Commonwealth Edison Co. v. Ill. Commerce Comm'n

2019 IL App (2d) 180504

128 N.E.3d 1165

432 Ill.Dec. 1

COMMONWEALTH EDISON COMPANY, Petitioner,

v.The ILLINOIS COMMERCE COMMISSION; Ameren Illinois Company, d/b/a Ameren Illinois; Association of Illinois Electric Cooperatives; Blue Delta Energy, LLC; Carbon Solutions Group ; Citizens Utility Board; Coalition for Community Solar Access; Elevate Energy ; Ensync, Inc. ; Environmental Defense Fund; Environmental Law & Policy Center; Grid Alternatives, Inc.; the Illinois Chamber of Commerce; Illinois Municipal Electric Agency; the Illinois Power Agency; Illinois Solar Energy Association; Little Village Environmental Justice Organization ; Natural Resources Defense Council; Northstar PV LLC, d/b/a Summitt Ridge Energy; Avangrid Renewables LLC ; EDP Renewables North America LLC; Invenergy LLC; Nextera Energy Resources, LLC; Robert Bosch Start-up Platform North America LLC; Series 2, d/b/a Bosch Building Grid Technologies; Solar Business Coalition; Solar Development Associates, LLC; Solar Energy Industries Association; Coalition for Community Solar Access; Illinois Solar Energy Association; the People of the State of Illinois ex rel. Lisa Madigan, Attorney General; Wabash Valley Power Association, Inc. ; and Wind on the Wires, Respondents.

No. 2-18-0504

Appellate Court of Illinois, Second District.

Opinion filed May 2, 2019

Clifford Berlow, of Jenner & Block LLP, of Chicago, and Matthew E. Price, of Jenner & Block LLP, of Washington, D.C., for petitioner.

James E. Weging, Special Assistant Attorney General, of Chicago, for respondent Illinois Commerce Commission.

Bradley D. Klein, of Chicago, for respondents Environmental Law & Policy Center et al.

JUSTICE BURKE delivered the judgment of the court, with opinion.

¶ 1 Under recently-enacted legislation, the Illinois Power Agency (IPA) developed a long-term renewable resources procurement plan (plan) to promote renewable energy, including the implementation of three programs that provide financial support to small renewable energy generation facilities (generation facilities) that might not be economically viable otherwise. Under the plan, the generation facilities memorialize their energy production through renewable energy credits (credits) that the IPA then procures on behalf of three large electric utilities: petitioner, Commonwealth Edison Company (ComEd), Ameren Illinois Company (Ameren), and MidAmerican Energy Company (MidAmerican) (collectively, Electric Utilities). The generation facilities sell credits to the Electric Utilities, which then pass along certain costs to their customers.

¶ 2 Some generation facilities operate in the service areas of (1) electric utilities operated by municipalities, (2) rural electric cooperatives, and (3) the Mount Carmel Public Utility (collectively, Local Utilities), which are not subject to the plan.¹ The plan as approved compels the Electric Utilities to buy credits from generation facilities operating in the service areas of the Local Utilities, but the Local Utilities are statutorily exempt from purchasing credits.

¶ 3 On April 3, 2018, the Illinois Commerce Commission (Commission) approved the plan. The Commission concluded that the generation facilities eligible for the programs are statutorily defined to include those within the service areas of the Local Utilities. On appeal, ComEd argues that the legislature intended to exclude the generation facilities operating in the service areas of the Local Utilities from participating in the programs.

¶ 4 We acknowledge that terms like "electric utility" and "utility" are not deployed with precision, rendering the statutory scheme ambiguous. However, deferring to the Commission's expertise, we agree with the Commission's interpretation in favor of the stated legislative intent of promoting the programs. We affirm.

¶ 5 I. BACKGROUND

¶ 6 A. Large Electric Utilities Versus Small Local Utilities

¶ 7 The Electric Utilities provide electric service to retail customers on their low-voltage local distribution networks within their service territories. ComEd has a service territory in the northern part of the state. Ameren has a service territory in the southern part of the state. MidAmerican has a service territory in and around the Quad Cities. The Local Utilities, meanwhile, have service territories akin to islands within the service territories of the Electric Utilities.

¶ 8 On December 7, 2016, the legislature enacted Public Act 99-906, commonly known as the Illinois Future Energy Jobs Act, with provisions to increase the state's commitment to renewable energy. Pub. Act 99-906, § 5 (eff. June 1, 2017). Public Act 99-906 modernized the Illinois renewable portfolio standard, creating new programs to encourage the deployment of solar photovoltaics and other renewable energy technologies throughout the state.

¶ 9 To achieve the broad new goals of the renewable portfolio standard, the legislation directed the IPA to develop plans subject to review and approval by the Commission. 220 ILCS 5/16-111.5(b) (West 2016). Under the plan at issue, the Electric Utilities must purchase a certain number of credits each year. 20 ILCS 3855/1-75(a), (c) (West 2016). The Local Utilities are not part of the plan and have no obligation to purchase credits, because the Illinois Power Agency Act and the Public Utilities Act regulate only "public utilities" ( 20 ILCS 3855/1-75(c)(1)(N) (West 2016); 220 ILCS 5/1-102 (West 2016) ), which are expressly defined to exclude entities owned or operated by municipalities or rural electric cooperatives. 220 ILCS 5/3-105(b)(1), (3) (West 2016). In contrast, an "electric utility" is a "public utility" that "has a franchise, license, permit or right to furnish or sell electricity to retail customers within a service area." 220 ILCS 5/16-102 (West 2016) ; see 20 ILCS 3855/1-10 (West 2016).

ComEd, Ameren, and MidAmerican are "electric utilities" under the Illinois Power Agency Act and the Public Utilities Act. A "municipal utility" is defined separately as a "public utility owned and operated by any subdivision or municipal corporation of this State." 20 ILCS 3855/1-10 (West 2016).

¶ 10 B. Renewable Energy Credits

¶ 11 The credits memorialize the production of renewable energy by the generation facilities, and the IPA specifies the quantity of credits that the Electric Utilities must procure each year. Under the IPA's direction, the Electric Utilities enter into contracts with eligible generation facilities to purchase the credits. The Electric Utilities recover certain expenses associated with the credits from their retail customers through a rate charge, subject to a statutory cap. 20 ILCS 3855/1-75(c)(1)(B), (c)(1)(E), (c)(6) (West 2016).

¶ 12 The Illinois Power Agency Act requires that 75% of the credits derive from wind and solar resources. 20 ILCS 3855/1-75(c)(1)(C) (West 2016). Many wind and solar projects are large-scale wind farms or solar arrays that interconnect with the interstate high-voltage transmission system. To be eligible for procurement, these large-scale projects must be located in Illinois or in adjacent states, provided that an adjacent state's facility demonstrates that the operation of the facility will help promote this state's interest in the "health, safety, and welfare of its residents." 20 ILCS 3855/1-75(c)(1)(G)(v), (c)(1)(I) (West 2016).

¶ 13 The parties agree that large-scale generation facilities located in the service territories of the Local Utilities are eligible to sell credits to the Electric Utilities. Accordingly, the plan directs the Electric Utilities to procure credits from those large-scale generation facilities, while the Local Utilities have no obligation to do so.

¶ 14 C. The Programs

¶ 15 To promote the small-scale, community-level generation facilities that interconnect with low-voltage distribution networks, the legislature directed the IPA to set aside a certain number of credits to be purchased by the Electric Utilities through the three specialized programs at issue in this case: the Adjustable Block Program ( 20 ILCS 3855/1-75(c)(1)(K) (West 2016) ), the Community Renewable Generation Program ( 20 ILCS 3855/1-75(c)(1)(N) (West 2016) ), and the Illinois Solar for All Program ( 20 ILCS 3855/1-56(b) (West 2016) ) (collectively, programs). The Electric Utilities must procure a certain portion of their credits through the programs.

¶ 16 As outlined below, the statutes prescribing the programs refer to "electric utilities" and "utility," which ComEd argues exclude small generation facilities that operate in the Local Utilities' service territories.

¶ 17 1. The Adjustable Block Program

¶ 18 "The credits from solar facilities must be procured using the Adjustable Block Program" from statutorily defined facilities: at least 50% from "distributed renewable energy generation devices" (distributed generation) and at least 25% from "community renewable generation projects" (community generation). 20 ILCS 3855/1-75(c)(1)(K)(i-iii) (West 2016). Distributed generation and community generation are defined in part by their interconnection with the distribution system level of (1) an "electric utility," such as ComEd, "as defined in [section 1-10] of the Illinois Power Agency Act"; (2) a "municipal utility as defined in [section 1-10] that owns or operates electric distribution facilities"; or (3) "a rural electric cooperative as defined in section 3-119 of the Public Utilities Act." 20 ILCS 3855/1-10 (West 2016).

¶ 19 The IPA, to ensure balanced market development throughout the state, must design the Adjustable Block Program to ensure that projects are developed "in diverse locations and are not concentrated in a few geographic areas." 20 ILCS 3855/1-75(c)(1)(K) (West 2016). The IPA must design the Adjustable Block Program to "provide a transparent schedule of prices and quantities to enable the photovoltaic market to scale up and for renewable energy credit prices to adjust at a predictable rate over time." 20 ILCS 3855/1-75(c)(1)(K) (West 2016).

¶ 20 The...