Diana Hathhorn (accountant in the Commission’s
financial analysis division), Jennifer L. Hinman (economic analyst in the Commission’s policy
division), Rochelle Phipps (senior financial analyst in the financial analysis division), and Jim
Zolnierek (director of the policy division). The affidavits stated that the witnesses had personal
knowledge of the facts and matters discussed in the response and objections, and to the best of
their knowledge, information, and belief, the facts and nonlegal opinions expressed are
accurate and true.
¶ 30 ComEd, however, complains that the Commission did not support its findings with
substantial evidence because it “did not attempt to quantify or analyze in any systematic way
the burdens” on the parties, nor did it adequately consider the burdens placed on ComEd.
ComEd provides no authority for its position that the Commission must provide quantifiable
findings on each evidentiary claim. It is self-evident that the administration of several sourcing
agreements is overall less burdensome than the administration and monitoring of more than 70
agreements. Affidavits from Commission staff support that conclusion. We find the evidence
sufficient to support the Commission’s decision. Furthermore, ComEd does not show that the
opposite conclusion is clearly evident. It argues only that the Commission made no finding that
the administrative burdens avoided by the alternate approach outweigh the administrative
burdens the approach imposes on ComEd.
¶ 31 Pursuant to the Public Utilities Act, the Commission “should act to promote the
development of an effectively competitive electricity market that operates efficiently and is
equitable to all consumers.” 220 ILCS 5/16-101A(d) (West 2012). By adopting the alternate
approach, which presented a more streamlined administration of the clean coal portfolio
standard required of the utilities and ARES, the Commission properly exercised its authority to
formulate reasonable means of achieving legislative objectives. We find the Commission’s
order approving the alternate approach lawful and supported by substantial evidence.
¶ 32 ICEA/IIEC make an additional argument that the Commission has no authority to impose a
competitively neutral charge, that is not a delivery service charge, upon ARES customers.
ComEd disagrees, arguing that if the Commission has authority to compel utilities to procure
electricity from retrofitted clean coal facilities for ARES customers, ComEd should recover
the costs associated with that procurement. As discussed above, the Commission’s authority to
compel ComEd to enter into a sourcing agreement with FutureGen 2.0 derives from the Illinois
Power Agency’s authority to develop a procurement plan for utilities that comply with the
clean coal portfolio standard of the Illinois Power Agency Act. See 20 ILCS 3855/1-75(d)
(West 2012). Subsection (d)(6) states that “[c]osts incurred under this subsection (d) or
pursuant to a contract entered into under this subsection (d) shall be deemed prudently incurred
and reasonable in amount and the electric utility shall be entitled to full cost recovery pursuant
to the tariffs filed with the Commission.” 20 ILCS 3855/1-75(d)(6) (West 2012). Allowing
ComEd to recover these costs from ARES customers further promotes the legislature’s intent
to allocate the costs of supplying utility services “to those who cause the costs to be incurred.”
220 ILCS 5/1-102(d)(iii) (West 2012). Therefore, according to the plain terms of the statute,
ComEd is entitled to recover from ARES customers its costs of entering into the sourcing
agreement with FutureGen 2.0 on ARES’ behalf.
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¶ 33 ComEd and ICEA/IIEC also argue that the Commission’s order violates the dormant
commerce clause and is therefore unconstitutional. This negative component of the commerce
clause prohibits states from enacting regulatory measures designed to benefit in-state interests
at the expense of out-of-state competitors. New Energy Co. of Indiana v. Limbach, 486 U.S.
269, 273-74 (1988). In other words, “state statutes that clearly discriminate against interstate
commerce are routinely struck down [citations], unless the discrimination is demonstrably
justified by a valid factor unrelated to economic protectionism.” Id. at 274.
¶ 34 Appellants argue that the Commission’s order is unconstitutional because it requires
ComEd to enter into a sourcing agreement for clean-coal energy with FutureGen 2.0, an
Illinois facility, effectively excluding from consideration out-of-state clean electric sources.
They allege that the order also has a discriminatory effect because 70% of the rate cap imposed
on ComEd for clean coal electricity is devoted to FutureGen 2.0’s output, “leaving little room
for any [other competitors] to place their clean coal electricity on the Illinois market.” The
order thus prevents customers from obtaining less costly clean coal electricity procured from
out-of-state sources, in violation of the dormant commerce clause.
¶ 35 Before addressing these constitutional arguments on the merits, however, we first
determine whether ICEA/IIEC and ComEd have standing to challenge the constitutionality of
the statute. The doctrine of standing “ensure[s] that courts are deciding actual, specific
controversies, and not abstract questions or moot issues.” In re Marriage of Rodriguez, 131 Ill.
2d 273, 279-80 (1989). Generally, courts will not consider a constitutional challenge to a
statutory provision unless the party challenging it is directly affected by the provision. In re
M.I., 2013 IL 113776, ¶ 32. In other words, the party challenging the provision “must be
directly or materially affected by the attacked provision and must be in immediate danger of
sustaining a direct injury” from the statute’s enforcement. Id. Without evidence of facts
showing such injury, a party does not have standing to challenge the statutory provision on the
ground that it would be unconstitutional if applied to third parties in a hypothetical case. Id.
¶ 36 The Commission argues that ICEA/IIEC and ComEd have not shown “any evidence of
discrimination on any similarly situated clean coal facility.” On the issue of standing to
challenge this provision, however, the relevant question is whether ICEA/IIEC and/or ComEd
is “directly or materially affected by the attacked provision” and “in immediate danger of
sustaining a direct injury” from enforcement of the provision. See In re M.I., 2013 IL 113776,
¶ 32. In their briefs, both parties acknowledge that the injured parties directly affected by the
provision are out-of-state facilities that would compete against FutureGen 2.0 in the
production of clean coal electricity. See also Alliance for Clean Coal v. Miller, 44 F.3d 591,
594 (7th Cir. 1995) (for the purpose of standing to challenge a statute that subsidized the use of
Illinois coal over the use of western coal, the relevant injury is the inability “to compete on an
equal footing in interstate commerce”). Neither ICEA/IIEC or ComEd claim an interest in
producing clean coal electricity. Furthermore, neither party has shown a direct, material injury
that would result from enforcement of the provision. In fact, the Commission has not had the
opportunity to enforce the provision since the FutureGen 2.0 facility is not yet operable.
Therefore, we find that ICEA/IIEC and ComEd do not have standing to challenge the
constitutionality of the provision at this time and, accordingly, we decline to address the issue
here.
¶ 37 For the foregoing reasons, we affirm the order of the Commission.
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¶ 38 Affirmed.
¶ 39 JUSTICE PUCINSKI, dissenting.
¶ 40 With great respect, I dissent from the opinion of the majority.
¶ 41 This is a one-word/one-phrase case. Some one-word cases require the court to determine
what the legislature meant by a word that is undefined. Local Union Nos. 15, 51, & 702 v.
Illinois Commerce Comm’n, 331 Ill. App. 3d 607 (5th Dist. 2002), is a good example. There
the court, looking at the Public Utilities Act, had to decide whether the word “if” meant: “ ‘in
the event that’ ” or on the condition that. Id. at 614-15. Either use led to dramatically different
results. More recently, and more famously, the court has been required to decide what the
words “ ‘reside in’ ” mean in the Illinois Municipal Code and the Election Code. Maksym v.
Board of Election Commissioners, 242 Ill. 2d 303, 324 (2011). Some other one-word cases call
on us to decide what a missing word means. That is, whether we should insert it, as though it
was an oversight by the legislature to have left it out, or leave the language of the statute as
written, and consider that the legislature had a purpose in leaving the word out when they
passed it.
¶ 42 Here the statute in question is the Illinois Power Agency Act (20 ILCS 3855/1-75(d)(5)
(West 2012)):
“(5) [Sentence 1] Re-powering and retrofitting coal-fired power plants previously
owned by Illinois utilities to qualify as clean coal facilities. [Sentence 2] During the
2009 procurement planning process and thereafter, the Agency and the Commission
shall consider sourcing agreements covering electricity generated by power plants that
were previously owned by Illinois utilities and that have been or will be converted into
clean coal facilities, as defined by Section 1-10 of this Act. [Sentence 3] Pursuant to
such procurement planning process, the owners of such facilities may propose to the
Agency sourcing agreements with utilities and alternative retail electric suppliers
required to comply with subsection (d) of this Section and item (5) of subsection (d) of
Section 16-115 of the Public Utilities Act, covering electricity generated by such
facilities. [Sentence 4] In the case of sourcing agreements that are power purchase
agreements, the contract price for electricity sales shall be established on a cost of
service basis. [Sentence 5] In the case of sourcing agreements that are contracts for
differences, the contract price from which the reference price is subtracted shall be
established on a cost of service basis. [Sentence 6] The Agency and the Commission
may approve any such utility sourcing agreements that do not exceed cost-based
benchmarks developed by the procurement administrator, in consultation with the
Commission staff, Agency staff and the procurement monitor, subject to Commission
review and approval.” (Emphases added.)
¶ 43 Under the plain language of sentence 2 above it is clear that FutureGen 2.0 qualifies under
this section since it is a retrofitted coal fired power plant previously owned by an Illinois
utility, in this case Ameren. And, with all the federal money (about $1.5 billion) coming into
the state to develop FutureGen 2.0’s new technology, along with the dedicated property,
equipment and plant in Meredosia, Illinois, and the pipeline and storage/sequestration facility
for the carbon dioxide at the Mt. Sinai formation in Morgan County, it is clear that the state’s
policy makers have decided that FutureGen 2.0 qualifies–at least in theory–as a clean coal
facility as defined by section 1-10 of the Illinois Power Agency Act. Of course it is not up and
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running yet and will not be until 2017, and then the energy it produces will be more expensive
than other clean coal facility energy, because our legislature has also decided that “all coal
used by a clean coal facility shall have high volatile bituminous rank and greater than 1.7
pounds of sulfur per million btu content,” a restriction which favors Illinois coal. 20 ILCS
3855/1-10 (West 2012). Further, the record and statements at oral argument make it clear that
FutureGen 2.0 cannot even continue its development without the sourcing agreements at issue
in place because without a guaranteed revenue stream–these sourcing agreements–it cannot
attract future investment in the project.
¶ 44 Sentence 3 mandates the Illinois Power Agency and the Commission “shall” consider
sourcing agreements from such plants, and since FutureGen 2.0 is the only one like it, it is
pretty clear that the Illinois Power Agency and the Commission shall at least give sourcing
agreements with FutureGen 2.0 some consideration, but note the statute does not require that
the sourcing agreement be accepted, just that it shall be considered, the kind of waffling that
leaves all the discretion to the Illinois Power Agency and the Commission, and neatly takes the
legislature off the hook in case someone complains that just maybe this is a restraint of trade
issue.
¶ 45 Sentence 4 gives the owners of the facilities, in this case FutureGen 2.0, the opportunity to
propose sourcing agreements to the Illinois Power Agency for both utilities and ARES, but
only the opportunity to propose the agreements, not any guarantee that the sourcing
agreements must be accepted.
¶ 46 The rub comes at sentence 6, which says the “Agency and the Commission may approve
any such utility sourcing agreements” but totally ignores whether the Illinois Power Agency
and the Commission may also approve such sourcing agreements for ARES. (Emphasis
added.) 20 ILCS 3855/1-75(d)(5) (West 2012).
¶ 47 The FutureGen 2.0 and Commission briefs want us to insert the phrase: “and alternative
retail electric suppliers” to sentence 6, so that it would read: the “Agency and the Commission
may approve such utility and alternative retail electric suppliers sourcing agreements.”
(Emphasis added.)
¶ 48 Clearly the Illinois Power Agency staff thinks so too, or they would not have proposed the
FutureGen 2.0 sourcing agreements for ARES, but adding those words has a complicated
result in that it frustrates the reason the legislature passed another statute, the Rate Relief Law,
which at section 16-101A(d) calls on the Commission to “act to promote the development of an
effectively competitive electricity market that operates efficiently and is equitable to all
consumers” thereby committing this state to a system that is both equitable and competitive.
220 ILCS 5/16-101A(d) (West 2012).
¶ 49 While it is true that the plan approved by the Commission is equitable to all customers in
the sense that every customer of every electricity supplier in Illinois will share in the higher
cost of the FutureGen 2.0 electricity, so the burden is spread around, that is because only clean
coal facilities that burn the kind of coal we have in abundance in Illinois qualify as clean coal
suppliers to either utilities or ARES. Coincidentally, FutureGen 2.0 is the only one in existence
anywhere identified in the record that burns that kind of coal.
¶ 50 However, it is also true that the FutureGen 2.0 energy will be more expensive than other
clean coal facility electricity that is generated without the particular problems associated with
Illinois coal thus frustrating the competitive purpose of the Customer Choice Act.
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¶ 51 All of this is further complicated by the approval by the Commission of the Illinois Power
Agency’s staff recommendation to require ComEd and Ameren (not a party to this appeal) to
actually do the sourcing agreements on behalf of all ARES. ComEd reasonably wonders under
what authority the Commission requires it, a regulated utility, to enter into contracts on behalf
of private sector ARES, even though the Commission has neatly provided a way for ComEd to
recoup its costs of doing so.
¶ 52 The Commission says it can do this because it has the authority to do those things
necessary to implement its mandates. However, the Commission has not provided any statute
to this court demonstrating that there is a mandate, that it has the authority, or that the state has
a public policy to guarantee 100% of FutureGen 2.0’s output for the next 20 years in
noncompetitive contracts, let alone by ComEd for the benefit of ARES customers.
¶ 53 I would reverse the order of the Commission and let the legislature work to make sure that
all the interrelated, overlapping and conflicting laws and public policies are reconciled.
¶ 54 As an alternative, and as suggested by the Illinois Power Agency, the Commission should
at the very least engage in its rulemaking process to fully develop the set of rules that would
permit this level of regulatory agency sleight-of-hand.
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