CRAIN’S CHICAGO BUSINESS: COMED IN THE NEWS

Will ComEd have to pony up millions for thawed meat?

http://www.chicagobusiness.com/article/20130504/ISSUE01/305049958/will-comed-have-to-pony-up-millions-for-thawed-meat

Crain’s Chicago Business
By Steve Daniels May 04, 2013

In summer 2011, more than 2 million customers suffered power outages during a wave of storms Commonwealth Edison Co. executives said was the worst they’d seen in 15 years. Hundreds of thousands were without electricity for 24 hours or longer.

Yet just 6,404 customers filed storm-related claims with the utility after enduring days in the dark.

There’s no mystery why: For years, ComEd has told customers that state law doesn’t hold the utility responsible for damages from weather-related outages. And, sure enough, ComEd reimbursed none of these claimants for food spoilage and other economic losses tied to outages.

Sometime in the next six weeks, however, the Illinois Commerce Commission is expected to rule on whether ComEd’s view of the law, which dates to the late 1990s, has been wrong all these years. Many observers expect the commission, made up entirely of appointees of longtime ComEd foe Gov. Pat Quinn, to rule against the utility.

More than a few Chicagoans who have endured long outages, with maddeningly little information on when to expect restoration, will cheer if that happens. But deciding ComEd is responsible for some damages from storm-related outages is the easy part. Determining when it has to pay, and establishing a workable adjudication process, is hard.

State law says ComEd must pay claims when at least 30,000 customers are out of power for at least four hours simultaneously. But, at the same time, the statute provides ComEd with a waiver against claims stemming from things it can’t control. They include “unpreventable damage due to weather events or conditions.”

Staff of the ICC examined the cases of 1.3 million ComEd customers who suffered outages of four hours or more during the stormy summer of 2011 and found that a little more than 51,000 of those were preventable. An administrative judge for the commission reduced that further to nearly 35,000.

‘ARBITRARY’ NUMBERS

Thomas O’Neill, senior vice president for regulatory and energy policy at ComEd, calls those numbers “arbitrary” and notes that both the staff and the judge affirmed that the utility had been properly maintaining the local power grid. “Utilities shouldn’t be liable when they’re not at fault,” he says. “We’re talking about creating a standard where the utility effectively becomes an insurance company against the weather.”

Mr. O’Neill emphasizes that the utility did pay $5.8 million to 864 claimants last year, generally to reimburse for property damage when crews made mistakes.

If the ICC goes along with its administrative judge’s recommendation on storm-related damages for 2011, that could mean $30 million or more in payments, he says. A more liberal interpretation of the law could be financially “catastrophic” and impede investing in the grid, he told the ICC at an April 23 oral argument on the issue.

“I urge you not to go there,” Mr. O’Neill pleaded before the commissioners.

Not many outside his industry agree with him. In addition to ICC staff, Mayor Rahm Emanuel’s administration, the Citizens Utility Board, Illinois Attorney General Lisa Madigan and numerous suburban mayors think ComEd shouldn’t enjoy blanket protection from responsibility when customers are blacked-out.

“Because otherwise they have no incentive to improve their technology and infrastructure,” says David Schmidt, mayor of northwest suburban Park Ridge, which suffered widespread outages in 2011. “It’s way too broad a loophole.”

Nancy Rotering, mayor of another hard-hit suburb, Highland Park, says residents were frustrated with their inability to file claims in 2011. A hard-to-explain standard resulting in damages paid to just a small percentage also could make people angry, she says.

“To me, it seems the ICC is trying to interpret a poorly written law that needs to be revisited by the General Assembly,” Ms. Rotering says.

Both mayors say the utility’s communication with local governments and affected customers has improved since 2011, when many complained of not knowing when the lights would come back on.

But last year’s summer storm season was relatively benign. “We haven’t been tested yet,” Mr. Schmidt says.

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