Civics Lesson ComEd-Style: News-Gazette Editorial

 

The Illinois General Assembly overrode Governor Quinn’s veto of Senate Bill 9 last week, and the News-Gazette (East Central Illinois) editorial identifies the critical issues that this action raises for all Illinois ratepayers. The magnitude of the danger posed by SB9 and this override have gone largely unremarked in the media. But Illinois ratepayers will be paying the price for the General Assembly’s kow-tow to ComEd and Ameren for years to come. Read the rest of the editorial by the Illinois News-Gazette here

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General Assembly Should Not Override the Governor’s Veto of Smart Meter Legislation

On May 5, 2013, Illinois Governor Pat Quinn vetoed legislation known as Senate Bill 9 that was pushed by Illinois utilities ComEd and Ameren in response to Illinois Commerce Commission rulings last year.

ComEd says that enactment of SB9 is necessary to get the installation of smart meters back on track. But if SB9 does become law, ComEd has committed to install only 60,000 smart meters in 2013 and another 160,000 in 2014. In stark contrast, over one million smart meters would have been installed by the end of 2014 under the original smart meter installation plan ordered by the ICC.

And what does ComEd want from consumers to install a measly 220,000 smart meters by the end of 2014? A $70 million rate increase in 2013 and a retroactive $70 million increase for 2012 under SB9, as well as an additional $311 million in 2014 under its April 29th rate filing. That’s a total rate increase of $451 million.

What ComEd’s really saying is that ratepayers should be happy because they’ll get one fifth as many smart meters installed over the next two years if they pay ComEd nearly half a billion more dollars. SB9 would cost consumers a fortune without getting smart meter installations back on track. ComEd is relentless in its efforts to pull off the biggest bait and switch in Illinois history.

ComEd has tried to justify SB9 on grounds that the ICC’s rulings misinterpreted the original smart grid law passed in 2011. ComEd contends its rates would have been $70 million per year higher if the ICC had correctly interpreted that law. ComEd has every right to make this argument, as it has done, to the Illinois Appellate Court. If ComEd prevails in court its rates will be $70 million higher.

But it is unconstitutional and illegal for ComEd to make an end run around the courts to the legislature and refuse to install any smart meters unless the legislature retroactively overturns the ICC. Most likely, ComEd doesn’t want to risk having an appellate court decide that the ICC’s reading of the law was right. It’s safer, easier, and probably cheaper to just ask the General Assembly to overrule a final, binding order of the ICC.

SB9 constitutes unprecedented legislative interference with a regulatory agency, as Governor Quinn stated in his veto message. In addition, SB9 is unconstitutional because it violates both the separation of powers and due process doctrines.

Rather than continuing to lobby for this extremely flawed bill, ComEd should focus on accelerating smart meter installations. If ComEd is right and the ICC wrong about the extra money ComEd says it deserves, the Illinois Appellate Court will rule in ComEd’s favor.

Once the Illinois General Assembly understands this, I’m confident that they will not want to wade into ComEd’s SB9 quagmire, and they’ll let Governor Quinn’s veto stand.

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Physical Oil Price Manipulation: EU Antitrust Authorities Raid BP, Shell & Statoil Offices

The WSJ reports that European Union antitrust authorities Tuesday raided the offices of BP, Royal Dutch Shell and Statoil, escalating a probe of alleged oil-price manipulation amid scrutiny of how prices are set in global financial markets.

Oil rig in the North Sea

EU officials are investigating whether the three companies manipulated prices in the $2.5 trillion physical-oil market by giving false data to Platts, an oil index publisher.

This is hardly the first time this has happened. In 2004, two El Paso Corp. traders were convicted of sending false information on fixed-price natural gas trades to Platts that was used in setting an index. That index likewise was used to calculate a monthly natural gas industry benchmark for pricing large volumes of natural gas. Changes in published indexes can inflate the price that electric utilities (and hence, ultimately, their customers) and businesses pay for natural gas.

[Sniff, sniff.] Something smells like LIBOR around here.

The manipulation and false reporting in the current EU investigation concerns neither futures prices nor spot market sales, but rather forward contracts in the bilateral natural gas market at the end of the trading day. This pricing data is known as the “market on close,” or MOC. The MOC’s are generally used to value forward positions on a mark-to-market basis.

In 2003, Platts adopted guidelines for price data submission, requiring that the data reporting function was to be handled by back office workers (risk management or compliance officers), rather than by the traders themselves.

It doesn’t appear that moving the pricing data reporting function to the back office solved the problem.

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ComEd’s Favor Bank: Sun-Times Editorial

The Sun-Times has come out against Senate Bill 9, which Governor Quinn vetoed earlier this week.

This is the unconstitutional bill that ComEd has been ramming through the General Assembly at flank speed. Contrary to ComEd’s claim that SB9 merely clarifies existing law, what it does, among other things, is retroactively overrule a final order of the Illinois Commerce Commission issued last year that held that ComEd had violated a Commission order. Read the full editorial here.

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Entergy Nuke Leaks Radioactive Water, Again, This Time into Lake Michigan

Seventy-nine gallons of “very slightly radioactive water” from a leaky tank at the troubled Palisades Nuclear Power Plant spilled into Lake Michigan. The plant is located in Michigan about 80 miles east-northeast of Chicago in Van Buren County’s Covert Township. It’s been under heightened Nuclear Regulatory Commission scrutiny because of a series of breakdowns over the past two years. Palisades is owned by New Orleans-based Entergy Corp.

While an NRC spokeswoman said there is “absolutely” no risk to human health, she did not offer to swim in Lake Michigan to prove her point. It’s unclear whether such natatory activities are in the NRC’s job description for spokespersons.

The same tank sprang a leak in 2012, and some of the radioactive water seeped into the plant’s control room. After that incident, the NRC set a cap on how much water could leak each day. (That is true, no joke.) The NRC did not provide Entergy with mops in 2012, as far as we know. But they have been working on a new warning sign designed specifically for Entergy’s Palisades nuke plant. It’s a half-height, sandwich-board sign that can be propped open on the floor, and it uses both of the following symbols:

and:

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