Take a virtual trip to Ottawa, Illinois, by listening to a recording of yesterday's oral arguments before the Illinois Appellate Court regarding whether or not the Rock Island Clean Line is a public utility under state law.
The recording, just over an hour long, includes arguments from the ICC and RICL in (flimsy) support of the ICC's decision to issue a conditional permit to RICL, as well as from ComEd's lawyer on behalf of appellants. The appellants asked the court to reverse the ICC's order and send the matter back to the Commission.
The attorney for the appellants discussed why RICL is not a public utility using a demonstrative that listed six attributes of public utilities. In contrast to public utilities operating (or proposed) in Illinois, RICL has NONE of the attributes of a public utility.
The recording, just over an hour long, includes arguments from the ICC and RICL in (flimsy) support of the ICC's decision to issue a conditional permit to RICL, as well as from ComEd's lawyer on behalf of appellants. The appellants asked the court to reverse the ICC's order and send the matter back to the Commission.
The attorney for the appellants discussed why RICL is not a public utility using a demonstrative that listed six attributes of public utilities. In contrast to public utilities operating (or proposed) in Illinois, RICL has NONE of the attributes of a public utility.
The point was made that the ICC's issuance of a permit to RICL for a speculative, future project was premature. The statute requires the applicant to possess certain attributes at the time it grants the license. To go around this failure, the ICC conditioned its permit upon a future showing of RICL's ability to finance its project. Said showing is to be made by making a filing to the ICC Staff, who will decide whether the financing stipulation has been met. Since when does a Commission staff anywhere have decisional authority? If RICL had met the financial requirements to be granted a permit when it was granted the permit, the Commission would have evaluated RICL's financial evidence to make a determination whether it was adequate to meet the statute. Instead, the ICC punted its authority over to the Staff at a future date to make a decision in which the other parties cannot participate.
The arguments were constantly interrupted by questions from the three judge panel hearing the case. These judges have been doing their homework!
One judge asked early on whether RICL's future use of eminent domain demonstrated a desire to keep costs low in order to increase profits.
That's exactly what it demonstrates! The judge pointed out the difference between a public utility's ratepayer-financed transmission projects, and RICL's investor-financed merchant transmission project. In the case of the public utility project, eminent domain may be granted in order to keep land acquisition costs as low as possible for the ratepayers who must pay for the project. However, in RICL's merchant transmission case, RICL's possible use of eminent domain will keep land acquisition costs low for its private investors. And since RICL's rates are set through negotiation, or by auction to the highest bidder, the price paid for transmission service is not the product of cost of service rate regulation. It is set by market. Any savings from using eminent domain to acquire property go directly into RICL's pocket and increase the company's profit. This, in a nutshell, is what makes the use of eminent domain for merchant transmission projects wrong. Eminent domain is supposed to be used for the benefit of the public, not for the benefit of private investors.
The judge further pointed out that a public utility has a legal obligation to serve all of the public in a non-discriminatory manner, otherwise any company could hold itself out as a public utility while it only serves certain customers who can afford its services. If a company proposes to pipe Goldschalger to taps in a limited number of homes who can afford it, it is not legally a public utility. RICL is no different.
There was also a lot of discussion regarding the amount of progress a permit holder must demonstrate in order to have its 2-year permit extended.
When asked about RICL's progress in Iowa, RICL's attorney said it had made a filing at the Iowa Utilities Board that is "moving the project forward slowly" in Iowa. (We'll laugh about that in the next post!) He also whined about how unusual Iowa law is and that Iowa should change its laws to be more like Illinois and other states. Hear that, Iowa? RICL doesn't like your laws! Awwwww.....
The court will issue a decision on the appeal "soon."
The arguments were constantly interrupted by questions from the three judge panel hearing the case. These judges have been doing their homework!
One judge asked early on whether RICL's future use of eminent domain demonstrated a desire to keep costs low in order to increase profits.
That's exactly what it demonstrates! The judge pointed out the difference between a public utility's ratepayer-financed transmission projects, and RICL's investor-financed merchant transmission project. In the case of the public utility project, eminent domain may be granted in order to keep land acquisition costs as low as possible for the ratepayers who must pay for the project. However, in RICL's merchant transmission case, RICL's possible use of eminent domain will keep land acquisition costs low for its private investors. And since RICL's rates are set through negotiation, or by auction to the highest bidder, the price paid for transmission service is not the product of cost of service rate regulation. It is set by market. Any savings from using eminent domain to acquire property go directly into RICL's pocket and increase the company's profit. This, in a nutshell, is what makes the use of eminent domain for merchant transmission projects wrong. Eminent domain is supposed to be used for the benefit of the public, not for the benefit of private investors.
The judge further pointed out that a public utility has a legal obligation to serve all of the public in a non-discriminatory manner, otherwise any company could hold itself out as a public utility while it only serves certain customers who can afford its services. If a company proposes to pipe Goldschalger to taps in a limited number of homes who can afford it, it is not legally a public utility. RICL is no different.
There was also a lot of discussion regarding the amount of progress a permit holder must demonstrate in order to have its 2-year permit extended.
When asked about RICL's progress in Iowa, RICL's attorney said it had made a filing at the Iowa Utilities Board that is "moving the project forward slowly" in Iowa. (We'll laugh about that in the next post!) He also whined about how unusual Iowa law is and that Iowa should change its laws to be more like Illinois and other states. Hear that, Iowa? RICL doesn't like your laws! Awwwww.....
The court will issue a decision on the appeal "soon."
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