People v. Ill. Commerce Comm’n

Peoples Gas and North Shore Gas sell and deliver natural gas to millions of residential and commercial Chicago area customers through their lines. Their operating costs include the costs of the gas itself and the costs of distribution. The Illinois Commerce Commission approved a volume-balancing-adjustment rider, or Rider VBA, which imposed so-called “revenue decoupling” on the companies’ customers. Rider VBA prevents under-recovery and over-recovery of fixed distribution costs by “decoupling” the revenue for those costs from the volume of gas delivered. If actual revenues dip below a level set by the Commission due to decreased delivery volume, the company issues customers a surcharge for the difference. If revenues tick above that level due to increased volume, the company issues customers a credit. In 2012, the Commission approved the rider on a permanent basis. The Attorney General and the Citizens Utility Board challenged that decision. The appellate court and Illinois Supreme Court affirmed, rejecting arguments that Rider VBA departed from “principles of rate-of-return regulation,” that a just and reasonable rate under the Act provides only an opportunity for, and not a guarantee of, a profit; that Rider VBA constituted impermissible single-issue rate-making; and that Rider VBA constitutes impermissible retroactive rate-making. View "People v. Ill. Commerce Comm'n" on Justia Law