Quinn's veto on electricity rates overturned

By Jamey Dunn

Lawmakers overturned a veto from Gov. Pat Quinn on a bill related to oversight of the so-called smart grid law.

In 2011, lawmakers passed a bill that gives Commonwealth Edison and Ameren automatic rate increases. In return, the utilities must make upgrades to the state’s electrical grid, including changes meant to make service more efficient for customers. Quinn vetoed the plan, but lawmakers overrode his veto.

The Illinois Commerce Commission, which is tasked with regulating the smart grid rollout, has since made a ruling about rates connected to the bill. Utilities didn’t like the ruling because they say it will cost them millions, and lawmakers say it was wrong and missed the intent of their law. So they approved Senate Bill 9, which supporters say clarifies the original language. It would also allow the utilities to collect rates they lost under the ICC ruling, plus interest, from customers retroactively.

Quinn vetoed SB 9. “I cannot support legislation that puts the profits of big electric utilities ahead of the families and businesses of Illinois,” he said in a prepared statement when he issued the veto. “A strong economy that creates jobs requires stable energy costs, but this bill sends Illinois in the wrong direction. We cannot allow big utilities to force automatic rate hikes on the people of Illinois by going around oversight authorities each and every time they do not get the decision they want.”

But legislators who pushed for an override say Quinn has it all wrong. “All this bill says is that the Commerce Commission ought to follow the law that we originally passed. I know when the governor vetoed this bill he did it very emphatically. Some of you may have seen that on the news, and he said that the General Assembly should not get in the way of the Commerce Commission,” said Skokie Democratic Rep. Lou Lang, sponsor of SB 9. “But I have a different story to tell. The story is that the Commerce Commission does not make public policy in this state. The Illinois General Assembly makes public policy, and they ought to follow the policy we set.”

The House approved the override today, 71-41, with five members voting present. The Senate passed the bill on Tuesday.

The utilities said that without the change, they would have to delay implementing the grid upgrades. But now that they bill is law, they say that work will return to normal. “We are starting immediately to accelerate smart meter installation and other work to improve reliability, provide new ways to save energy and money, and serve as a shot in the arm to our state’s economy,” Anne Pramaggiore, president and chief executive officer of ComEd, said in a prepared statement.

Opponents say the override shows that the utilities will come to lawmakers when they do not like the decisions made by regulators. “I think that SB 9 is very telling that they don’t want the commission to be anything more than a rubber stamp,” said Scott Musser, a lobbyist with the AARP. He said that it seems that lawmakers are not willing to back the ICC in such conflicts. “They have now made the commission their punching bag. They’ve beaten them up pretty successfully.”

Senate overrides Quinn’s veto on 'smart grid' costs

By Meredith Colias 

The Illinois Senate voted today to override Gov. Pat Quinn’s veto on Senate Bill 9, moving one step closer to reversing a decision by the Illinois Commerce Commission on the smart grid law.

The vote was 44 to 11, with 1 voting present. The House will also need to vote to override the governor’s veto for the measure to become law. The original bill passed in that chamber with a veto-proof majority.

The bill puts “profits of big utilities ahead of families and businesses,” Quinn spokesman Dave Blanchette said. “It really sends Illinois in the wrong direction.” The Illinois Commerce Commission is a regulatory body in charge of approving electric rate increases. It also is overseeing the smart grid implementation. Proponents of Senate Bill 9 have said that the Commerce Commission ruling misinterpreted the intent of the original bill.

In a statement, Senate President John Cullerton said the legislation was “understood to be clear and unambiguous.” If lawmakers override Quinn’s veto, it would roll back the ICC decision that Commonwealth Edison says would cost the electric utility $100 million annually. Ameren, the other large electric utility in the state, was ordered to reduce its rates by $50 million under the same ruling. But utility companies want the money back, plus interest from their customers.

Lawmakers voted to allow electric companies like ComEd and Ameren to raise their customers' rates to create a ‘smart grid’ electrical system that will do such things as deal with power outages more efficiently. In return, the companies are required to create jobs. But both utilities have said the ICC ruling slowed job creation. (For more on smart grid, see Illinois Issues July/August.)

Interest groups opposing the bill say it may give Commonwealth Edison and Ameren justification to raise electric rates without knowing whether the smart grid system will eventually save money for consumers. “We were not comfortable with the way ComEd was proposing to pay for those upgrades,” said Jim Chilsen, communications director for the Citizens Utility Board. “I think the focus now is to make sure that Illinois consumers don’t just get stuck with the bill.” Chilsen said ComEd was now obligated to “build a smart grid that actually benefits consumers.” Estimates for how much the smart grid implementation would actually increase electric bills have ranged from $.80 to a few dollars per customer.

AARP lobbyist Scott Musser said he is concerned the Illinois Commerce Commission could become a “rubber stamp” because of the way the utilities were able to circumvent the ruling of the commission. Musser said the episode set a poor example for those looking to the regulatory commission to protect consumers. Potentially, he said, “there’s almost no point for any group to intervene anymore in the process because it’s a done deal. We’ve opened up Pandora’s box.” He said utilities could come to the General Assembly and “get much better treatment than they would if you went through the regular process of the Commerce Commission.”

Utility rate increases headed to Quinn

By Jamey Dunn

The Illinois House sent a bill to Gov. Pat Quinn today that could mean rate hikes for customers of the state’s two largest utility companies.

Senate Bill 9 would essentially overrule a decision from the Illinois Commerce Commission, a regulatory body that approves rate increases and is overseeing the implementation of the smart grid plan, which became law in 2011. Lawmakers say the ICC misinterpreted the law. They say the resulting ruling could cost Commonwealth Edison an estimated $100 million annually and forced Ameren to reduce its rates by just under $50 million. The utilities want the money back, plus interest.

Under the smart grid legislation, which became law after legislators voted to override a veto from Gov. Pat Quinn, Ameren and Commonwealth Edison committed to investing more than $3 billion in the state’s electrical grid over 10 years. Under the law, ComEd is required to create 2,000 new jobs, and Ameren is required to create 450 jobs over the same period. ComEd has already created 700 new jobs under the plan. The utility has also installed 500 “smart switches” that help to prevent power outages and completed 500 projects to strengthen the grid against storm damage. But the utility companies claim that they cannot move ahead with the investments and further job growth unless the ICC ruling is reversed. “ComEd is proceeding with a portion of the core grid modernization programs, while postponing the deployment of the remainder and all smart meters until 2015. SB 9 would allow us to get the Smart Grid program — and the related job creation — back on track,” said Anne Pramaggiore, ComEd president and CEO.

Unions are supporting the bill, hoping to see the job growth continue. “On behalf of the 6,300 hard-working men and women of northern Illinois who make up IBEW Local 15, we enthusiastically support this legislation because it allows utilities to invest in their systems, grow the local economy and create thousands of new jobs — something our state needs badly,” said Dean Apple, president and business manager of IBEW Local 15. “If we don’t find a solution to deploy ComEd’s Smart Grid program as planned, our state will face a great setback. We believe SB 9 is that solution.”

The rate increases are expected to be small, likely less than $1 for most customers. However, opponents say it is unfair to charge customers more for power that they have already paid for. “They’re getting the retroactive rate hikes with interest,” said Scott Musser, associate state director for AARP. “People are going to be paying for service that they have already used.” He said that the move is part of a disturbing trend of utility companies coming to the legislature for relief when the ICC issues an unfavorable ruling. ComEd appealed the ICC ruling, and the ICC issued another ruling after that appeal. The utility is also in court with a lawsuit over the ruling. “They didn’t like what the commission did. The commission’s decision was based on the law.” Musser said, adding  that the court case should be allowed to play out. “The issue hasn’t been resolved through the appropriate legal channels. If they don’t like in the end what the court decided and they want to come back to and tweak the law, fine.”

The House approved the measure with little floor debate today, and no lawmakers spoke out against the bill. Musser said that illustrates how much sway the utility companies, which spend millions each year to lobby lawmakers, hold in the state. “In the House and the Senate, a lot of it’s the clout the utility companies have. I think it’s unfortunate nobody’s getting up on the floor and speaking about it. You’re seeing people voting against it, but you’re not getting an actual dialogue.”

A spokesperson for Gov. Pat Quinn said he plans to “thoroughly review the bill.” A representative of the governor filed as an opponent to the bill at a House committee hearing Wednesday.

For more on Smart grid see Illinois Issues July/August 2011. 

Utilities look to lawmakers to settle regulation dispute

By Jamey Dunn 

Utility customers across Illinois could see a spike in their bills if a measure that a Senate committee approved today becomes law.

Senate Bill 9 would essentially override a ruling from the Illinois Commerce Commission because lawmakers say that the commission misunderstood some of the details in the smart grid legislation, which became law in 2011 when the legislature overrode Gov. Pat Quinn's veto. “It was felt by many in the General Assembly that we had a clear piece of legislation, and yet the ICC misinterpreted it,” said Senate President John Cullerton, who sponsored the bill. “It’s just reenacting the bill that we intended to enact in the first place.” The ICC ruling could cost Commonwealth Edison an estimated $100 million annually, and Ameren was ordered to reduce its rates by just under $50 million. The utilities want the money back, plus interest. And they say that they would have to downsize their plans to invest in the state’s power infrastructure without it. “We find ourselves at a point where we need some clarification in order to continue on,” said Anne Pramaggiore, chief operating officer of ComEd.

Ameren and ComEd are committed to investing more than $3 billion in the grid over 10 years as part of the smart grid plan. Under the law, ComEd is required to create 2,000 new jobs, and Ameren is required to create 450 jobs over the same time period. Pramaggiore said that ComEd has already created 700 new jobs under the plan. The utility has also installed 500 “smart switches” that help to prevent power outages and completed 500 projects to strengthen the grid against storm damage. But she says the money that the ICC denied the utility would hurt its efforts to upgrade the power system. “Without it, we are stalled in these programs. We can’t proceed forward and continue on and ramp them up as we intended.”

Richard Mark, president and chief executive officer of Ameren, agreed. He said that Ameren has reduced its capital spending by $30 million and has put off hiring 100 additional workers.

‘‘In this instance, the commission went forward with some decisions that apparently were not what the General Assembly intended for that language to say. And today they are taking action to begin to correct that and to make modifications to get that implementation down to what they had originally intended,” said ICC Executive Director Jonathan Feipel. He said the ICC’s role is to interpret the law as it is sent to the commission. “The commission in deciding these cases went through literally thousands and thousands of pages of evidence and legal briefs, and interpreting very complex statute is what the commission does. So these commission orders were then absolutely based on record evidence and legal briefs and the state of the law at the time.”

Proponents of SB 9 say it will allow the utilities to make upgrades, which are intended to create savings for customers in the long run. But opponents say those savings are an unknown, and the immediate result would be higher bills with no real benefits for customers.

“The people on the line to pick up the cost of this drafting error is the Illinois consumers. What were looking at is both a retroactive rate increase... and it applies interest, as well,” said David Vinkler, associate state director for AARP Illinois. He said that if the bill is approved, the cost to consumers may not be that great, but he said it adds up when considered along with other rising utility costs, especially for seniors on fixed incomes. “It may not end up being a whole lot per bill. You may be talking $2 to $5 per bill. The problem is that there are people that $2 to $5 is too much. You’ve got this sort of death by a thousand cuts.” Vinkler said that the Ameren and ComEd’s appeal to lawmakers undermines the regulatory role of the ICC. “We have a Commerce Commission for a reason. They’re doing their job. [Ameren and ComEd] keep on running back the to General Assembly because it’s a better venue for them.”

For more on smart grid, see Illinois Issues July/August 2011.

2011 in review

By Jamey Dunn

It was a busy year at the Statehouse as Illinois legislators passed an income tax increase, a significant change to the state’s criminal justice system and reforms to two important state systems, among other bills.

Death penalty 
Perhaps the most pivotal change to come this year was the abolition of Illinois’ death penalty. Because of the state’s checkered past of false convictions, proponents argued that the state could not in good conscience reinstate the death penalty. More than a decade ago, George Ryan called for a moratorium on capital punishment after several death row inmates were exonerated. Ryan also commuted the sentences of 167 death-row inmates to life in prison before leaving office in 2003.

Opponents argued that law enforcement officers need the threat of the death penalty as a bargaining chip when negotiating plea deals or trying to get a confession. Others argued that state should have the option for the “worst of the worst” offenders. “Seven out of 10 of those people on death row when Gov. Ryan commuted their sentences didn’t contest their own guilt,” said Sen. William Haine, a Democrat and former prosecutor from Alton.

Former Democratic Rep. Susana Mendoza said she was conflicted about supporting the abolition because she supported the death penalty, but she said her decision to vote for the repeal came after she put aside her own emotions and acknowledged how flawed Illinois’ system has been. “We’ve come horrifyingly close to executing innocent men, and it could happen again,” Mendoza said.

After taking public feedback, Gov. Pat Quinn signed the bill and communicated the sentences of all the inmates on death row. The passage of the plan resulted in some savings for the state as well as the elimination of some positions in the office of the state appellate defender's office.

Tax increase 
Early this year lawmakers voted to increase the income tax rate for the first time since 1989. Legislators voted to make that increase permanent in 1993. This year's temporary income tax hike raised the personal rate from 3 percent to 5 percent and the corporate tax from 4.8 percent to 7 percent.

Supporters said that the increase was necessary to get the state’s fiscal house in order. “This mess is a mess that is the responsibility of all of us. … It’s too late. It’s time for us to be adults, face the crisis and figure out together a solution,” said Rep. Barbara Flynn Currie, a Chicago Democrat. However, Republicans argued that Democrats did not do enough to cut the budget. Rep. Roger Eddy, a Hutsonville Republican, said that GOP calls for spending cuts have been ignored for years. “The time to be adults was eight years ago, when we were expanding programs,” he said. The measure also includes spending caps for the next four fiscal years.

The limits would be $36.8 billion in Fiscal Year 2012, $37.5 billion in FY 2013, $38.3 billion in FY 2014 and $39.1 billion in FY 2015. If legislators spend more, the tax increases will be nullified.

Worker’s compensation
Worker’s compensation reform was a top priority for all four legislative leaders and the governor at the beginning of the spring 2011 session. Lawmakers approved and Quinn signed a reform package backed by several business groups, but detractors were skeptical about how much money employers would save from the plan. The negotiations over workers’ compensation reform were tense. and at one point the bill’s sponsor — Rep. John Bradley, a Marion Democrat — threatened to call a bill that would have dismantled the entire system.

The legislation that passed in the end reduces the fees paid to doctors for treating employees by 30 percent, creates new rules for the appointment of arbitrators, who decide the outcome of claims, and requires the use of American Medical Association standards when determining workers’ level of impairment from injuries.

Republican opponents to the plan said it asks for too large a sacrifice from the medical community in the form of reduced fees and may not result in substantial savings for businesses. Doug Whitley, president of the Illinois Chamber of Commerce, said lawmakers should not think their work is done just because they made tweaks to the system. “The political leadership has to appreciate, understand, recognize that workers’ compensation is not a static action. … Even if we make progress in Illinois, that doesn’t mean that other states didn’t do things similarly. There’s a keeping-up-with-the-Joneses aspect to this.”

Education reform 
Teachers unions, education reform groups, administrators, business leaders and parents' organizations worked together on an education reform package that was generally agreed upon by all groups. The plan changes the way teachers are granted tenure, hired, fired or laid off.

Under the new law, teachers have to receive positive evaluations for three years to receive tenure. Teachers who earn “excellent” reviews in each of their first three years will also earn tenure. Teachers with tenure who receive two unsatisfactory reviews within a seven-year period could have their teaching licenses reviewed by the state superintendent and be required to complete professional development geared toward improving their performance or face having their licenses revoked. Layoffs will no longer be decided on a “last-in-first-out” basis but instead will be determined by qualifications and job performance. Seniority will only be used as a “tie-breaker.” Administrators will be free to hire any candidate for new positions instead of giving preference to teachers transferring within the district. The measure also makes it easier for districts to fire underperforming teachers.

“With this bill, we’re going to ensure that the better teachers stay and the lesser teachers go,” said Palatine Republican Sen. Matt Murphy. Half of teachers’ evaluations will be based on student performance under the new system that starts to kick in at different times for different schools based on size and student performance level. Most schools must switch to the new evaluations by 2016.

Rep. Monique Davis, a Chicago Democrat who cast the lone vote against the legislation in the House, said aspects of the bill that apply only to Chicago Public Schools, such as a greater threshold for going on strike that requires the support of a supermajority of voting union members, were discriminatory. “The intentions are good, but the results will not change a thing. I’m not going to be a union buster,” the former teacher and administrator said during floor debate. Unions outside of Chicago will need the support of half of union members to strike. The measure lengthens negotiations required before a strike and would force both sides to release their demands to the public if an impasse is reached.

Smart grid 
The two largest utility companies in the state will be able to increase customers' rates to make improvements to the state's electric grid and add so-called smart grid technologies. The plan allows Ameren and Commonwealth Edison to increase customers’ rates 2.5 percent annually to pay for improvements to the state’s electric grid ranging from basic repairs to poles and lines to cutting-edge technology that could allow utilities to prevent outages and customers to track their energy usage.

The companies are required to invest a total of $3.2 billion in the grid over 10 years. The measure also requires ComEd to create 2,000 new jobs through the plan and Ameren to create 450 jobs. If they do not meet those goals, they will be subject to fines.

Doug Scott, chairman of the Illinois Commerce Commission, which signs off on rate increases and will oversee the utilities under the plan, said the bill strips away too much regulation. “In the normal circumstance, our review serves a check to companies to spend money only on the items they are allowed by law. … We think that this bill significantly weakens that check and provides no real incentive for the companies to control their costs.”

Sponsors of the plan say the upgrades will bring economic development and allow the state’s aging grid to keep pace with modern energy demands. “Sometimes we’ve got to do what we’ve go to do,” said East Moline Democratic Sen. Mike Jacobs, who sponsored the plan. “If we’re going to have success in the 21st century, we need to have a 21st century grid.”

Gov. Pat Quinn adamantly opposed the legislation and vetoed it once it reached his desk. But the General Assembly overrode his veto in the fall session. 

Tax breaks 
After several businesses threatened to leave the Illinois, lawmakers voted to give tax breaks to some to try and stem job loss in the state. The package will give about $200 million in tax breaks to the CME group, and Sears. The plan contains other breaks meant to help businesses throughout the state — such as an extension of the research and envelopment tax credit and a reinstatement of the net operating loss provision in 2012 for losses up to $100,000. The package also offers tax breaks for individuals in the form of increasing the Earned Income Tax Credit from 5 percent of the federal credit to 10 percent over two years and linking the standard exemption to federal cost of living increases. In total, it is projected to cost about $300 million next fiscal year and $350 million by fiscal year 2014.

Up next 
The passage of the tax breaks passage spurred a call from both sides of the aisle in the House to roll back corporate income tax rates. “I think people at the time of the increase of the corporate tax realized that that was not the route to go,” House Minority Leader Tom Cross said. “Business after business potentially will be coming to the state and looking for relief, and doing it on a per-company basis is not the way to go.”

Expect the issue to get plenty of lip service, and maybe even some action, next year.
Other noteworthy pieces of legislation failed to gain in 2011 the support needed to become laws. However, the sponsors of many such bills say they will fight on. Rep. Lou Lang, a Skokie Democrat, will likely spend some time in 2012 trying to hammer out a plan gaming expansion that can pass in both chambers and gain Quinn’s signature. A plan he sponsored passed in 2011, but Quinn said it was too large of an expansion and refused to sign a bill that would allow slot machines at horse racing tracks. Without the slots for the tracks, Lang could not find the support to pass a scaled back gaming package during the fall veto session. Lang has also vowed to continue to push a bill that would allow the chronically ill access to medical marijuana. He has called various versions of such a proposal but has yet to find enough support to pass the plan in the House.

House Republican Leader Tom Cross has been unable to find the support to pass his plan to reduce pension benefits for current state employees, but he has been able to pass bills to try and reign in what many saw as abuses of the system. With a pension payment that is projected to be $5.3 billion — about $1 billion more than last fiscal year — expect to hear more about potential changes to benefits.

Illinois is the last state to allow the concealed carry of firearms, and a sponsor of a bill that would allow it says it “only a matter of time” before it happens here. The legislation failed in the House this year, but sponsor Brandon Phelps is working to drum up the votes and says he is only “five or six votes away” from House approval. “Forty other states are not wrong, I believe, and it’s not the Wild West anywhere else,” said Phelps, a Harrisburg Democrat. There are pending court cases, as well as federal legislation, that could also potentially open up the state to concealed carry.

Madigan wants lawmakers involved in union contract negotiations

By Jamey Dunn

House Speaker Michael Madigan today unveiled a plan that he says would allow lawmakers to play a role in bargaining with unions for state employee contracts.

“Traditionally, prior governors have negotiated with [the American Federation of State, County and Municipal Employees] and the other unions without regard to the legislature. Traditionally, the governor would negotiate. The governor would come into agreement with the unions, and then subsequently, the legislature would be told this is the cost of the contract we just negotiated,” Madigan said. “They’d send the bill to us, and we’d be told pay the bill.”

Madigan seeks to change that. He introduced a resolution today that he said would “interject the legislature into collective bargaining.” If approved, the measure would allow the legislature to vote on a cap for wage increases when union contracts are up in 2012. It would also remove staffing levels from bargaining contracts. Madigan said this would prevent governors from making a deal like Quinn’s promise to AFSCME last year that there would be no layoffs until 2012. “Once there’s a contract in place that states a rate of pay, why the only venue for adjustment in a budget year is the size of the workforce. Gov. Quinn gave that away. I don’t think he should do that.”

Quinn has since gone back on that deal by announcing about 1,900 layoffs as part of a state facility closure plan. He also recently put a freeze on pay raises included in union contracts. Quinn said he was forced to do both because the legislature approved a budget that does not include enough money to fund essential government services through the end of the fiscal year. The unions and Quinn are fighting over the raises in court, and hearings on the proposed facility closures are currently under way throughout the state.

House members publicly grumbled about Quinn’s deal with AFSCME during the spring legislative session as they tried to craft a budget without spending more than their chamber’s admittedly conservative revenue estimates. Madigan tapped the same committee that produced the revenue estimate to come up with a percentage to use as the wage increases cap. “We have a choice. We can stand on the sidelines and let those people go off and do what they do and send us a bill. Or we can interject ourselves now and be present through the negotiations so that our position is known and understood,” Madigan said.

He added: “What we’re talking about is about a two-and-a-half-year obligation on spending. Well, I think the legislature has a rightful place in this bargaining,”

House members said they were unsure whether the resolution would have any binding effect on Quinn’s actions. However, they said it would send a message to the governor about how such agreements limit their budgeting power, especially when faced with revenues lowered by the recent economic crisis.

“The governor created his own problem by not only the raises but by guaranteeing no layoffs. I mean how do you do that combination in this kind of an environment?” asked Hutsonville Republican Rep. Roger Eddy. He said the resolution sends “the message to the governor that we can’t have that type of budgeting take place. We’re the appropriating agencies. We’re the arm of appropriation in the Constitution.”

Quinn has yet to take a position on the plan. “It’s an interesting suggestion. There will be many challenges confronting the state as we begin collective bargaining negotiations,” said a prepared statement from Quinn’s office. A call to AFSCME for comment was not returned.

Meanwhile, the Illinois Senate approved a bill today that is the first step to a potential override of Gov. Pat Quinn’s veto of a plan to upgrade the state’s electric grid.

Lawmakers approved a so-called trailer bill that would increase requirements on Commonwealth Edison and Ameren. Supporters of plan that would allow the companies to raise customers' rates in exchange for more than $3 billion in grid investments over the next 10 years hope that the changes will bring enough votes onto the original bill to override Quinn’s veto.

The utilities would be able to increase rates by up to 2.5 percent annually. Quinn said today the plan allows the companies to do “an end run” around the Illinois Commerce Commission, which rules on rate hikes. Quinn called the trailer bill — which among other changes, would require utilities to spend more money on grid upgrades focused on reliability and spend millions more annually on rate relief for low-income customers — “a hasty effort to try and paper over this bad bill.”

Oak Park Democratic Sen. Don Harmon, who sponsored the follow-up bill that passed today, said that the plan would not result in the automatic rate increases opponents have described. “You have to remember, it’s not net revenue to the utility. They are recovering costs that they have already incurred.” Harmon said any rate increases would be capped and would likely result in about $3 more per month for average customers.

However, he conceded that voting on a bill that would result in rate increases may be unpopular with voters. “This is one of those things that is difficult to explain to folks back home, and I understand that. … We all want reliable power delivered to our homes and businesses. The only way that’s going to happen is if the ratepayers pay for it.”

Lebanon Republican Rep. Kyle McCarter said that instead of raising rates on all customers, the legislature should set a price for smart meters — an important component of Smart Grid that allows customers to potentially save money by monitoring their power usage — and utilities could then give interested customers a chance to buy them. “Other states have chosen other ways to pay for this,” McCarter said. “If this smart grid is wonderful like we’re being told it is, surely everyone will ask to have a smart meter and be part of the smart grid.”

Lawmakers look for ways around Quinn's opposition

By Jamey Dunn

Tweaks to two major legislative packages emerged the day before the fall veto legislative session is scheduled to begin.

Waukegan Democratic Sen. Terry Link said he plans to bring a bill that contains Gov. Pat Quinn’s suggested changes for the gaming expansion up for a floor vote in the Senate this week. Quinn said last week that he supported five new casinos in the state, including one owned by the city of Chicago, but opposed the slot machines at horse racing tracks that would be allowed under the gaming plan lawmakers approved in the spring session.

Last week, Link told Illinois Issues that legislation based on Quinn’s demands could not find the support needed to pass in the Senate. However, Link said today: “I will carry it with sincerity. I will tell all the facts, figures and everything that the governor has in it. I will … make it as a positive endeavor.” He said if it does not pass, he plans to sponsor a trailer bill in the last week of veto session that he hopes will be a “compromise” that the governor can accept. Quinn has been unable to veto the gaming bill because a parliamentary move was used to hold it from going to his desk. But he said last week that given the opportunity, he would use his veto pen on Senate Bill 744. Link would not share any details today about a potential trailer bill.

Gov. Pat Quinn has also shot down a plan that sponsors say would help the state’s two biggest utility companies update Illinois’ electrical grid. Quinn was a vocal opponent of Senate Bill 1652 when lawmakers passed it last spring. He followed through on his vow to veto the bill and has been urging  residents to call their lawmakers and ask them to vote against a potential override of his veto.

The measure would allow the companies to increase consumer rates in exchange for a $3.2 billion investment in the grid over 10 years.

Supporters worked to craft a follow-up bill that they say would tighten restrictions on Ameren and Commonwealth Edison. They hope it will be enough top drum up the supermajority needed to undo Quinn’s veto. A Senate committee approved the changes today.

“I commended the governor for vetoing the bill, having voted against it. There were clearly some defects in Senate Bill 1652 that caused concern for myself and other members of the General Assembly who voted ‘no,’” Oak Park Democratic Sen. Don Harmon said. Harmon is the sponsor of House Bill 3036, the so-called trailer bill that asks more of utilities and would only go into effect if lawmakers vote to override the governor’s veto. Harmon said the plan “would make that underlying bill, in my opinion, much better.”

House Bill 3036 would increase reliability standards and require the utilities to spend more of their investment on traditional infrastructure, such as buried power lines, to make transmission more reliable. The plan calls for spending on so-called smart grid technologies — which allow utilities to better monitor lines, outages and transmission in real time — as well as basic costs like power lines and poles.

The original legislation requires ComEd to create 2,000 jobs under the plan and Ameren to create 450 jobs. Harmon said his bill would crack down on how those jobs are counted to avoid the potential double counting of a single job. It would also increase the penalty for not meeting those hiring goals from $3,000 per job to $6,000.

The bill calls for both companies to spend an annual combined total of $60 million a year on rate relief programs for low-income customers.

The legislation would also lower the return on equity the companies would be allowed to earn from 10.4 percent to about 9.7 percent. Harmon said in years two through 10 of the plan, the return would be capped at 8 percent to 9 percent. Consumer advocates said the utilities should not be able to make more than 10 percent returns on their investments, since they would likely be backed with rate increases.

Despite such changes, major consumer advocacy groups, along with Quinn and Attorney General Lisa Madigan, remain opposed to the plan.

“We don’t think ... it addresses the fundamental problems,” said Scott Musser, associate state director of AARP Illinois. “I think we need to start from square one on this and go a new direction and get everyone at the table. One of the fundamental problems all along is there hasn’t been substantial negotiations.”

Madigan blasted the proposed changes to the plan. “Just like they tried to muscle this legislation through the spring session, ComEd and Ameren are at it again. On the eve of veto session, the utility companies gave the public just 59 minutes to review their smart grid “trailer bill” before taking it to the Senate for a vote. If ComEd and Ameren’s proposal were actually a “smart” deal for consumers, it would hold its own rather than be rushed through the process without public input. Instead, ComEd and Ameren have produced a “Trojan Horse” deal that’s designed to distract us from what this legislation really does: guarantee the utilities’ profits, mandate automatic, annual rate hikes and eviscerate independent oversight,” the attorney general said in a written statement.


For more on what to expect during veto session, see Illinois Issues' roundup of the big issues with links to background piec

Veto session preview

By Jamey Dunn

Illinois lawmakers will likely have a busy veto session as they consider two industry changing plans opposed by Gov. Pat Quinn, components of a budget that Quinn says is forcing him to close several state facilities and other potentially hot button issues.

“The agenda is pretty full. It’s really kind of the fall legislative sessions these days rather than a veto session,” said Kent Redfield, an emeritus political science professor at the University of Illinois Springfield. Several committee hearings are scheduled for Monday, and the session will runs Tuesday through Thursday. It will resume November 8, with an adjournment date scheduled for November 10.

Gaming
Gov. Pat Quinn laid out what he would like to see changed in the gaming expansion package that lawmakers passed at the end of the spring legislative session. Senate President John Cullerton still has a procedural hold on Senate Bill 744, so Quinn has been unable to do anything but present his list of demands. Skokie Democratic Rep. Lou Lang and Waukegan Democratic Sen. Terry Link, the sponsors of the bill, have been pushing Quinn all summer for specifics on what he wants. When he finally gave them this week, the sponsors seemed less than thrilled. Lang and Link agree that if they drafted Quinn’s plan into a bill, they couldn’t scrape up the votes to pass it.

The governor wants to remove a provision that would allow slot machines at horse racing tracks. He does  support the addition of five new casinos, including one owned by the city of Chicago. He also wants to add a measure to address legalization of video poker in some bars and restaurants across the state. When video poker was approved as part of the funding plan for the capital construction bill, Quinn supported allowing local governments to opt out of having it in their area. Now, he wants local officials to vote to opt it if they want video poker. So far, the Illinois Gaming Board has not issued any video poker licenses, and the plan has not generated any revenue for the state. Quinn also wants to take tax breaks out of the bill, which are a sweetener for existing casinos. His plan also calls for a ban on campaign contributions from those holding gaming licenses or managing a casino.

Supporters of the gaming expansion say they are working on a trailer bill with changes that they hope will appease Quinn and say they plan to roll it out in a committee hearing early next week. They say they cannot pass legislation that does not include slots at the racetracks. Quinn said he will not sign a bill that does, and he has also vowed to veto SB 744 if it is sent to him — making the plan to fix the situation with a trailer bill that would tack changes onto the original legislation a shaky prospect. “Somebody may figure out how to pull a rabbit out of a hat that makes Quinn, and [Chicago Mayor Rahm] Emanuel, and downstate [lawmakers] and the horse racing people happy,” said Redfield. “But it would be a neat trick.”

For more on video poker and the challenges it has faced getting off the ground, see Illinois Issues April 2010.

Smart grid
Sponsors of a Senate Bill 1652, which would allow the state’s two biggest utility companies to increase customers’ rates in exchange for investments in the state's electric grid have said they will  try to drum up enough votes to override Quinn’s veto. Supporters say smart grid technology will create jobs, make service more reliable and help some customers save money by allowing them to monitor their usage.

Opposition to the bill includes AARP; the Citizens Utility Board, which is a consumer advocacy group started by Quinn; and Attorney General Lisa Madigan. Quinn has appealed to the public and even set up a website encouraging people to call their lawmakers and tell them to vote against the bill. Quinn and others say it was written by Ameren and Commonwealth Edison lobbyists as a way to lock in the utilities’ profits. “It seems to me that the governor has a right to set up a media campaign and hire lobbyists and do everything that he’s doing,” said Sen. Mike Jacobs, an East Moline Democrat and sponsor of SB1652. “But at the end of the day, this comes down to the question, do you want a smart grid or don’t you?”

Lawmakers backing the legislation say they are working on a trailer bill to tighten up customer service and reliability requirements in the hopes of getting some fence sitters’ votes to keep the plan alive. Expect heavy lobbying and public relations efforts on both sides of the issue.

For more on smart grid technology and its potential public policy implications, see Illinois Issues July/August 2011.

Budget
Hearings are under way throughout the state about the potential closure of seven state facilities. Quinn announced last month his plans to close the institutions and lay off more than 1,900 state employees. The governor said the budget lawmakers approved in the spring would not fully find state operations, so the facilities must be shuttered to shift money to the core services of the state. Quinn is calling on lawmakers to approve his budget vetoes, many of which, such as a cut to school transportation budget, are generally unpopular with legislators. Quinn is also reportedly working up a list of budget tweaks and cuts he would like to see restored.

Some school officials are looking to lawmakers to find a way for them to get paid. Quinn cut money for the salaries of regional superintendents. The majority of them stayed on the job and have not seen a paycheck since June. Quinn said that local governments should pay them and has a bill in the works to shift the cost. The Illinois Municipal League opposes dipping into local funds. Lawmakers could also vote to override the governor’s veto and restore the money to the state budget. Regional superintendents say they do not prefer one plan over they other; they just want to get paid.

Legislative scholarships
Quinn used his veto pen to try to end a program that has been a source of controversy and scandal for years, but it is unlikely that his changes will ever see the light of day.

Quinn took a bill that would have barred lawmakers from giving scholarships to family members and rewrote it to end the program altogether. He has the support of the bill’s sponsors and has been publicly calling on lawmakers to end the program. However, House Speaker Michael Madigan said Quinn overstepped his constitutional authority, and it is unlikely that the speaker will call the veto for a vote. If no vote is taken, Quinn’s changes and the underlying legislation would die.

Lang, a longtime member of House Democratic leadership, said Madigan has historically been opposed to allowing governors to use their veto pens to make broad changes in the legislation that lands on their desks. “Even if he likes the changes, he has not allowed those bills to be called to a vote because they violate the Constitution.”

Other critical pieces of legislation may come up for a vote in the short time that lawmakers are scheduled to be in session. Legislators may consider a bill that would create the state’s insurance exchange, an online marketplace that is meant to drive down the cost of insurance by encouraging competition. Such exchanges are a key component of the new federal health care reform law. Legislators may also consider a controversial bill that would bring the state in line with a federal plan regarding the punishment and tracking of sex offenders. For more on those topics, see Illinois Issues September 2011 and Illinois Issues blog.  Pension reform working groups that include Madigan and House Minority Leader Tom Cross have been meeting throughout the summer and could potentially produce a bill. For more on the two sides of the pension debate, see this month's Illinois Issues. Cross backed a bill that would diminish benefits for employees hired before other changes to benefits went into effect in January, but it lacked the needed support in the House. “Most people I talk to would be really surprised if [Cross’ plan] moved in the House [during veto session.] Other than if the speaker really just got tired of doing all this and puts it out there so it won’t pass,” Redfield said.

He added: “There are a lot of very heavyweight things to be dealing with. And there’s the context of the budget. … They may not ultimately do anything, but they do have a lot on their plate.”

For more on veto session, see this month’s Illinois Issues.

Quinn looks to public to fight smart grid plan

By Jamey Dunn

Gov. Pat Quinn is gearing up for a battle with legislators over smart grid legislation.

Quinn toured the state today pushing back against backers of Senate Bill 1652, which he vetoed last month. Supporters say the measure would help the state’s two largest utilities upgrade infrastructure and add new technologies to make power delivery more reliable. Quinn — who is joined in his opposition by Attorney General Lisa Madigan, AARP, the Illinois Commerce Commission, which oversees utilities and signs off on rate increases, and others — says the legislation would lock in “automatic rate hikes” for consumers and loosen oversight of utility companies. “We’re really on the eve of one of the biggest consumer battles in Illinois in the last generation really,” Quinn said today at a Peoria event. “It’s very very important, I think, that consumers in Illinois know that this is a bill that will impact their utility rates now and for years and years to come.”

Quinn said today he is hoping to spearhead a “statewide movement of citizens and businesses” opposing the bill. He rolled out a new website that prompts visitors to contact their state representatives about the legislation. “[Commonwealth Edison and Ameren] have a lot of campaign money. They have a lot of lobbyists. As a matter of fact, I think they may have hired a lobbyist for each member of the General Assembly. … They’re putting every ounce of their power and money behind this bill. They want to override my veto. I believe the people of Illinois are on our side,” Quinn said at a Decatur news conference. AARP has joined Quinn in his opposition tour. “This bill would give many of our members increased utility costs. A lot of our members live on fixed incomes. And when their expenses go up, their standard of living goes down. It’s a balancing act,” said Dean Clough, a member of AARP’s Illinois Executive Council.

The governor said the potential rate increases would be bad for business in Illinois. “One of the very best and most important things that businesses look at is what your utility rates are. And it’s not good at all for the people of Illinois and their jobs to have a permanent raise in utility rates. That is something that’s going to hurt the jobs climate in our state of Illinois.” At least one Illinois business agrees with this assessment. “[Archer Daniels Midland Co.], like other employers in Illinois, relies on competitively priced, reliably delivered electricity in order to operate,” said Greg Webb, a spokesperson for Decatur-based ADM. “Unfortunately, this bill does neither of those things in our view. Its reliability provisions are not strong enough. And its rate provisions could very well lead to Illinois businesses paying higher rates than neighboring states without commensurate benefits.”

But the bill’s sponsors maintain that an upgraded grid — which could help consumers save energy and make utilities more responsive to outages — would be a business draw. “It seems to me that the governor has a right to set up a media campaign and hire lobbyists and do everything that he’s doing,” said Sen. Mike Jacobs, an East Moline Democrat.“But at the end of the day, this comes down to the question, do you want a smart grid or don’t you?”

Jacobs said that smart grid technologies, such as allowing consumers the option to track real-time power prices and lower their usage when rates are highest, would result in savings on many power bills. He added that customers would value getting their lights back on more quickly after an outage with the help of smart grid technology that notifies utility companies when there is a problem with power transmission. “When the power goes out, right now nobody even knows. How can that be good for consumers?” Jacobs said the use of more technology in Illinoisans’ everyday lives has created the demand for grid upgrades. “You can’t have all these brand new iPads and not provide a way to power them,” he said. “Yes, things cost money. You can’t have something for nothing. Those days are over.”

Jacobs is confident that the three-fifths majority needed to override Quinn’s veto will materialize by the legislature's veto session, which is scheduled to start Oct. 25. But he said things could change. “Nothing’s ever a lock in government. People have a right to change their minds.” If Quinn’s efforts work to urge large numbers of voters to call their legislators in protest, he may be able to scare some votes off of a potential override. However, his repeated use of the bully pulpit on this issue, capped off with a campaign-like tour of the state, may alienate some lawmakers from his cause.

For more on smart grid technologies and how they might affect public policy in the state, see the July/August 2011 Illinois Issues. 

Quinn vetoes smart grid bill

By Jamey Dunn

Gov. Pat Quinn today followed though on his vow to veto a bill that he says asks too much of energy consumers in the name of progress.

Quinn shot down Senate Bill 1652, legislation that would allow the state’s two largest utility companies, Commonwealth Edison and Ameren, to increase customers’ rates by up to 2.5 percent annually as part of a plan to upgrade the state’s electric grid. The companies would be required to invest $3.2 billion in the grid over 10 years by making basic upgrades, as well as adding so-called smart technologies that would allow consumers to track their energy usage and possibly save money. The measure would also require ComEd to create 2,000 new jobs through the plan and Ameren to create 450 jobs.

Quinn, Attorney General Lisa Madigan, consumer advocates AARP and others have vocally opposed the legislation since its inception. “This bill would have been devastating for Illinois consumers,” Madigan said at a Chicago news conference today. “It’s hardly something that we should have shoved down our throats and taken out of our wallets here in the state of Illinois.”

They say the bill would allow companies to defer all the risk of new investments to consumers by ensuring that utilities see all-but-guaranteed profit increases. Madigan said the bill would “gut” the state regulatory system that requires utilities to make their cases for rate increases to the Illinois Commerce Commission. Doug Scott, director if the ICC, said the legislation allows utilities to charge customers for much more than grid upgrades, including lawyers' fees and charitable contributions. “This isn’t just about smart grid, and it isn’t just about infrastructure,” Scott said.

Sen. Mike Jacobs, a sponsor of the bill, said Madigan and others are grandstanding and blocking a bill that would bring economic growth and new jobs to the state, as well as improved service for utility customers. “When you move away from the politics, where everybody wants to make their two cents on their press releases, and look at the bill, it’s an upgrade,” said Jacobs, an East Moline Democrat.

Supporters and opponents of the legislation both point to summer storms that led to mass blackouts in the northern Chicago suburbs as a way to make their case.

“In particular, this bill grants unprecedented advantages to Illinois utilities that have a less than stellar record for providing reliable service. Recent storms in the Chicago area exposed significant service shortcomings, and more than 1.5 million people suffered through lengthy and widespread outages. Local businesses and consumers who depend on regular, predictable electricity suffered enormously. These interruptions impose a profound hardship on the state’s economy and are simply unacceptable,” Quinn wrote in the message that accompanied his veto. “More troubling is that while customers suffer service interruptions and higher rates, these same utilities have been in Springfield advocating for a bill that erodes meaningful consumer protections. These utilities have been trying to dramatically change the rules to guarantee annual rate increases, while eliminating accountability for, literally, leaving people in the dark.’

But Jacobs said that smart-grid technologies could have prevented some of the blackouts and helped to turn the lights back on more quickly for those who lost power.“You can’t buy champagne on a beer budget. … The fact is that Illinois is a leader in energy, and it’s time for the governor to lead,” Jacobs said. He said it is “disingenuous” of Quinn to support energy conservation and earth-friendly policy but oppose SB 1652, which could allow for more power generated by renewable sources.

Some environmental advocates did jump on in support of the plan after a rewrite emerged at the end of the spring legislative session. Jack Darin, director of the Illinois chapter of the Sierra Club, said the bill that legislators passed would allow more companies, such as big box stores, to generate their own power through wind, solar and other means. “We could see every large rooftop in the state potentially being a clean renewable energy power plant, whether it’s a big box store, parking garage or office space,” Darin said. He said his organization backs the bill strictly on its environmental merits, but he said lawmakers should also recognize the concerns of consumer advocates.

Quinn is pushing his own piece of legislation that he says would help to improve the grid while protecting consumers. However, Jacobs and the House sponsor, Orland Park Democrat Rep. Kevin McCarthy, said they are confident that they will be able to find the votes needed to override Quinn’s veto.

Quinn said that business owners came to plead with him to veto the bill and that the majority of Illinoisans do not support the plan. “We’ll, I think, show them… that the people of Illinois are mightier than Commonwealth Edison.”

Skokie Democratic Rep. Lou Lang said ComEd needs to step up its customer service efforts if the company wants lawmakers who did not support the bill last time to change their votes. He said his constituents who lost power over the summer were less upset about the lapse in service and more worked up about the way the company treated them when they called to report that their power was out. “The people that called my office irate did not call here just because they had a power outage,” Lang said.

For more on what defines smart grid technology and its potential public policy implications for the state, see Illinois Issues July/August 2011.