{ "id": 5275418, "name": "GOVERNOR'S OFFICE OF CONSUMER SERVICES, Appellant, v. ILLINOIS COMMERCE COMMISSION et al., Appellees; THE PEOPLE ex rel. ROLAND W. BURRIS, Attorney General, Appellant, v. ILLINOIS COMMERCE COMMISSION et al., Appellees", "name_abbreviation": "Governor's Office of Consumer Services v. Illinois Commerce Commission", "decision_date": "1991-10-16", "docket_number": "Nos. 3\u201490\u20140875, 3\u201491\u20140032 cons.", "first_page": "68", "last_page": "76", "citations": [ { "type": "official", "cite": "220 Ill. App. 3d 68" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "165 N.E.2d 329", "category": "reporters:state_regional", "reporter": "N.E.2d", "pin_cites": [ { "page": "332" } ], "opinion_index": 0 }, { "cite": "18 Ill. 2d 518", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5328012 ], "pin_cites": [ { "page": "523" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/18/0518-01" ] }, { "cite": "125 N.E. 891", "category": "reporters:state_regional", "reporter": "N.E.", "year": 1960, "pin_cites": [ { "page": "896" } ], "opinion_index": 0 }, { "cite": "291 Ill. 209", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 2421772 ], "year": 1960, "pin_cites": [ { "page": "218" } ], "opinion_index": 0, "case_paths": [ "/ill/291/0209-01" ] }, { "cite": "112 N.E 2d 141", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1919, "pin_cites": [ { "page": "144" } ], "opinion_index": 0 }, { "cite": "414 Ill. 582", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 5313789 ], "year": 1919, "pin_cites": [ { "page": "590" } ], "opinion_index": 0, "case_paths": [ "/ill/414/0582-01" ] }, { "cite": "539 N.E.2d 717", "category": "reporters:state_regional", "reporter": "N.E.2d", "pin_cites": [ { "page": "726" } ], "opinion_index": 0 }, { "cite": "183 Ill. App. 3d 220", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2629282 ], "pin_cites": [ { "page": "236-37" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/183/0220-01" ] }, { "cite": "510 N.E.2d 865", "category": "reporters:state_regional", "reporter": "N.E.2d", "weight": 3, "pin_cites": [ { "page": "874" }, { "page": "874" }, { "page": "874" } ], "opinion_index": 0 }, { "cite": "117 Ill. 2d 120", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5545200 ], "weight": 3, "pin_cites": [ { "page": "142" }, { "page": "142" }, { "page": "142" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/117/0120-01" ] }, { "cite": "573 N.E.2d 858", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "214 Ill. App. 3d 222", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5297160 ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/214/0222-01" ] } ], "analysis": { "cardinality": 765, "char_count": 16698, "ocr_confidence": 0.803, "pagerank": { "raw": 1.1011502260213775e-07, "percentile": 0.5684051464004272 }, "sha256": "e606d6f2c8067199e0a52f23af67648f3a07c457b2138447eb872acb6f47146a", "simhash": "1:8081978a11a530d6", "word_count": 2621 }, "last_updated": "2023-07-14T21:04:36.621238+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "GOVERNOR\u2019S OFFICE OF CONSUMER SERVICES, Appellant, v. ILLINOIS COMMERCE COMMISSION et al., Appellees.-THE PEOPLE ex rel. ROLAND W. BURRIS, Attorney General, Appellant, v. ILLINOIS COMMERCE COMMISSION et al., Appellees." ], "opinions": [ { "text": "JUSTICE McCUSKEY\ndelivered the opinion of the court:\nThe Illinois Attorney General and the Governor\u2019s Office of Consumer Services appeal from an order of the Illinois Commerce Commission (Commission) which redesigned Illinois Power Company\u2019s electric service rates. The separate appeals have been consolidated. We affirm.\nOn December 8, 1989, Illinois Power filed revised tariff sheets with the Commission to implement redesigned electric service rates and to recover a revenue increase proposed in its then-pending revenue requirement case (Commission docket No. 89 \u2014 0276). The December filing was designated docket No. 90 \u2014 0006 and is the subject of this appeal.\nThe Commission had granted Illinois Power a $74.8 million rate increase in docket No. 89 \u2014 0276 in an amended final order issued on July 13, 1990. The Commission\u2019s order was appealed to this court in People ex rel. Hartigan v. Illinois Commerce Comm\u2019n (1991), 214 Ill. App. 3d 222, 573 N.E.2d 858. This court affirmed the Commission\u2019s adoption of Hlinois Power\u2019s actual capital structure and the Commission\u2019s determination of an appropriate rate of return, but reversed the Commission\u2019s determination of the used and useful portion of the utility\u2019s Clinton Nuclear Power Station.\nIn docket No. 90\u20140006, Illinois Power sought approval of a permanent allocation among customer classes of the revenue increase proposed in docket No. 89\u20140276, and a redesign of rates and charges to recover the revenue increase. Intervening parties included the People of the State of Illinois ex rel. Attorney General Burris, the Illinois Industrial Energy Consumers (IIEC), the Governor\u2019s Office of Consumer Services, the Office of Public Counsel, the Citizens Utility Board, the Small Business Utility Advocate, the Board of Trustees of the University of Illinois, and the staff of the Commission.\nEvidentiary hearings were held on July 26, 27 and 31, 1990, and August 1 and 2, 1990. Oral argument was held on October 17, 1990. Experts testifying before the Commission provided analyses of Illinois Power\u2019s cost of service, and proposed various revenue allocations and rate designs. The record before the Commission contained over 600 transcribed pages of oral testimony and hundreds of pages of written testimony and exhibits.\nOn November 5, 1990, the Commission entered a final order in docket No. 90 \u2014 0006. The Commission\u2019s 67-page order concluded that marginal costs should be the primary basis and principal determinant of cost of service for the design of Illinois Power\u2019s rates. The Commission adopted, with some exceptions, the marginal cost study proposed by Illinois Power and rejected the cost study sponsored by the Attorney General, the Governor\u2019s Office of Consumer Services, and the Citizens Utility Board. The Commission allocated the authorized revenue increase among Illinois Power\u2019s major customer classes as follows: residential, 9.6%; commercial, 7.1%; industrial, 7.1%; lighting, 7.1%; and municipal, 9.6%.\nThe Commission denied the applications for rehearing filed by the Attorney General and the Governor\u2019s Office of Consumer Services. Both parties appealed, and the cases were consolidated for our review.\nSection 10\u2014201 of the Public Utilities Act (Act) lists the powers and duties of the appellate courts upon appeals from orders of the Commission. (Ill. Rev. Stat. 1989, ch. 111\u2154, par. 10\u2014201.) A reviewing court may affirm the Commission\u2019s order; it may reverse the order; or it may remand the cause to the Commission to receive new or additional evidence. (Ill. Rev. Stat. 1989, ch. 111\u2154, par. 10\u2014201(e)(v); People ex rel. Hartigan v. Illinois Commerce Comm\u2019n (1987), 117 Ill. 2d 120, 142, 510 N.E.2d 865, 874.) An order of the Commission can be reversed on appeal only if (1) the findings of the Commission are not supported by substantial evidence; (2) the order is without the jurisdiction of the Commission; (3) the order violates the Federal or State Constitution or laws; or (4) the proceedings or manner by which the Commission decided its order violate the Federal or State Constitution or laws, to the prejudice of the appellant. (Ill. Rev. Stat. 1989, ch. 111\u2154, par. 10\u2014201(e)(iv).) The findings and conclusions of the Commission on questions of fact shall be held prima facie to be true and as found by the Commission; orders of the Commission shall be held to be prima facie reasonable, and the burden of proof upon all issues raised on appeal shall be upon the party appealing from the order. (Ill. Rev. Stat. 1989, ch. 111\u2154, par. 10\u2014201(d).)\n\u201cApart from examining whether the Commission acted within the scope of its authority or infringed upon a constitutional right, a court is limited to reviewing whether the Commission set out findings of fact supporting its decision and whether the findings are against the manifest weight of the evidence.\u201d Hartigan, 117 Ill. 2d at 142, 510 N.E.2d at 874.\nThe purpose of the proceedings before the Commission was threefold: to choose the study which best measured Illinois Power\u2019s cost to provide service in the future; to allocate the revenue increase among the utility\u2019s major customer classes; and to design the specific rates and charges for each customer class to enable the company to collect its revenue requirement. The determination of revenue allocation, rate design, and customer charges depended upon the selection of an appropriate marginal cost study.\nThe Attorney General\u2019s main contention on appeal is that the rates produced by the marginal cost methodology adopted by the Commission do not comply with the regulatory goals of the Act. The Attorney General argues that the Commission\u2019s order is contrary to law because it adopts a cost of service study which fails to consider the effects of excess capacity on long-term cost of service; because the Commission\u2019s revenue allocation methodology similarly fails to consider excess capacity; and because the findings with respect to customer charges and rate design violate section 1\u2014102 of the Act. (Ill. Rev. Stat. 1989, ch. 111\u2154, par. 1\u2014102.) The Attorney General requests that the case be remanded to the Commission for the establishment of an identifiable standard for satisfying the long-term cost of service \u201crequirement,\u201d as that term is argued to be used in the Act.\nWe disagree with the Attorney General\u2019s contention that the Commission erroneously rejected the Attorney General\u2019s long-term marginal cost of service study in favor of Illinois Power\u2019s cost study. We find substantial evidence in the record to support the Commission\u2019s adoption of Illinois Power\u2019s marginal cost study.\nThe marginal cost study presented by Illinois Power measured its cost to provide additional electric service in the future. The study included an analysis of three major cost components: marginal customer costs; marginal capacity costs; and marginal energy costs. Witnesses for Illinois Power testified as to the validity of the marginal cost study. The Commission staff and the expert witness retained by IIEC used Illinois Power\u2019s study in support of their analyses and proposals. Commission staff witness Corbin also testified in support of Illinois Power\u2019s study. (The Commission\u2019s order did reflect his objection to Illinois Power\u2019s inclusion of a portion of minimum distribution system costs in customer-related costs.)\nJames Drzemiecki provided testimony on behalf of the Attorney General, the Citizens Utility Board, and the Governor\u2019s Office of Consumer Services. Mr. Drzemiecki provided an analysis of Illinois Power\u2019s cost of service and offered various revenue allocation and rate design proposals. Mr. Drzemiecki concluded that Illinois Power\u2019s marginal cost analysis was inadequate to properly allocate costs.\nIIEC witness Chalfant testified that the Attorney General\u2019s cost study was neither a valid marginal cost study nor a valid embedded cost study:\n\u201c[Bjecause [Drzemiecki] makes no attempt to determine marginal distribution or subtransmission costs, his study cannot be considered marginal; because he alters what he represents to be an embedded cost study, his study cannot be considered embedded; and, because he totally omits a large portion of transmission costs, his study cannot be considered valid in any sense.\u201d\nThe Commission concluded:\n\u201cThe Commission believes, as it did in the Commonwealth Edison case in which Mr. Drzemiecki testified ***, that Mr. Drzemiecki\u2019s study is not a marginal cost study as he contends. Mr. Drzemiecki\u2019s blending of marginal and embedded cost concepts severely limits the value this Commission can place on his analysis.\n* * *\nMr. Drzemiecki\u2019s cost study incorrectly mixes marginal and embedded cost concepts with the result that it is neither a valid marginal cost study nor a valid embedded cost study. If the Commission were to accept studies that deviate from principles governing appropriately prepared cost studies, i.e., blend disparate concepts on an ad hoc basis, the integrity of such studies would be compromised and it would invite the manipulation of studies in order to achieve the sponsor\u2019s desired results.\u201d\nThe Attorney General also fails to provide or recommend a definition of \u201clong term.\u201d Illinois Power\u2019s study was based upon a Eve-year estimate of the cost of energy to its system, while the Attorney General\u2019s study was calculated on a 10-year basis. With a definition of \u201clong term\u201d otherwise unavailable, either of these studies could qualify as having considered costs on a long-term basis. We defer, then, to the expertise of the Commission to determine the proper time period for its adopted cost study.\nThe Attorney General maintains that Illinois Power\u2019s failure to include in its study the effects of excess capacity on long-term costs of service violates the legislative goals of the Act. Section 1\u2014102 of the Act provides, in part:\n\u201cThe General Assembly finds that the health, welfare and prosperity of all Illinois citizens require the provision of adequate, efficient, reliable, environmentally safe and least-cost public utility services at prices which accurately reflect the long-term cost of such services and which are equitable to all citizens.\u201d (Emphasis added.) Ill. Rev. Stat. 1989, ch. 111\u2154, par. 1-102.\nWe do not find the prefatory language of section 1\u2014102 of the Act to mandate the consideration of the \u201clong-term\u201d cost of providing electrical utility service. (Ill. Rev. Stat. 1989, ch. 111\u2154, par. 1\u2014102.) This section is identified simply as \u201cFindings and Intent.\u201d The section states the general reasons for enactment of the legislation and lists major goals and objectives of public utility regulation. The section neither mandates the adoption of a particular type of cost study nor requires a certain time period over which such costs are to be developed. Furthermore, \u201clong-term cost\u201d is not defined in the Act, and the Commission is given no direction as to how it is to consider \u201clong-term costs.\u201d\n\u201cPrefatory language *** generally is not regarded as being an operative part of statutory enactments. The function of the preamble of a statute is to supply reasons and explanations for the legislative enactments. The preamble does not confer powers or determine rights. [Citation.] A declaration of policy contained in a statute is, like a preamble, not a part of the substantive portions of the act. Such provisions are available for clarification of ambiguous substantive portions of the act, but may not be used to create ambiguity in other substantive provisions. [Citation.]\u201d Illinois Independent Telephone Association v. Illinois Commerce Comm\u2019n (1988), 183 Ill. App. 3d 220, 236-37, 539 N.E.2d 717, 726.\nUpon adoption of Illinois Power\u2019s marginal cost study, the Commission used the \u201cEqual Percentage of Marginal Cost\u201d (EPMC) approach to allocate the revenue increase among the company\u2019s major customer classes. This method attempts to equalize marginal cost recovery among the customer classes while limiting the overall increase any particular class will experience.\nThe Attorney General complains that the EPMC approach magnifies the distortions of marginal cost estimates and does not allow for the effects of system-wide excess capacity on long-term costs, in violation of sections 9\u2014215 and 1\u2014102 of the Act (Ill. Rev. Stat. 1989, ch. 111\u2154, pars. 9\u2014215, 1\u2014102). The Attorney General argues that the EPMC allocation ignores the long-run capital costs upon which the emphasized short-term cost savings are based. The result, it is alleged, is a rate structure which disproportionately burdens residential customers. The Attorney General argues that use of the EPMC approach conflicts with section 1\u2014102 of the Act, which mandates the setting of rates at \u201cprices *** which are equitable to all citizens.\u201d (Ill. Rev. Stat. 1989, ch. 111\u2154, par. 1\u2014102.) As discussed earlier in this opinion, however, we do not consider this section to be a substantive provision of the Act. Also, the Commission used the constrained EPMC approach, which limits the impact of the revenue increase on residential customers. The Commission stated:\n\u201cThe Commission continues to believe that the constrained EPMC approach is the most appropriate methodology for allocating an overall revenue increase level to the customer classes. The constrained EPMC approach allows for continued movement toward system average marginal cost recovery for each major class, while taking into account other appropriate rate-making considerations such as rate continuity, customer impact and customer understanding.\u201d\nThe Attorney General contends that section 9 \u2014 215 of the Act (Ill. Rev. Stat. 1989, ch. 111\u2154, par. 9\u2014215) requires the Commission to make excess capacity adjustments to marginal cost studies or to inter-class revenue allocations in order to set rates which are just and reasonable. We note, however, that section 9\u2014215 only \u201cempowerfs]\u201d (emphasis added) the Commission to make adjustments in rates; such action is merely allowed, not required. In addition, we reiterate the Commission\u2019s broad discretion in setting just and reasonable rates.\nFinally, the Attorney General takes issue with three aspects of the rates and charges adopted for the individual tariff schedules: the $12.50 monthly residential facilities charge; the residential declining block winter energy charge; and the residential space heat rate. Again, the Attorney General argues that the rate design violates section 1\u2014102 of the Act (Ill. Rev. Stat. 1989, ch. 111\u2154, par. 1\u2014102) because the rates and rate structures do not reflect a consideration of the effects of excess capacity. For reasons discussed earlier, we find the argument without merit. We find substantial evidence in the record to support the Commission\u2019s determination.\nThe setting of utility rates is a legislative rather than a judicial function. (Hartigan, 117 Ill. 2d at 142, 510 N.E.2d at 874.) \u201c \u2018A just and reasonable rate *** is *** a question of sound business judgment rather than one of legal formula ***.\u2019 \u201d The determination of what is a just and reasonable rate \u201c \u2018is a question of fact to be settled by the good sense of the tribunal it may come before.\u2019 \u201d (Produce Terminal Corp. v. Illinois Commerce Comm\u2019n (1953), 414 Ill. 582, 590, 112 N.E 2d 141, 144, quoting State Public Utilities Comm\u2019n ex rel. City of Springfield v. Springfield Gas & Electric Co. (1919), 291 Ill. 209, 218, 125 N.E. 891, 896.) We accord great weight to the order of the Commission as reflecting \u201cthe judgment of a tribunal appointed by law and informed by experience.\u201d Village of Apple River v. Illinois Commerce Comm\u2019n (1960), 18 Ill. 2d 518, 523, 165 N.E.2d 329, 332.\nFor the reasons stated above, we affirm the order of the Commission in this matter.\nAffirmed.\nGORMAN and BARRY, JJ., concur.", "type": "majority", "author": "JUSTICE McCUSKEY" } ], "attorneys": [ "Roland W. Burris, Attorney General, of Springfield, and David G. Gilbert and Patricia A. O\u2019Brien, both of Governor\u2019s Office of Consumer Services, of Chicago (Robert W. Cushing and Janice Dale, Assistant Attorneys General, of Chicago, of counsel), for petitioners.", "Roland W. Burris, Attorney General, of Springfield (John P. Kelliher, Special Assistant Attorney General, of Chicago, of counsel), for respondent Illinois Commerce Commission.", "Clark M. Stalker, Carrie Hightman, and Owen E. MacBride, all of Schiff, Hardin & Waite, of Chicago, and Edward C. Fitzhenry, Jr., and Eric Robertson, both of Lueders, Robertson & Konzen, of Granite City, for respondent Illinois Power Company." ], "corrections": "", "head_matter": "GOVERNOR\u2019S OFFICE OF CONSUMER SERVICES, Appellant, v. ILLINOIS COMMERCE COMMISSION et al., Appellees.-THE PEOPLE ex rel. ROLAND W. BURRIS, Attorney General, Appellant, v. ILLINOIS COMMERCE COMMISSION et al., Appellees.\nThird District\nNos. 3\u201490\u20140875, 3\u201491\u20140032 cons.\nOpinion filed October 16, 1991.\nRoland W. Burris, Attorney General, of Springfield, and David G. Gilbert and Patricia A. O\u2019Brien, both of Governor\u2019s Office of Consumer Services, of Chicago (Robert W. Cushing and Janice Dale, Assistant Attorneys General, of Chicago, of counsel), for petitioners.\nRoland W. Burris, Attorney General, of Springfield (John P. Kelliher, Special Assistant Attorney General, of Chicago, of counsel), for respondent Illinois Commerce Commission.\nClark M. Stalker, Carrie Hightman, and Owen E. MacBride, all of Schiff, Hardin & Waite, of Chicago, and Edward C. Fitzhenry, Jr., and Eric Robertson, both of Lueders, Robertson & Konzen, of Granite City, for respondent Illinois Power Company." }, "file_name": "0068-01", "first_page_order": 90, "last_page_order": 98 }