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Characterizing Ameren Illinois’ smart grid plan as “vague and incomplete,” on Tuesday, May 29, the Illinois Commerce Commission (ICC) refused to approve it—specifically noting that the utility had failed to show that it would deliver a cost benefit to customers  and, therefore, had not complied with the requirements of Section 16-108 (c) of the state’s Public Utilities Act.

Adding insult to injury, the ICC stated that Ameren’s Smart Grid Advanced Metering Infrastructure Plan “bordered on not being a plan at all, but rather a more of a general statement of intention to install smart meters in some parts of its service territory.”

Throughout the process, the Chicago-based Citizens Utility Board had vigorously opposed the plan, stating, “CUB is cautiously optimistic that high-tech upgrades to the power grid could save consumers money and improve reliability in the long run, but it has to be done right.”

The Ask

Ameren Illinois is a regulated electric and gas delivery company, with a service territory spanning more than 45,000 miles of distribution lines and reaching 1.2 million electric customers and 840,000 natural gas customers in the central and southern regions of the state.

Late last year, Ameren pushed Illinois state legislators to pass the "Energy Infrastructure and Modernization Act," also known as "the smart grid bill." The legislation is designed to help Ameren pay for $625 million in upgrades to the power grid over a ten-year period—including:

·         Infrastructure Improvements, such as  replacing underground cables, reinforcing poles, and adding transformers(requiring an estimated investment of $258 million over the next decade);

·         Distribution automation, including the creation of a test network around Champaign, to enable researchers, startup companies and others to test smart grid technology ($169 million);

·         Advanced metering infrastructure, involving the installation of 780,000 upgraded meters by 2021 ($174 million);

·         Enhanced voltage control, to be achieved by installing voltage optimization equipment ($11 million);

·         Software and technology enhancements ($6 million); and

·          Training facilities, among them, a state-of-the-art training center in Belleville and renovations to the existing Decatur facility ($7 million).

The utility submitted a “blueprint” for its Modernization Action Plan (MAP) to the Illinois Commerce Commission during the first quarter of this year, on March 5, hailing the anticipated benefits. “We are beginning a[n] historic process that will enable Ameren Illinois to accelerate the process of modernizing its electric distribution system over the next ten years in order to meet the service expectations of our customers in the 21st century,” said Michael Moehn, Ameren Illinois senior vice president of Customer Operations.

Moehn noted, “Customers will benefit through improved service reliability and a greater potential for energy savings.” In addition, Ameren Illinois promised to create more than 450 additional jobs by 2015, the peak year of the ten-year initiative.

Through the passage of the smart grid bill, the utility said it would be able to fund the entire project using a performance-based "formula" method of setting electric delivery service rates, which would be similar to that already in use by the Federal Energy Regulatory Commission.  Ameren asked the Illinois Commerce Commission to finalize a formula that would give the utility yearly rate hikes for up to a decade—but proposed to cut electric rates by $19 million before the program got underway.

The Rejoinder

However, CUB filed expert testimony showing that the Ameren proposal “is filled with inflated spending—and Ameren customers should get a $43 million upfront rate cut.”  

The advocacy group accused the utility of padding its own budget at the expense of consumers: “For example,” the group stated, “Ameren wants customers to pay more than a $250,000 for corporate sponsorships, including spending on basketball tournaments, game tickets, and holiday street decorations.  The company also wants customers to foot the bill for $718,000 in ‘branding’ changes; and $158,000 in e-store expenses, related to an internal online store where Ameren employees can purchase corporate branded shirts, sweaters, and cups.”

What’s more, Miriam Horn, the New York City-based director of the Environmental Defense Fund's Smart Grid Initiative, testified on behalf of CUB that the plan lacked the detail to back up Ameren's claim that its AMI would give customers $275 million in benefits.

CUB recommended that the ICC reject the plan, or order Ameren to modify it through discussions with consumer advocates and other stakeholders in the process.

The Finding

In considering the Ameren submission, the ICC stated that, under Section 16-108 (c) of the state’s Public Utilities Act., a smart grid AMI deployment plan should comprise:

·         A vision statement consistent with developing a cost-beneficial Smart Grid;

·         A description of how the utility will evaluate and prioritize technology choices to create customer value;

·         A timetable for implementation and the locations of meter deployment;

·         Annual milestones and metrics for measuring the success of the AMI plan; and

·         A plan for consumer education.  

The Commission determined that the cost/benefit analysis presented by the company relied on incomplete or speculative calculations and that, regardless of those calculations, Ameren Illinois’ AMI plan could not be approved because it would have to rely on either including gas meters or a compliance period longer than the ten years—neither of which is allowed under the statute.

ICC Chairman Doug Scott said that “when and where the company meets its legal obligation, it provided scant information.  I am troubled by the inadequacy of the plan.”

Commissioner John Colgan noted that, while there are benefits to customers from a smart grid system, Ameren witnesses did not demonstrate any— leaving commissioners nothing to work with or modify. “I wish we had better information,” he said.

Commissioner Erin O’Connell-Diaz said the Ameren AMI proposal was “…very troubling to all of us. Here we see that they want to include gas customers, the time lines for implementation are outside those spelled out in the law, and they have missed the cost-beneficial standard.

“I think we all look forward to reviewing a plan that meets the legislative directives,” O’Connell-Diaz said. “That way, the entire state will be on the modernization track as envisioned by the General Assembly when it passed the new law.”

After receiving word of the finding, CUB released a statement: “Ameren's plan was a step in the right direction, but our expert testimony found that it lacked key details on how it would benefit customers. We look forward to working with Ameren to improve its plan.”

Ameren had no comment at press time.