Gridliance Heartland v. Ill. Com. Comm'n

240 N.E.3d 45

2023 IL App (5th) 230073

GRIDLIANCE HEARTLAND LLC, Petitioner-Appellant,

v.The ILLINOIS COMMERCE COMMISSION and Ameren Illinois Company, d/b/a Ameren Illinois, Respondents-Appellees.

NO. 5-23-0073

Appellate Court of Illinois, Fifth District.

Rule 23 Order Filed December 26, 2023

Motion to Publish Granted January 26, 2024

Opinion Filed January 26, 2024

Appeal from the Illinois Commerce Commission, No. 20-0263.

Phillip A. Casey, of Calfee, Halter & Griswold LLP, Indianapolis, IN, for appellant.

Brian J. Dodds, Robert W. Funk, Thomas R. Stanton, and Matthew L. Harvey, Special Assistant Attorneys General, of Chicago, for appellee Illinois Commerce Commission.

Anne M. Zehr, Albert D. Sturtevant, Mark W. DeMonte, Christine Prorok, Eric E. Dearmont, Matthew R. Tomc, of Whitt Sturtevant, LLP, of Chicago (for Ameren Illinois Company), Brian J. Dodds, Robert W. Funk, Thomas R. Stanton, Matthew L. Harvey of Illinois Commerce Commission of Chicago, (for Illinois Commerce Commission), for appellees.

OPINION

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

¶ 1 The petitioner, GridLiance Heartland LLC (GridLiance), appeals directly from an interim order of the Illinois Commerce Commission (Commission), dated November 17, 2022, and subsequent denial of rehearing, dated January 5, 2023. The Commission found in its interim order that GridLiance met the definition of a public utility as defined in section 3-105 of the Illinois Public Utilities Act (220 ILCS 5/3-105 (West 2022)). Based on this finding, the Commission directed GridLiance to apply for a certificate of public convenience and necessity (CPCN), and the Commission reopened the proceeding. We affirm the Commission’s order.

¶ 2 I. BACKGROUND

¶ 3 In August of 2018, GridLiance entered into a purchase agreement with Electric Energy, Inc. (EEI), for transmis- sion assets which consisted of two substations in Joppa, Illinois, and six connecting 161 kilovolt transmission lines that extended into Kentucky. The Illinois portion of the facilities were in the authorized service territory of Ameren Illinois Company, d/b/a Ameren Illinois’s (Ameren), and connected to Ameren’s electric transmission and distribution facilities.

¶ 4 After entering into the purchase agreement and prior to acquiring the EEI facilities, GridLiance petitioned the Commission in GridLiance Heartland LLC, Ill. Comm. Comm’n No. 18-1617 (Order-Final Sept. 18, 2019), for a CPCN under section 8-406(a) of the Public Utilities Act (220 ILCS 5/8-406(a) (West 2018)). The CPCN would authorize GridLiance to own, control, operate, and manage the EEI facilities for public use and to provide public utility electric transmission service over the facilities. GridLiance had argued that it should qualify as a public utility because, unlike EEI, GridLiance would offer non-discriminatory service on the EEI transmission facilities to "eligible customers," including entities that would supply power to "end users" in Illinois.

¶ 5 Ameren intervened in GridLiance, Ill. Comm. Comm’n No. 18-1617, and argued that GridLiance was not a public utility or eligible for a CPCN. Ameren claimed that a determination could not be made on whether GridLiance was a public utility prior to the acquisition of the EEI facilities. On September 6, 2019, GridLiance withdrew its petition. The Commission subsequently dismissed GridLiance, Ill. Comm. Comm’n No. 18-1617, without determining whether GridLiance was a public utility under section 3-105 of the Public Utilities Act (220 ILCS 5/3-105 (West 2018)).

¶ 6 GridLiance and EEI had also petitioned the Federal Energy Regulatory Commission (FERC) for approval of the GridLiance acquisition of the EEI facilities. FERC issued an order on August 28, 2019, denying, without prejudice, GridLiance’s application. FERC found that GridLiance and EEI failed to demonstrate that the acquisition was consistent with the public interest because it would adversely impact customers’ rates. GridLiance filed a subsequent application. On January 31, 2020, FERC conditionally approved GridLiance’s acquisition of the EEI facilities, subject to rate mitigation measures. GridLiance accepted the conditions.

¶ 7 GridLiance acquired the facilities from EEI on February 29, 2020. GridLiance transferred functional control of four transmission lines and associated facilities to the Midcontinent Independent System Operator, Inc. (MISO), a nonprofit, non-stock corporation that was a Regional Transmission Organization (RTO).

¶ 8 MISO managed the region’s power grid, which was approximately 65,000 miles of interconnected high-voltage transmission line. MISO additionally operated an energy and ancillary service market for approximately 200,000 megawatts of power generating resources. GridLiance, as an owner of transmission assets, continued to own and maintain its assets while MISO coordinated the use of individual assets and offered transmission services.

¶ 9 GridLiance’s assets were subject to MISO’s open access transmission tariff (MISO Tariff) because of the transfer of GridLiance’s functional control to MISO. Illinois service customers in a specified pricing zone paid the aggregate rate of the annual revenue requirement for all transmission owners in the zone to recoup costs associated with owning and operating transmission assets. Ameren and its customers pay approximately $6 million in costs annually regarding GridLiance’s MISO assets.

¶ 10 After GridLiance acquired the facilities, Ameren filed a complaint with the Commission against GridLiance, in Ameren Illinois Co. v. GridLiance Heartland LLC, Ill. Comm. Comm’n No. 20-0263 (Mar. 9, 2020). Ameren alleged that GridLiance failed to comply with multiple requirements under the Public Utilities Act (220 ILCS 5/1-101 et seq. (West 2018)). Ameren’s claims included that GridLiance was in violation for not lawfully operating as a public utility, transferring functional control of the EEI facilities to MISO without Commission approval, for not providing the least-cost service and plant to Illinois customers, and for not possessing a CPCN.

¶ 11 On the same day that Ameren filed its complaint with the Commission, GridLiance filed a verified petition for declaratory ruling in GridLiance Heartland LLC, Ill. Comm. Comm’n No. 20-0264 (Order-Final June 4, 2020). GridLiance requested that the Commission determine whether it qualified as an Illinois public utility under section 3-105 of the Public Utilities Act (220 ILCS 5/3-105 (West 2018)) based on its acquisition of the EEI facilities and the transfer of their functional control to MISO.

¶ 12 Ameren filed a motion to intervene in GridLiance, Ill. Comm. Comm’n No. 20-0264, and requested to consolidate the two pending matters. GridLiance then filed a motion to suspend Ameren, Ill. Comm. Comm’n No. 20-0263, until a determination was made by the Commission on whether GridLiance was a public utility. The Commission denied Ameren’s request to consolidate and granted GridLiance’s motion to suspend.

¶ 13 GridLiance then filed a motion to dismiss Ameren’s complaint for want of jurisdiction. GridLiance argued that the Commission did not have jurisdiction to consider Ameren’s petition and GridLiance was not subject to the statutory obligations because GridLiance was not a "public utility" under the Public Utilities Act (220 ILCS 5/3-105 (West 2018)). GridLiance claimed that it did not sell electricity to end-use customers in Illinois, nor did it offer transmission assets for public use in Illinois. GridLiance additionally argued that res judicata, applied where the circuit court previously determined that EEI’s ownership and the operation of the transmission assets did not make EEI a public utility. See Electric Energy, Inc. v. Illinois Commerce Comm’n, No. 91-MR-175 (Cir. Ct. Sangamon County, Aug. 28, 1991).

¶ 14 Electric Energy, Inc. found that EEI was formed in 1950 by investor-owned utilities for the purpose of constructing, owning, and operating a steam-electric generating plant in Joppa, Illinois. Electric Energy, Inc. v. Illinois Commerce Comm’n Inc., No. 91-MR-175. At the time of the 1991 decision, Union Electric Company, Kentucky Utilities Company, Illinois Power Company, and Central Illinois Public Service Company had ownership shares in EEL The Joppa plant only provided power and energy to the Department of Energy Gaseous Diffusion Plant (DOE Plant) in Paduch, Kentucky, to the Tennessee Valley Authority, and to EEI’s sponsors for resale. Sales by EEI were made pursuant to power supply contracts subject to FERC. EEI never sold electricity at retail to utility consumers in Illinois or held itself out to provide electricity to the general public in Illinois. The circuit court found that EEI was not a "public utility" pursuant to section 3-105 of the Public Utilities Act because it did not offer electric service to the public or own or operate any plant, equipment, or property for public use in Illinois. Electric Energy, No. 91-MR-175.

¶ 15 GridLiance’s motion to dismiss additionally referred to a September 8, 2016, Commission decision. The Commission found that EEI’s ownership and use of the transmission assets did not render EEI a "public utility" under the Public Utilities Act and cancelled EEI’s CPCN. Ill. Comm. Comm’n, On Its Own Motion No. 16-0429 (Order-Final Sept. 8, 2016). GridLiance noted in its motion that the only change that it had made after acquiring the transmission assets from EEI was its transfer of four transmission lines and the associated facilities to MISO’s functional control.

¶ 16 The administrative law judge denied GridLiance’s motion to dismiss and found that MISO controlled GridLiance’s transmission assets and all eligible customers would be able to access the power flowing through the transmission assets pursuant to the MISO Tariff. Further, assets under MISO’s control would be used to provide utility service to the public in Illinois, and GridLiance met the definition of a public utility under ...