Energy Policy Debate First Step to Building Illinois’ 21st Century Grid
Energy Infrastructure Modernization Act (HB14 Amendment 1) introduction marks beginning of process to address vital questions about how best to modernize energy infrastructure for economic growth
Springfield, Illinois - ComEd today applauded the introduction of legislation that would enable Illinois to make major investments in its electric grid over the next decade to ensure that it can meet the demands of the 21st century economy and the changing needs of business and residential customers.
The Energy Infrastructure Modernization Act (Illinois HB14 Amendment 1) would pave the way for badly needed energy infrastructure investment by creating a policy framework to reform electric utility regulation and facilitate the electric grid modernization program. The bill is sponsored by Kevin A. McCarthy, Illinois State Rep., 37th District. The introduction of this legislation begins a dialogue on the best path to building a sustainable and technologically advanced grid.
“This is one of the most important policy and economic development issues facing Illinois right now,” said Kevin A. McCarthy, Illinois State Rep., 37th District. “Just as the Illinois General Assembly was the catalyst for a new era of telecom innovation and customer benefits, the same must be done for our electric infrastructure. I am confident that all parties can come together on a package that has both strong consumer protections and a mandate to our utilities to invest in Illinois’ economic competitiveness and growth.”
ComEd said the digital economy is putting demands on the electric system that can only be met with significant capital investments in modern technologies and upgraded equipment. Much of Illinois’ energy infrastructure is decades old. It has served Illinois well, but it must be updated to meet the demands of a worldwide digital economy. Forty-four states are ahead of Illinois in developing solutions to advance their energy infrastructure.
“With the introduction of this bill, the Illinois General Assembly has taken on the critically important task of determining the proper policy path to make a 21st century electric grid a reality,” said Anne Pramaggiore, president and chief operating officer, ComEd. “We look forward to participating in the discussions about the future of Illinois’ energy infrastructure and the role it plays in business innovation and the economic vitality of our state.”
“Thomas Edison, who helped design the electric grid, would look at today’s system and see almost exactly what he saw back in 1910. But imagine Alexander Graham Bell suddenly transported to the 21st century. He’d be awestruck by iPhones and our online world. We simply cannot move our state forward into the new economy without energy infrastructure to support this shift,” said Pramaggiore.
“Businesses’ reliance on digital technologies cannot be underestimated. A state that can provide more reliable power at a reasonable cost has an obvious advantage when competing to bring in new businesses,” said Doug Whitley, president, Illinois Chamber of Commerce. “It is always appropriate for every business to attempt to incorporate modern, efficient technologies and systems in order to meet the needs and expectations of their customers. When technologies improve, winning companies move rapidly to adapt.”
One example of the rapidly expanding digital economy is the data center market. Today, Chicago is a top data market in the United States, with approximately 60 data centers in operation.
“Reliable electric power is the life blood of our business,” said Phil Horstmann, President and CEO of Ascent Corporation, a developer and operator of data center facilities. “Serving our global client’s data center needs requires a best-in-class power grid and plays a big role in our decisions on where to locate our facilities. While Illinois can take pride in its current standing as a top data center market, it must continually innovate to remain a player in this high-growth, high-tech space. That’s why this modernization plan is so important to attracting businesses like Ascent.”
Infrastructure modernization in Illinois is stalled not for lack of a plan, but for lack of a stable regulatory platform to support the investment in infrastructure, said Pramaggiore.
“The current process for setting rates was designed for the world of a century ago. But this system is simply not compatible with the kind of investments and long-term strategic planning that’s needed today,” said Pramaggiore. “States across the country are recognizing that their old regulatory models are not adaptable to modern requirements of finance and investment and are looking for ways to adjust their processes to attract capital. Illinois will need to open a similar dialogue.”
The Energy Infrastructure Modernization Act would adjust the way electric rates are set using a formula mechanism modeled on the process the federal government uses for interstate transmission regulation. Such a process would make cost recovery more timely and predictable, while still maintaining Illinois Commerce Commission authority to set rates and consumer groups would continue to have the ability to challenge utilities’ cost filings.
The regulatory reform called for in the Energy Infrastructure Modernization Act is similar, in principle, to the reform of telecom regulation, which was the catalyst of the technology boom in the telecom industry that brought enormous benefits to consumers. Recently, President Obama called for regulation reform that protects consumers while reducing unreasonable burdens that stifle innovation and investment.
The Energy Infrastructure Modernization Act would create a regulatory process that would protect consumers, while assuring that Illinois utilities are investing, innovating and preparing our grid to compete in the new digitized world of commerce. ComEd said the legislation would spur billions in investment and create thousands of jobs and catapult Illinois to the top-tier of state-based Smart Grid development.
“ComEd’s proposal for ensuring investment in a modern electric grid is just what we need because Illinois can ill afford to lag behind other states when it comes to expanding and attracting business,” said Larry Huggins, president and CEO, Riteway-Huggins Construction Services. “This effort would help Illinois keep pace with other states on the economic development front while providing much-needed jobs in our communities.”
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.