March 08, 2011
ComEd President Urges Lawmakers to Create Framework for a 21st Century Electric Grid
Infrastructure Modernization Act would create jobs and keep the state competitive
Springfield, Illinois - Appearing today before a joint hearing of the Senate Energy Committee and the House Public Utilities Committee, ComEd President and Chief Operating Officer Anne Pramaggiore testified that electric grid modernization was a critical step to keep Illinois competitive and meet the challenges of the digital world.
“Illinois is at a fork in the road with respect to its electric grid,” said Pramaggiore. “We can choose the status quo, which will put us significantly behind other states and the demands of the digital economy, or we can choose to embrace the future by modernizing the grid now.”
Tuesday’s joint committee hearing marked the beginning of a policy discussion on the best path to building a sustainable and technologically advanced grid. The Infrastructure Modernization Act (Illinois HB14 Amendment 1) would pave the way for badly needed energy infrastructure investment by reforming regulatory oversight. The bill is sponsored by Kevin A. McCarthy, Illinois State Rep., 37th District and Dave Winters, Illinois State Rep., 68th District.
The legislative proposal would do three things:
- Identify and direct appropriate investment for grid modernization;
- Reform the traditional regulatory structure to authorize and oversee such investments; and
- Create the framework for performance metrics designed to ensure that utilities deliver on the benefits promised to consumers.
New demands of the digital age
Pramaggiore said new technology industries, such as data centers, have set the bar on reliable power higher than ever before. Even traditional manufacturing is relying on microprocessors that are highly sensitive to electric grid disturbances. Dispatching renewable energy sources like wind and solar power will require a flexible, responsive grid.
“It is time to build a grid for the 21st century economy,” said Pramaggiore. “And it is time to do it now, because our energy and economic future depend on a modern electric grid.”
Investment in a modern grid
Pramaggiore said the bill will allow ComEd to invest $2.6 billion over 10 years – above what the utility has already budgeted to maintain the system. The investment would require 2,000 workers at its peak and fall into three categories:
- Network Modernization: $1.1 billion to modernize and refurbish ComEd’s network and equipment to reduce outages.
- Smart Grid: Over the 10 years, ComEd would invest $1.5 billion in Smart Grid technology to create a two-way communications network, providing better information for customers and increased availability of modern automation technologies.
- Employee Training and Smart Grid Export: The design of a new skills training center in the ComEd service territory and the promotion of Smart Grid manufacturers and deployment companies to locate in Illinois, creating even more jobs throughout the state as the industry expands.
A better system for setting utility rates
To allow utilities to make the significant investments that grid modernization requires, HB14 proposes changes to the current regulatory model while maintaining all the safeguards and oversight of the current system. Traditional regulation is based on a short-term outlook that forces a reactive mode of operations that’s inefficient and more expensive for customers and utilities alike. Adjustments to the regulatory process would involve an annual process for setting rates and more consistent and agreed-upon formulas for determining utility cost recovery.
“HB14 proposes a better system for setting utility rates. It combines the transparency and accountability of current regulation and more frequent regulatory oversight, with a new process that produces stability and a long-term perspective to investment,” said Pramaggiore.
Benefits to customers and state
These benefits include new pricing options for customers through advanced meters, operational savings passed on to customers, improvements in customer service and economic expansion opportunities with a more competitive grid to attract businesses to the state.
Download the full text of Anne Pramaggiore's testimony. (PDF | 75.2 KB)
Commonwealth Edison Company (ComEd) is a unit of Chicago-based Exelon Corporation (NYSE: EXC), one of the nation’s largest electric utilities with approximately 5.4 million customers. ComEd provides service to approximately 3.8 million customers across Northern Illinois, or 70% of the state’s population.