nextgrid illinois: utility of the future …(boma/chicago) contains: 1) an evaluation of the impacts...

NEXTGRID ILLINOIS: UTILITY OF THE FUTURE STUDY - COMMENTS BY THE BUILDING OWNERS AND MANAGERS ASSOCIATION OF CHICAGO Comments to the Draft Final Report compiled by the University of Illinois Department of Electrical and Computing Engineering at the University of Illinois at Urbana-Champaign (UIUC) on behalf of the Illinois Commerce Commission (ICC).

Abstract This document submitted by the Building Owners and Managers Association of Chicago (BOMA/Chicago) contains: 1) An evaluation of the impacts of past energy initiatives in Illinois that have led to dramatic increases in costs for the state’s electricity consumers; and, 2) Recommendations intended to improve the internal consistency, accuracy and value of the Draft Final Report as presented by UIUC and the ICC.

Table of Contents Background .................................................................................................................................................. 1

NextGrid Illinois: Utility of the Future Study. .......................................................................................... 1

BOMA/Chicago. ....................................................................................................................................... 1

BOMA/Chicago Perspective on Past Energy Initiatives ................................................................................ 1

EIMA and FEJA Experience. ...................................................................................................................... 2

Observations & Recommendations ........................................................................................................... 14

Comments & Recommendations (Structural Issues). ............................................................................ 14

Comments & Recommendations (Topical Issues). ................................................................................. 16

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BACKGROUND This submittal includes general and specific recommendations to enhance the value of the NextGrid: Illinois’ Utility of the Future Study Draft Report (Draft Report) by the Building Owners and Managers Association of Chicago (BOMA/Chicago). Additionally, this report presents the consumer cost impact of prior Illinois energy sector studies and initiatives. This cost analysis is presented to remind all NextGrid participants that consumers have ultimately paid the price for the “big ideas” generated by similar initiatives in the recent past. Accordingly, any new capital projects or services should be closely evaluated and scrutinized: First, by whether the service or gadget is available in the competitive market or could be available barring barriers by regulation; and second, by a robust cost-benefit analysis.

NEXTGRID ILLINOIS: UTILITY OF THE FUTURE STUDY. The Illinois Commerce Commission (ICC) initiated the ‘NextGrid: Illinois’ Utility of the Future Study’ (Study) on March 22, 2017 in Docket 17-0142. The purpose of the Study was to generate a Final Report that “outlines relevant issues, opportunities and challenges, identifies areas of consensus and disagreement, educates policy makers, and provides a range of recommendations aimed at empowering customers and communities, driving economic development, optimizing the electric utility industry, and creating a 21st

Century regulatory model that

supports innovation.”1

The ICC selected the Department of Electrical and Computing Engineering at the University of Illinois at Urbana-Champaign (UIUC) as the NextGrid Lead Facilitator. UIUC prepared a Draft Report based on the individual reports produced by the seven Working Groups. The Working Groups were comprised of subject matter experts selected by the ICC and others and oriented around the following subject areas: New Technology Deployment and Grid Integration, Metering, Communications and Data, Reliability, 1 Illinois Commerce Commission, Resolution, Docket 17-0142, March 22, 2017

Resiliency and Security, Customer and Community Participation, Electricity Markets, Regulatory, Environmental and Policy Issues, and Ratemaking.

The Working Group held a minimum of four (4) closed meetings to make and receive information. Each Working Group leader drafted a Working Group report. UIUC combined the working group reports into a Draft Report. The ICC posted for public comment a Draft Report on December 14, 2018.

BOMA/CHICAGO. BOMA/Chicago is an association that represents 239 commercial office, institutional and public buildings in the City of Chicago, and 169 affiliate members that provide commercial building services to support operational excellence. BOMA/Chicago members make up approximately 80 percent of downtown’s total rentable building area and 98 percent of rentable space in Class A buildings downtown. BOMA/Chicago has long played a role in drafting new building codes, advancing fire and life safety measures, negotiating mutually beneficial labor agreements and enhancing energy efficiency and sustainability practices.

Currently, BOMA/Chicago member buildings support over 34,000 jobs, house more than 412,000 tenant employees and over 10,000 local, national and international companies. BOMA/Chicago buildings also support local schools and public services through payments of more than $1 billion in annual property taxes. By protecting the interests of the owners and managers of these buildings, BOMA/Chicago also supports the businesses that are housed in them - businesses that require quality office space and access to cost effective and reliable energy supplies.

BOMA/CHICAGO PERSPECTIVE

BOMA/Chicago building tenants have options other than Chicago. Tenants with multiple office locations in other states can (and do) shift staff between locations in response to costs. Because energy represents a major operating cost for commercial real

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estate, many large tenants could consider shrinking or eliminating their Chicago operations in favor of lower cost options in other states if energy costs were to rise in Illinois.

In response to the importance of energy to our industry, BOMA/Chicago regularly engages with its members on energy issues though its Energy and Sustainability Committee and assists members in accessing energy efficiency, demand response, and retro-commissioning services that reduce energy costs while maintaining functionality and comfort for tenants. BOMA/Chicago has also committed its expertise to every major energy stakeholder initiative in Illinois over the past twenty plus years including: Retail Deregulation (1996), Post-2006 Transition (2005-2006), Illinois Smart Grid Initiative (ISGI) (2008-2009), and the House Resolution 1146 (HR-1146 Study) (2014).

BOMA/Chicago notes that the outcomes of the ISGI stakeholder process supported the passage of the Energy Infrastructure Modernization Act (EIMA, PA 97-0616, enacted in 2011), and the HR-1146 Study largely informed the Future Energy Jobs Act (FEJA, PA

2 Financial values for Ameren Illinois reflect the performance of Ameren Illinois’ combined electricity and natural gas operations.

99-0906, enacted in 2017). BOMA/Chicago’s analysis of the results of EIMA and FEJA informs BOMA/Chicago’s evaluation and recommendations for the NextGrid Initiative.

EIMA AND FEJA EXPERIENCE. The ISGI and HR-1146 initiatives resulted in energy legislation in Illinois (ISGI for EIMA, and HR-1146 for FEJA). In both cases, the resulting statutes required the utilities to expend substantial capital for distribution system upgrades for which they received a Rate of Return.

A review of the annual financial disclosures of the parent companies of Ameren Illinois and ComEd reveal accelerated earnings and profitability for the utilities increased with EIMA and FEJA. Figure 1 conveys the Total Operating Revenues, Operating Income, Net Income, and Rate Base for each utility for fiscal years 2013 through 2017 as reported in parent company 10-K filings with the Securities and Exchange Commission.2

Notable trends identified in the financial reports for Ameren Illinois and ComEd include:

FIGURE 1: HISTORICAL EARNINGS FOR AMEREN ILLINOIS & COMED. AMEREN ILLINOIS AND COMED HAVE INCREASED TOTAL OPERATING

REVENUES BY OVER $36 BILLION AND INCREASED RATEBASE BY OVER $3.1 BILLION OVER THE 2013 TO 2017 PERIOD.

2013 2014 2015 2016 2017 5-Year Total

Total Operating Revenues $2,311,000,000 $2,498,000,000 $2,466,000,000 $2,490,000,000 $2,528,000,000 $12,293,000,000Operating Income $415,000,000 $450,000,000 $466,000,000 $544,000,000 $580,000,000 $2,455,000,000Net Income $160,000,000 $201,000,000 $214,000,000 $252,000,000 $268,000,000 $1,095,000,000ICC Approved Ratebase $2,025,879,000 $2,260,709,000 $2,480,480,000 $2,555,714,000 $2,738,545,000 -

Total Operating Revenues $4,464,000,000 $4,564,000,000 $4,905,000,000 $5,239,000,000 $5,521,000,000 $24,693,000,000Operating Income $954,000,000 $980,000,000 $1,017,000,000 $1,205,000,000 $1,323,000,000 $5,479,000,000Net Income $249,000,000 $408,000,000 $426,000,000 $378,000,000 $567,000,000 $2,028,000,000ICC Approved Ratebase $6,367,003,000 $6,701,622,000 $7,344,017,000 $8,276,940,000 $8,831,360,000 -

Total Operating Revenues $6,775,000,000 $7,062,000,000 $7,371,000,000 $7,729,000,000 $8,049,000,000 $36,986,000,000Operating Income $1,369,000,000 $1,430,000,000 $1,483,000,000 $1,749,000,000 $1,903,000,000 $7,934,000,000Net Income $409,000,000 $609,000,000 $640,000,000 $630,000,000 $835,000,000 $3,123,000,000ICC Approved Ratebase $8,392,882,000 $8,962,331,000 $9,824,497,000 $10,832,654,000 $11,569,905,000 -

Ameren Illinois

Commonwealth Edison

Combined (Ameren Illinois & Commonwealth Edison)

Financial Metric Fiscal Years

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§ Total Operating Revenues for Ameren Illinois grew by over 9% during the 2013 to 1017 period, and by over 23% for ComEd over the same period.

§ Operating Income for Ameren Illinois grew by over 39% during the 2013 to 1017 period, and by over 38% for ComEd over the same period.

§ Net Income (profits) for Ameren Illinois grew by over 47% during the 2013 to 2017 period, and by over 127% for ComEd over the same period.

While financially healthy utilities are essential to ensuring reliable energy services, BOMA/Chicago notes that utility profits represent an expense to utility customers. As such, EIMA and FEJA have caused significant cost increases for BOMA/Chicago members – as well as all other Ameren Illinois and ComEd customers across the state.

§ EIMA Cost Impact. EIMA required Ameren Illinois and ComEd to invest $3 billion in electric system upgrades, modernization projects, and training facilities over the planned ten-year period. These

expenditures were to be incremental to the utilities’ total annual capital investment program, as set by the average of utility capital spending for calendar years 2008, 2009, and 2010.

Under EIMA, electric distribution revenue for the utilities varies from year to year based upon fluctuations in underlying costs, investments being recovered and allowed Return on Equity. Each utility’s allowed Return on Equity is set at the annual average rate on 30-year treasury notes plus 580 basis points, subject to a collar of plus or minus 50 basis points. Therefore, the collar limits favorable and unfavorable impacts of weather and load on revenue. Each utility’s allowed Return on Equity is subject to reduction if specific reliability and customer service benefits are not met over the ten years of the EIMA authority.

Figures 2 and 3 convey the capital expenditures reported by Ameren Illinois and ComEd under EIMA. We note that the utilities aggressively spent their capital allowances quickly, and those capital

FIGURE 2: EIMA CAPITAL EXPENSES FOR AMEREN ILLINOIS. THROUGH 2018, AMEREN ILLINOIS HAS SPENT $590.5 MILLION (83%) OF ITS

BUDGETED $714.3 MILLION IN EIMA-RELATED CAPITAL EXPENDITURES.

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021Annual Capital Expenditures $26.4 $33.1 $89.2 $127.8 $106.0 $125.7 $82.3 $78.6 $26.3 $18.9Cumulative Capital Expenditures $26.4 $59.5 $148.7 $276.5 $382.5 $508.2 $590.5 $669.1 $695.4 $714.3

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Ameren Illinois: EIMA Capital Expenditures

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expenditures strongly correlate to the increases on Rate Base that the utilities have experienced in recent years (see Figure 1).

Figure 4 conveys the general Rate Increases that the ICC has approved for Ameren Illinois and ComEd that were first applied to consumer utility bills starting in January 2014.3

The utilities collect funds to recover operating and EIMA-related through distribution rate charges (i.e. Customer, Meter, Distribution and Demand Charges, and the Illinois Electricity Distribution Tax). Each utility rate class (i.e. residential small commercial, large commercial, etc.) has a schedule

3 Rate Case History Report, Illinois Commerce Commission 4 We identified January 2013 as the first billing cycle that fully reflected EIMA charges after the effective date of PA 98-0015 on May

22, 2013, and the ICC’s subsequent approval of new distribution rate formulas that reflected the impacts of PA 98-0015. 5 2019 Distribution Costs are calculated using the Billing Determinants and Distribution charges filed by Ameren Illinois in Rate Case

18-0807 and ComEd in Rate Case 18-0808, which were applied starting January 1, 2019.

of distribution rate charges that are approved by the ICC in the annual formula rate cases.

To calculate the consumer cost impacts of EIMA for different types of Ameren Illinois and ComEd customers, we multiplied the billing determinants for each distribution rate charge (i.e. number of customers, number of kWh delivered, etc.) by the distribution rates charged by the utilities in each of the months between January 2013 and December 2019.4 This process established a discreet cost for each billing determinant for every consumer rate class. By comparing distribution costs for years 2014 through 2019 to the base year (2013) we can calculate the growth in costs that are attributable to EIMA.5

FIGURE 3: EIMA CAPITAL EXPENSES FOR COMED. THROUGH 2018, AMEREN ILLINOIS HAS SPENT $2.503 BILLION (97%) OF ITS BUDGETED

$2.569 BILLION IN EIMA-RELATED CAPITAL EXPENDITURES.

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021Annual Capital Expenditures $165.0$253.0$444.0 $663.0$621.0 $271.0 $86.0 $26.0 $20.0 $20.0Cumulative Capital Expenditures $165.0$418.0$862.0$1,525.$2,146.$2,417.$2,503.$2,529.$2,549.$2,569.

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ComEd: EIMA Capital Expenditures

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Figure 5 identifies the cost impacts of EIMA for each of Ameren Illinois’ primary customer groups. In the aggregate, our analysis calculates that electricity delivery rates have increased for all Ameren Illinois customers by $302 million between 2013 and 2019. This tracks closely with the rate increase allowed by the ICC for Ameren Illinois as noted in Figure 4.

Between 2014 and 2019, we calculate that Ameren Illinois customers will pay more than $1.26 billion in electricity delivery charges than if rates remained at 2013 levels (i.e. costs attributable to EIMA). EIMA-related costs for the primary Ameren Illinois customer segments are as follows:

§ Residential Customers (DS-1 Rate Class). Total EIMA cots for the average Ameren Illinois Residential customer have increased by approximately $620 between 2013 and 2019.

§ Small Commercial Customers (DS-2 Rate Class) Total EIMA costs for the average Ameren Illinois Small Commercial customer have increased by approximately $1,819 between 2013 and 2019.

§ Medium Commercial Customers (DS-3 Rate Class) Total EIMA costs for the average Ameren Illinois Medium Commercial customer have increased by approximately $41,878 between 2013 and 2019.

§ Large Commercial & Industrial Customers (DS-4 Rate Class). Total EIMA costs for the average Ameren Illinois Large Commercial customer have increased by approximately $214,590 between 2013 and 2019.

§ Outdoor Lighting Customers (DS-5 Rate Class). Total EIMA costs for Ameren Illinois’ Outdoor Lighting Customers have increased by over $41 million between 2013 and 2019 (a cumulative increase of 254%).

Through 2019 cumulative costs increase for Ameren Illinois customers resulting from EIMA exceed $1.2 billion. With additional capital spending under EIMA expected through 2021 and the extended amortization applied to EIMA expenditures, Ameren Illinois customers will continue paying EIMA premiums over many more years.

FIGURE 4: EIMA RATE INCREASES FOR AMEREN ILLINOIS & COMED. CONSUMERS WILL PAY OVER $1 BILLION MORE IN 2019 THAN IN

2013 DUE TO DISTRIBUTION RATE INCREASES APPROVED UNDER EIMA.

ICC Rate Case #Start Year for Rate

Recovery to CommenceICC Approved

Revenue ChangeICC Rate Case #

Start Year for Rate Recovery to Commence

ICC Approved Revenue Change

13-0301 January-14 -$44,363,000 13-0318 January-14 $340,945,00014-0317 January-15 $204,346,000 14-0312 January-15 $232,272,00015-0305 January-16 $105,782,000 15-0287 January-16 -$66,677,00016-0262 January-17 -$14,488,000 16-0259 January-17 $127,498,70917-0197 January-18 -$17,339,000 17-0196 January-18 $95,583,00018-0807 January-19 $71,606,000 18-0808 January-19 -$24,085,000

$305,544,000 $705,536,709Cumulative Rate Increases for ComEd

customers in Calendar Year 2019Cumulative Rate Increases for Ameren

Illinois customers in Calendar Year 2019

Ameren Illinois Commonwealth Edison

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FIGURE 5: EIMA RATE IMPACTS FOR AMEREN ILLINOIS CONSUMERS. AMEREN CUSTOMERS WILL PAY $300 MILLION MORE IN DELIVERY RATES

IN 2019 THAN IN 2013 AND WILL PAY TOTAL PREMIUMS OF MORE THAN $1.3 BILLION BETWEEN 2013 AND 2019 DUE TO EIMA.

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Figure 6 identifies the cost impacts of EIMA for each of ComEd’s primary customer groups. In the aggregate, our analysis calculates that electricity delivery rates have increased for all Ameren Illinois customers by $710 million between 2013 and 2019. This tracks closely with the rate increase allowed by the ICC for ComEd as noted above in Figure 4.

Between 2014 and 2019, we calculate that ComEd customers will pay more than $3.53 billion in electricity delivery charges than if rates remained at 2013 levels. EIMA-related costs for the primary ComEd customer segments are as follows:

§ Residential Customers (Single Family, Multi-Family, Single Family with Electric Space Heat, Multi-Family with Electric Space Heat Rate Delivery Classes). Total costs for electricity delivery for the average ComEd Residential Customer have increased by approximately $492 between 2013 and 2019.

§ Small Commercial Customers (Watt-Hour and Small Load Delivery Classes). Total costs for electricity delivery for the average Ameren Illinois Small Commercial customer have increased by approximately $1,471 between 2013 and 2019.

§ Medium Commercial Customers (Medium Commercial Delivery Class). Total costs for electricity delivery for the average ComEd Medium Commercial Customer have increased by approximately $19,413 between 2013 and 2019.

§ Large Commercial & Industrial Customers (Large Load, Very Large Load, Extra Large Load, High Voltage, Railroad Delivery Classes). Total costs for electricity delivery for the average ComEd Large Commercial Customer have increased by approximately $120,585 between 2013 and 2019.

§ Outdoor Lighting (Dusk to Dawn Lighting and General Lighting Delivery Classes). Total electricity delivery costs for ComEd’s Outdoor Lighting customers have increased by over $25 million between 2013 and 2019 (a cumulative increase of 138%).

Through 2019 cumulative costs for EIMA for ComEd ratepayers exceed $3.5 billion. With additional capital spending under EIMA expected through 2021 and the extended amortization applied to EIMA expenditures, ComEd customers will continue paying EIMA premiums over many more years.

Figure 7 presents the cost impacts that twelve BOMA/Chicago members have experienced as a result of EIMA. As noted, distribution rates impacted by EIMA have increased by an average of approximately 40% between 2013 and 2019.

§ FEJA. Enacted in 2017 (Public Act 99-0906), FEJA requires Ameren Illinois and ComEd to facilitate:

- Zero Emissions Credits (ZECs). The utilities must purchase ZECs generated by the Clinton and Quad Cities nuclear power stations owned by Exelon Corporation over a ten (10) year term (a pass-through expense to be paid by consumers).

- Renewable Energy Credits (RECs). The utilities must purchase RECs from a range of new renewable energy assets to be built in Illinois through fifteen (15) year contracts (a pass-through expense to be paid by consumers). Prior to FEJA, the utilities procured RECs only for default rate through the Illinois Power Agency. Retail Energy Suppliers secured RECs for 50% of their renewable portfolio standard obligations and made an Alternative Compliance Payment (ACP) to the Illinois Power Agency for the remainder of their obligations. The Illinois Power Agency purchased REC using ACP funds. FEJA provides that the utilities will have exclusive REC purchasing responsibilities for all accounts in 2019. Because the utilities will require all funding available under the renewable portfolio standard cost cap, the costs of the FEJA-based REC purchases will be higher than the costs realized by the retail energy suppliers in the period prior to FEJA.

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FIGURE 6: EIMA RATE IMPACTS FOR COMED CONSUMERS. COMED CUSTOMERS WILL PAY $710 MILLION MORE IN DELIVERY RATES IN

2019 THAN IN 2013 AND WILL PAY TOTAL PREMIUMS OF MORE THAN $3.5 BILLION BETWEEN 2013 AND 2019 DUE TO EIMA.

Consumer Rate Class & Rate Elements 2013 2014 2015 2016 2017 2018 2019

Customer Charges $425,374,155 $516,991,195 $409,950,989 $375,684,557 $400,846,206 $422,288,242 $415,176,219Meter Charges $119,481,386 $138,540,825 $180,647,396 $182,633,429 $196,669,193 $212,644,591 $222,212,379Delivery Charges $546,519,426 $654,684,565 $806,447,956 $833,764,909 $822,295,942 $880,168,196 $841,471,575Illinois Electricity Distribution Tax Charges $33,207,367 $31,446,601 $31,212,220 $31,465,886 $29,938,593 $33,265,891 $32,067,048

Annual Residential Rate Class Total $1,124,582,334 $1,341,663,186 $1,428,258,561 $1,423,548,782 $1,449,749,934 $1,548,366,919 $1,510,927,221Rate Class - Reporting Year Increase over 2013 Base Year (%) - 19.3% 27.0% 26.6% 28.9% 37.7% 34.4%Rate Class - Cumulative Increase over 2013 Rates (%) - 19.3% 46.3% 72.9% 101.8% 139.5% 173.8%Consumer - Reporting Year Average Annual Cost $329 $389 $412 $405 $409 $434 $415Consumer - Reporting Year Average Increase over 2013 Base Year ($) - $61 $83 $76 $80 $106 $87Consumer - Cumulative Increase over 2013 Base Year Rates ($) - $61 $144 $220 $300 $406 $492

Customer Charges $39,950,352 $51,370,208 $53,722,198 $48,082,479 $51,214,434 $62,095,829 $54,086,615Meter Charges $28,802,136 $33,266,203 $40,460,455 $42,514,154 $46,420,951 $55,094,890 $36,598,213Delivery & Demand Charges $196,086,564 $236,733,863 $261,290,736 $252,999,547 $263,913,249 $286,226,974 $267,778,114Illinois Electricity Distribution Tax Charges $14,242,268 $14,022,097 $14,356,274 $13,946,833 $13,959,623 $14,573,664 $14,305,470

Annual Small Commercial Rate Class Total $279,081,320 $335,392,370 $369,829,663 $357,543,013 $375,508,257 $417,991,358 $372,768,411Rate Class - Reporting Year Increase over 2013 Base Year (%) - 20.2% 32.5% 28.1% 34.6% 49.8% 33.6%Rate Class - Cumulative Increase over 2013 Rates (%) - 20.2% 52.7% 80.8% 115.4% 165.1% 198.7%Consumer - Reporting Year Average Annual Cost $822 $982 $1,078 $1,032 $1,073 $1,183 $1,053Consumer - Reporting Year Average Increase over 2013 Base Year ($) - $161 $256 $211 $251 $361 $232Consumer - Cumulative Increase over 2013 Base Year Rates ($) - $161 $417 $627 $878 $1,239 $1,471


Annual Small Commercial Rate Class Total $155,439,367 $185,958,029 $200,145,322 $197,865,231 $207,891,760 $218,746,175 $216,976,679Rate Class - Reporting Year Increase over 2013 Base Year (%) - 19.6% 28.8% 27.3% 33.7% 40.7% 39.6%

Rate Class - Cumulative Increase over 2013 Rates (%) - 19.6% 48.4% 75.7% 109.4% 150.2% 189.8%

Consumer - Reporting Year Average Annual Cost $8,912 $10,797 $11,882 $11,721 $12,400 $13,098 $12,990

Consumer - Reporting Year Average Increase over 2013 Base Year ($) - $1,885 $2,969 $2,808 $3,488 $4,185 $4,078

Consumer - Cumulative Increase over 2013 Base Year Rates ($) - $1,885 $4,854 $7,662 $11,150 $15,335 $19,413


Annual DS-4 Rate Class Total $409,745,100 $466,950,540 $514,856,282 $518,752,776 $527,150,159 $560,829,381 $568,857,489Rate Class - Reporting Year Increase over 2013 Base Year (%) - 14.0% 25.7% 26.6% 28.7% 36.9% 38.8%Rate Class - Cumulative Increase over 2013 Rates (%) - 14.0% 39.6% 66.2% 94.9% 131.7% 170.6%Consumer - Reporting Year Average Annual Cost $66,011 $74,798 $84,710 $85,405 $86,178 $92,636 $92,921Consumer - Reporting Year Average Increase over 2013 Base Year ($) - $8,787 $18,700 $19,395 $20,167 $26,625 $26,911Consumer - Cumulative Increase over 2013 Base Year Rates ($) - $8,787 $27,487 $46,882 $67,049 $93,674 $120,585

Fixture Charges $13,278,841 $11,288,649 $12,354,252 $16,238,478 $18,189,975 $20,143,256 $21,680,071Meter Charges $462,093 $451,067 $733,001 $669,769 $631,232 $644,515 $370,586Delivery & Demand Charges $3,585,692 $3,306,274 $4,521,862 $4,218,858 $4,224,328 $4,701,375 $4,777,173Illinois Electricity Distribution Tax Charges $826,097 $791,257 $813,631 $805,833 $815,649 $827,028 $831,464

Annual Lighting Rate Class Total $18,152,723 $15,837,247 $18,422,746 $21,932,937 $23,861,183 $26,316,174 $27,659,294Rate Class - Reporting Year Increase over 2013 Base Year ($) - -$2,315,476 $270,023 $3,780,214 $5,708,461 $8,163,451 $9,506,572Rate Class - Reporting Year Increase over 2013 Base Year (%) - -12.8% 1.5% 20.8% 31.4% 45.0% 52.4%Rate Class - Cumulative Increase over 2013 Rates ($) - -$2,315,476 -$2,045,452 $1,734,762 $7,443,223 $15,606,674 $25,113,246Rate Class - Cumulative Increase over 2013 Rates (%) -12.8% -11.3% 9.6% 41.0% 86.0% 138.3%

Customer Charges $485,670,567 $589,729,802 $485,586,775 $444,275,359 $472,646,164 $508,458,744 $493,993,424Meter Charges $154,234,123 $178,619,834 $229,211,799 $233,381,562 $251,822,853 $276,223,195 $264,108,690Delivery & Demand Charges $1,227,593,220 $1,463,234,362 $1,701,295,192 $1,723,928,734 $1,741,966,465 $1,860,951,862 $1,813,004,833Illinois Electricity Distribution Tax Charges $106,224,092 $102,928,724 $103,064,555 $101,818,607 $99,535,836 $106,472,950 $104,402,075Fixture Charges $13,278,841 $11,288,649 $12,354,252 $16,238,478 $18,189,975 $20,143,256 $21,680,071

Annual All Rate Classes Total $1,987,000,843 $2,345,801,372 $2,531,512,573 $2,519,642,739 $2,584,161,292 $2,772,250,007 $2,697,189,094Rate Class - Reporting Year Increase over 2013 Base Year ($) - $358,800,529 $544,511,730 $532,641,896 $597,160,450 $785,249,164 $710,188,251Rate Class - Reporting Year Increase over 2013 Base Year (%) - 18.1% 27.4% 26.8% 30.1% 39.5% 35.7%Rate Class - Cumulative Increase over 2013 Rates ($) - $358,800,529 $903,312,259 $1,435,954,155 $2,033,114,605 $2,818,363,768 $3,528,552,019Rate Class - Cumulative Increase over 2013 Rates (%) 18.1% 45.5% 72.3% 102.3% 141.8% 177.6%

Residential Accounts

Small Commercial Accounts

Medium Commercial Accounts

Large Commercial & Industrial Accounts

Lighting Accounts

All Rate Classes

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- Consumer Education. The utilities must sponsor a range of consumer education and outreach programs to assist consumers in reducing energy consumption and costs (a pass-through expense to be paid by consumers).

- Energy Efficiency Programs. The utilities must invest capital to provide energy efficiency programs and grants to serve utility customers with a peak demand of less than 10 MW (an addition to ratebase and included in the formula-based ratemaking). Prior to FEJA, the utilities operated energy efficiency programs for all rate classes using ratepayer funds on a pass-through basis. Though the utilities could recover program development, management and reporting costs – the bulk of the energy efficiency program costs were net neutral for utility earnings. FEJA provides that the utilities fund the energy efficiency programs as a capital expense and will therefore be allowed to earn a rate of return on all energy efficiency program grants and expenditures. Due to this conversion from pass-

through to rate of return compensation, consumers realized a discount on efficiency charges in the first years of the new efficiency rules, with large increases subsequently.

- Voltage Optimization. The utilities must invest capital to improve the management of voltage levels throughout the utility distribution systems to reduce energy losses (an addition to ratebase and included in the formula-based ratemaking).

- Rooftop Solar Grants. The utilities must invest capital to pay consumers a grant equal to $250 per kW of rooftop solar installations located within the utility distribution service regions (an addition to ratebase and included in the formula-based ratemaking).

Figures 8 and 9 convey the projected annual spending for FEJA-related programs between 2017 and 2027 by Ameren Illinois and ComEd. As noted, Ameren Illinois is projected to spend approximately $3.5 billion on programs mandated by FEJA, and ComEd is projected to spend approximately $8.0

FIGURE 7: EIMA RATE INCREASES FOR SELECT BOMA/CHICAGO BUILDINGS SERVED BY COMED. ELECTRICITY DELIVERY RATES HAVE

INCREASED OVER 40% BETWEEN 2013 AND 2019 FOR COMMERCIAL OFFICE BUILDINGS OF VARYING SIZES. ADDITIONAL INCREASES

WILL BE REALIZED OVER FUTURE YEARS AS FULL COST RECOVERY IS ALLOWED UNDER FORMULA RATES.

Respondent Gross Square Feet of

Commercial Office Space

Rate Class

Costs Attributed to EIMA Cost Premium

in 2019 (2019 vs. 2013)

Total Cost Premiums

(2014 to 2019)

Total Rate Increase %

(2013-2019) Respondent 1 >1,000,000 1,000 kW - 10 MW $119,281 $524,024 40.1% Respondent 2 750-1,000,000 1,000 kW - 10 MW $31,092 $147,920 37.5% Respondent 3 500-750,000 1,000 kW - 10 MW $52,514 $239,786 39.1% Respondent 4 >1,000,000 > 10 MW $255,715 $874,143 27.2% Respondent 5 >1,000,000 1,000 kW - 10 MW $53,412 $242,532 37.8% Respondent 6 <500,000 400 kW - 1,000 kW $20,805 $89,356 46.5% Respondent 7 500-750,000 1,000 kW - 10 MW $46,946 $215,460 38.6% Respondent 8 500-750,000 400 kW - 1,000 kW $20,105 $86,302 46.1% Respondent 9 <500,000 1,000 kW - 10 MW $40,615 $188,644 38.5%

Respondent 10 <500,000 400 kW - 1,000 kW $15,610 $67,579 46.2% Respondent 11 <500,000 400 kW - 1,000 kW $6,560 $29,650 46.3% Respondent 12 <500,000 400 kW - 1,000 kW $23,395 $100,100 45.8%

TOTAL $686,051 $2,805,496 -

Page | 10

FIGURE 8: FEJA EXPENSES FOR AMEREN ILLINOIS. AMEREN ILLINOIS IS PROJECTED TO SPEND $3.5 BILLION ON FEJA RELATED PROGRAMS

FIGURE 9: FEJA EXPENSES FOR COMED. COMED IS PROJECTED TO SPEND $8.0 BILLION ON FEJA RELATED PROGRAMS

$-

$1,000,000,000

$2,000,000,000

$3,000,000,000

$4,000,000,000

$5,000,000,000

$6,000,000,000

$7,000,000,000

$8,000,000,000

$9,000,000,000

$-

$100,000,000

$200,000,000

$300,000,000

$400,000,000

$500,000,000

$600,000,000

$700,000,000

$800,000,000

$900,000,000

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Cumulative Speinding Levels

Annual Spending Levels

Projected Annual FEJA Spending Levels for ComEd

Zero Emissions Credits Solar Rebates Renewable Portfolio Standard

Energy Efficiency Training Voltage Optimization

Cumulative Utility Spending

Page | 11

billion on FEJA-related programs between 2017 and 2027.

For Ameren Illinois, approximately $2 billion of the $3.5 billion in total program spending will be included in the Rate Base. For ComEd, approximately $4.5 billion of the total $8.0 billion in program spending will be included in Rate Base. These FEJA-based Rate Base inclusions are in addition to the $3.1 billion in Rate Base allotted to Ameren Illinois and ComEd by EIMA.

Ameren Illinois and ComEd collect funds to recover pass-through costs as well as the capital and guaranteed returns related to FEJA through tariff Riders (i.e. ComEd Riders EEPA and EEPP for Energy Efficiency program cost recovery, Rider ZEA for Zero Emissions Credits cost recovery, etc.). Each utility rate class (i.e. residential small commercial, large commercial, etc.) has a schedule of Rider charges that are approved by the ICC in the annual formula rate cases.

Figure 10 conveys the estimated net cost recovery levels that Ameren Illinois and ComEd that were first applied to consumer utility bills starting in June 2017 (the date of enactment for FEJA).

Because FEJA contains new programs (i.e. Zero Emission Credits, Consumer Education, Voltage Optimization, and Rooftop Solar Grants) as well as amendments to existing programs (REC purchases, Energy Efficiency Program), and stages the commencement of these programs at different times we set out to calculate the net consumer cost impacts of FEJA for Ameren Illinois and ComEd customers on an annual basis. To accomplish this, we applied known and estimated rates for the FEJA programs (as provided by ComEd and Exelon during the legislative deliberations concerning FEJA) to the projected volumes of consumption for each primary rate class of utility customers. Figure 10 conveys our estimated annual net costs to customers of Ameren Illinois and ComEd for the FEJA-related programs for the 2017 through 2027 period. To be clear, Ameren Illinois and ComEd customers will

continue to pay for FEJA programs beyond 2027 as substantial portions of FEJA expenditures are to be included in Rate Base and will be amortized for periods extending to 2046.

As shown in Figure 10, FEJA allowed for a near term rate reduction for Ameren Illinois Residential customers in 2017 and 2018 and all other classes for 2017. This was due largely to the conversion of energy efficiency programs funded by ratepayers on a pass-through basis to being funded by capital provided by the utilities. FEJA starts to increase net costs for all consumers by 2019 with an estimated cumulative cost increases for Ameren Illinois customers of $1.4 billion by 2027.

As with Ameren Illinois, FEJA allowed for a near term rate reduction for ComEd’s residential customers in 2017 (due to the conversion of energy efficiency programs towards the use of ComEd provided capital funding). However, FEJA starts to increase net costs for all ComEd consumers by 2019 with an estimated cumulative cost increases for Ameren Illinois customers of $3.1 billion by 2027.

Page | 12

FIGURE 10: FEJA EXPENSES FOR AMEREN ILLINOIS AND COMED. COMED CONSUMERS WILL PAY A TOTAL OF $9.2 BILLION FOR FEJA

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Residential -$32,133,935 -$10,713,734 $3,395,597 $16,600,328 $28,701,450 $41,313,559 $50,301,001 $52,747,576 $55,054,126 $63,426,941 $52,842,041 $321,534,952Small & Medium Commercial -$2,781,195 $13,659,242 $23,084,365 $30,247,366 $36,888,100 $43,893,462 $49,087,136 $53,908,347 $58,556,686 $66,189,214 $59,633,805 $432,366,528Large Commercial & Industrial (<10 MW) $5,200,779 $25,772,774 $37,718,524 $45,027,355 $52,017,188 $59,426,068 $66,198,732 $72,794,483 $79,214,398 $86,801,748 $80,803,871 $610,975,919Large Commercial & Industrial (>10 MW) -$531,349 $4,295,639 $6,227,951 $6,696,142 $7,093,676 $7,521,583 $7,698,233 $7,845,106 $7,988,610 $8,576,756 $4,431,023 $67,843,370

Annual Total -$30,245,700 $33,013,921 $70,426,436 $98,571,192 $124,700,414 $152,154,671 $173,285,103 $187,295,512 $200,813,821 $224,994,658 $197,710,739 $1,432,720,768

Residential -$26,230,807 $18,219,302 $51,733,811 $80,273,893 $117,904,189 $136,981,268 $160,539,121 $165,761,982 $180,903,506 $181,492,887 $153,924,268 $1,221,503,422Small & Medium Commercial -$29,616,679 $28,117,301 $58,830,399 $78,588,742 $97,829,028 $118,329,037 $136,073,066 $152,917,072 $169,085,203 $187,925,358 $164,807,491 $1,162,886,019Large Commercial & Industrial (<10 MW) $573,156 $29,841,167 $44,283,183 $50,996,636 $57,415,581 $64,396,385 $70,627,229 $76,771,079 $82,579,975 $89,119,689 $72,536,371 $639,140,451Large Commercial & Industrial (>10 MW) -$2,571,319 $9,749,988 $14,468,294 $15,217,770 $15,885,278 $16,689,255 $17,169,525 $17,657,322 $18,042,665 $18,674,518 $7,501,821 $148,485,117

Annual Total -$57,845,649 $85,927,758 $169,315,688 $225,077,042 $289,034,076 $336,395,945 $384,408,941 $413,107,454 $450,611,350 $477,212,451 $398,769,951 $3,172,015,008

Residential -$58,364,742 $7,505,569 $55,129,409 $96,874,221 $146,605,640 $178,294,827 $210,840,123 $218,509,558 $235,957,633 $244,919,827 $206,766,309 $1,543,038,373Small & Medium Commercial -$32,397,874 $41,776,543 $81,914,764 $108,836,108 $134,717,128 $162,222,499 $185,160,202 $206,825,419 $227,641,889 $254,114,572 $224,441,296 $1,595,252,547Large Commercial & Industrial (<10 MW) $5,773,935 $55,613,940 $82,001,707 $96,023,992 $109,432,769 $123,822,452 $136,825,961 $149,565,562 $161,794,373 $175,921,437 $153,340,242 $1,250,116,370Large Commercial & Industrial (>10 MW) -$3,102,668 $14,045,627 $20,696,245 $21,913,913 $22,978,954 $24,210,838 $24,867,758 $25,502,428 $26,031,276 $27,251,274 $11,932,844 $216,328,486

Annual Total -$88,091,348 $118,941,679 $239,742,124 $323,648,234 $413,734,490 $488,550,617 $557,694,043 $600,402,966 $651,425,171 $702,207,110 $596,480,690 $4,604,735,777

Utility and Rate Class

Ameren Illinois

ComEd

Ameren Illinois & ComEd Combined

2017 - 2027 Total

Program Years

Page | 13

Figure 11 conveys annual projected costs to be paid by BOMA/Chicago members and tenants. As noted, FEJA is projected to add over $380 million in new costs to BOMA/Chicago members and tenants between 2017 and 2046.

Based on direct experience with and cost analysis of EIMA and FEJA, BOMA/Chicago approaches the Draft Report with the following perspective:

§ Initiatives generate overbroad findings. ISGI and HR-1146 generated thousands of pages of content containing divergent and sometimes contradictory conclusions and findings. Weighing in at over 260 pages, the Draft Report appears to follow the same pattern as its predecessors.

§ Initiatives are leveraged for legislation. Despite lacking firm and consistent conclusions, ISGI and HR-1146 were used to justify EIMA and FEJA legislation. As the NextGrid Initiative and Draft Report was planned, paid for, and must be approved by the utilities, BOMA/Chicago expects

that the Final Report – whatever it contains – will be cited as a justification for new energy legislation in Illinois, and correspondingly rising costs to consumers with no cost-benefit analyses.

§ Increasing Rate Base is always expensive for consumers. As demonstrated in the above analyses, mandating utility spending through EIMA and FEJA has increased consumer costs by billions over the past six years. The Draft Report indicates a preference for more Rate of Return spending by the utilities (e.g. Distribution System Operator, Transactional Platforms, microgrids, fiber networks, transportation electrification, etc.) that, if included in utility Rate Base, will lead to even higher costs for consumers over the near and long term.

§ Mandating new energy costs will further decrease Illinois’ competitiveness. As noted earlier, tenants of BOMA/Chicago buildings can and do respond to rising costs with their feet. BOMA/Chicago is very concerned that the NextGrid initiative will serve to

FIGURE 11: PROJECTED FEJA EXPENSES FOR BOMA/CHICAGO MEMBERS & TENANTS. OVER $380 MILLION IN ADDED EXPENSES TO

BOMA/CHICAGO MEMBERS AND TENANTS THROUGH 2046

$-

$50,000,000

$100,000,000

$150,000,000

$200,000,000

$250,000,000

$300,000,000

$350,000,000

$400,000,000

$-

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

20172019

20212023

20252027

20292031

20332035

20372039

Cum

ulat

ive

Cost

to B

OM

A/Ch

icag

o &

Ten

ants

Annu

al C

ost t

o BO

MA/

Chic

ago

& T

enan

ts

Projected Annual Cost for FEJA: BOMA/Chicago & Tenants

BOMA Member Cost (Annual) BOMA Tenant Cost (Annual) Total BOMA Cost (Cumulative)

Page | 14

increase profits for the utilities, deliver minimal value to consumers, and erode the benefits of competition in the future.

OBSERVATIONS & RECOMMENDATIONS BOMA/Chicago has reviewed the Draft Report and submits the following comments, observations, and recommendations which are intended to improve the value of the Final Report and the NextGrid Initiative. BOMA/Chicago’s comments have been grouped into two categories: Structural and Topical.

COMMENTS & RECOMMENDATIONS (STRUCTURAL ISSUES). The NextGrid Initiative is a worthy undertaking; however, certain elements of the process have damaged the credibility of its work product. These include:

§ Limits to Stakeholder Participation. The ICC has been sued for allegedly excluding certain parties from the working group sessions (Cook County Chancery Court, Case Number 2018-CH-07943). Even if the allegations prove to be unfounded, the fact that the case has not been resolved has tainted the entire NextGrid Initiative and Reports.

§ Lack of Focus and Inconsistent Structure. The Draft Report is a 262-page synopsis of the output of seven working groups. The Report is disjointed and difficult to follow as there are several overlapping issues. Additionally, the Draft Report contains numerous “solutions in search of problems”. Except for working group 3 (Reliability, Resiliency and Security), the Draft Report lacks any Gap Analyses to discreetly define specific problems that policies are supposed to remedy. Additionally, the purposeful exclusion of any cost or cost/benefit analysis from the entire NextGrid process prevents the public from ascertaining whether a concept or issue is truly relevant or merely incidental.

§ Silence on Critical Disclosures. The provenance of the NextGrid Initiative presented in the Draft Report fails to note that UIUC serves as the

6 Contractual Funding and Services Agreement, Executed by UIUC on January 18, 2018

Facilitator for the NextGrid Initiative under a Service Agreement with Ameren Illinois and ComEd.6 Nor does the Draft Report divulge that under the Agreement, UIUC is obligated to generate an Interim and Final Report and that “(t)he Interim and Final Reports shall not be complete until prior review by UTILITY COMPANIES and acceptance by the ICC” (Page 9 of 9, Scope of Work, Contractual Funding and Services Agreement). Failure to disclose that the very utilities which could benefit from the outcomes of the NextGrid Initiative maintain financial and editorial control over the Final Report causes one to question whether the NextGrid Initiative was truly independent from the outset, and what editorial controls the utilities will exercise on the Final Report.

§ Internal Inconsistencies. The Draft Report contains contradictory and inconsistent statements that require either correction or clarification:

- Establishing Consensus. The Draft Report states that it does not seek to deliver a consensus view on the positions of stakeholders or establish the costs of proposed grid modernization options. But somehow certain opinions are presented as preferred or self-evident despite a lack of evidence or attribution.

Statement #1: “The ICC emphasized that its goal was not to drive stakeholders to reach consensus on the many emerging electricity issues facing Illinois.” – (Page 1).

Statement #2: “As these resources are integrated into the distribution grid, the need for independent distribution system operators (DSOs) that provide distribution network services along analogous lines as ISOs providing bulk grid services, becomes evident.” (Page 4)

Statement #3: “Efficient communication, trading and settlement involving very large numbers of small transactions may be best facilitated

Page | 15

through creation of a distribution-level market platform (distribution system platform or DSP).” (Page 48)

Statement #4: “Electrification of current, fossil-fueled technologies, such as on- and off-road transportation, industrial processes, buildings and farming applications, has huge potential to benefit customers, communities, the grid, the environment and the nation’s economic wellbeing.” (Page 14)

Statement #5: “Overall, the investment to accommodate added electrification loads can drive Illinois to emerge as a leader in technology and a role model for other states to emulate.” (8)

Statement #6: “Furthermore, the participating stakeholders strongly suggested that Illinois needs to encourage utilities, businesses and public institutions to invest in technologies and pursue policies that can accelerate electrification to facilitate widespread adoption of measures to develop electric vehicle fleets, rural electric-vehicle corridors, community solar, building technology and electrified autonomous/ride-share transportation options and other appropriate non-transportation utilization of fossil fuels. (Page 180)

- Consideration of Costs. The Draft Report states that establishing costs of grid modernization options, yet it also commits to ensuring cost-effectiveness – how can these statements exist on the same page of the Draft Report?

Statement #1: “The NextGrid study scope did not include the investigation of the projected costs and benefits of grid modernization investment strategies” - Page 2.

Statement #2: “The Report examines options for further grid modernization and candidate updates of state regulatory policies to ensure a cost-effective, safe, reliable and resilient

electricity system design and operations to benefit customers and communities across the state and to ensure the state’s solid economic growth.” - Page 2, 3

Such inconsistencies and contradictions are common to processes driven by multiple committees. However, the Final Report will only be credible if it consistently maintains neutrality and avoids including promotional statements that, incidentally, uniformly advocate for additional and undefined levels of capital spending by the utilities.

To further improve the value of the NextGrid Initiative, BOMA/Chicago recommends that the ICC consider adopting the following:

§ Restructure the Initiative. The ICC should amend the resolution creating the NextGrid Initiative to include multiple subsequent phases. In so doing, the current outputs by the working groups and UIUC can be treated as a dry-run fact-finding phase (Phase 1), allowing the ICC to issue a more cohesive, consistent and unconflicted Final Report. Recommended subsequent phases for the expanded NextGrid Initiative may include the following:

- Phase 2: Needs Assessment. Clearly defining the range of discreet problems that require policy or regulatory changes. These changes should necessarily include current barriers to entry and ant

- Phase 3: Cost/Benefit Analysis. Detailed cost and benefit analyses of problems defined in Phase 2 to allow for prioritization (i.e. which problems require solving in the near-, medium-, and long-term), and solution testing.

- Phase 4: Critical Planning. Creation of specific and vetted options for consideration by policymakers to break the cycle of ad hoc energy policymaking.

§ Commit to Transparency. All parties and members of the public must have the access guaranteed to them through the Open Meetings Act. It would be

Page | 16

advisable for all ICC Commissioners, staff, and contractors and subcontractors to receive enhanced training concerning the requirements of the Open Meetings Act, and for any subsequent NextGrid Initiative proceedings to be monitored by

representatives of the Attorney General’s Public Access Counselor. Hopefully these measures will be enough to convince the public that energy policy in Illinois is not being decided by self-dealing industry insiders during closed-door meetings.

§ Use Public Funds. FEJA allows the ICC to collect revenue from the utilities to support ICC staff costs, so subsequent NextGrid Initiative activities should be contracted and paid for by the ICC. Using public funds will prevent the appearance of undue influence that is found in the current arrangements between UIUC and the utilities.

COMMENTS & RECOMMENDATIONS (TOPICAL ISSUES). The Draft Report touches on a broad range of issues that potentially impact the cost of operations for BOMA/Chicago members. Given the history of how similar studies and initiatives have been used to

support the passage of legislation that has resulted in significant cost increases for utility customers, BOMA/Chicago requests that the following recommendations be considered for inclusion in the Final Report in order to ensure that it presents a balanced and neutral position on the issues.

Figure 12 conveys the policy evaluation approach that BOMA/Chicago applied to the working group sections of the Draft Report. This approach serves to highlight the high-level objectives that BOMA/Chicago believes should guide energy policy development in the state.

FIGURE 12: BOMA/CHICAGO ENERGY POLICY EVALUATION CRITERIA. BASED ON DECADES OF EXPERIENCE IN THE ILLINOIS ENERGY

MARKETS, BOMA/CHICAGO EVALUATES ENERGY POLICY PROPOSALS ACCORDING TO THE FOLLOWING CRITERIA.

’

• l Does the Policy require a minimum NPV to allow implementation, and competitive bidding?

• Does the Policy prioritize private-sector providers and solutions over utility-controlled options?

• Does the process to develop the Policy open to the maximum number of parties, and are the

• financial relationships• between the parties• known?

• Does the Policy include sunset provisions, require re-authorizations, or set automatic reviews based on financial metric triggers?

Limits Transparency

Least Cost

Market Building

Page | 17

The tables on the following pages present the evaluation of several issues contained in the Draft

Report and BOMA/Chicago’s recommendations for improvements.

Working Group

Comment Issue

1 1A Creation of a Distribution System Operator (DSO)

General Comment There could be value in funding private information system networks as a pilot to demonstrate the value of demand response and distribution system management.

Metric Concern Recommendation

Transparency How will we know that this is a necessary and required initiative?

Insert a statement in the Final Report clarifying that a centralized utility-owned fiber network is not a proven need.

Cost-Competitiveness

Ratebasing this expense could lead to long-term cost increases with an unclear level of benefit for BOMA/Chicago members.

Insert a statement in the Final Report clarifying that fiber network deployment is not a core function of the utilities.

Market Building Will a utility-led initiative in this area preclude the use of other existing networks and options?

Insert a statement in the Final report clarifying that large energy users already have access to existing fiber networks, and that duplicating those systems will cause a needless escalation of costs.

Limits What are the metrics to measure success and efficiency if this is undertaken by the utility?

Insert a statement in the Final report recommending a five (5) year pilot project(s) to prove out utility competence and cost-effectiveness in this arena prior to allowing any large scale or rate-based projects.

Working Group

Comment Issue

2 2B Utility ownership of fiber network infrastructure

General Comment There may be benefits in examining how the existing fiber networks serving BOMA/Chicago members could be integrated with ComEd’s systems to determine integration options.


Transparency How will we know that this is a necessary and required initiative?

Insert a statement in the Final Report clarifying that a centralized utility-owned fiber network is not a proven need.


Ratebasing this expense could lead to long-term cost increases with an unclear level of benefit for BOMA/Chicago members.

Insert a statement in the Final Report clarifying that fiber network deployment is not a core utility function, and that outside vendors have appropriate technical expertise.

Market Building Will a utility-led initiative in this area preclude the use of other existing networks and options?

Insert a statement in the Final report clarifying that large energy users already have access to existing fiber networks, and that duplicating those systems will cause a needless escalation of costs.


Insert a statement in the Final report recommending a five (5) year pilot project to prove out utility competence and cost-effectiveness in this arena prior to allowing any large scale or rate-based projects.

Page | 18

Working Group

Comment Issue

3 3A Enhancing data sharing, security clearances, access to intelligence and protecting critical infrastructure

General Comment There may be benefits in examining how the existing fiber networks serving BOMA/Chicago members could support enhanced security for downtown networks.


Transparency How can this initiative be structured to ensure an appropriate cost/benefit balance – especially for consumers?

Insert a statement in the Final Report clarifying the elements that a regulator would examine to determine cost effectiveness.


Ratebasing this expense could lead to an unknown level of cost increases and unclear level of benefit for BOMA/Chicago members.

Insert a statement in the Final Report identifying the range of total costs cited in current microgrids.

Market Building Will a utility-led initiative in this area preclude the use of other options?

Insert a statement in the Final Report clarifying that while grid security is a core utility function, it cannot preclude the adoption of third-party systems or technologies


Insert a statement in the Final report recommending that security initiatives be phased in through a series of five (5) year programs that require ICC approval.

Working Group

Comment Issue

4 4A Funding of “Smart City” initiatives and use data at the municipal level

General Comment There may be benefits in examining how the existing metering information for BOMA/Chicago members could be leveraged to facilitate a pilot energy intensity study with ComEd & Chicago


Transparency How can this initiative be structured to ensure an appropriate cost/benefit balance?



Ratebasing this expense could lead to long-term and cost increases with an unclear level of benefit for BOMA/Chicago members.

Insert a statement in the Final Report identifying the range of total costs cited in other “Smart City” proposals

Market Building Will municipalities be able to use third-party vendors for these initiatives, or will the utility be the only option?

Insert a statement in the Final Report clarifying that municipalities are not required to undertake “Smart City” initiatives exclusively through the utility.


Insert a statement in the Final report recommending that “Smart City” initiatives start with a five (5) year pilot project to prove out functionality and cost-effectiveness prior to full deployment.

Page | 19

Working Group

Comment Issue

4 4B Unbalanced criticism of Retail Electric Choice

General Comment The benefits of Retail Electric Choice are significant for BOMA/Chicago members, and the benefits competition are largely ignored in the Draft Report.


Transparency Is the tone of the section intended to open the door to clawing back Retail Choice?

Insert a statement in the Final Report clarifying that Retail Choice is the policy of the state, and that Retail Choice delivers value in terms of risk management and other elements beside financial.


Removing Retail Choice in the residential sector could lead to the loss of Retail Choice in the Commercial Sector.

Insert into the Final Report the findings of significant benefits resulting from Retail Choice in “Restructuring Recharged The Superior Performance of Competitive Electricity Markets 2008-2016” Philip R. O’Connor, Ph.D. April 2017

Market Building Will the loss of Retail Choice in the residential sector cause some ARES to leave the market?

Insert a statement in the Final Report clarifying that bifurcated choice markets fail to deliver full benefits (reference CA and MI).

Limits What are the metrics to measure success of a removal of Retail Choice?

Insert a statement in the Final Report recommending that any change to Retail Choice require changes in state law

Working Group

Comment Issue

5 5A Funding of Microgrid projects

General Comment There may be benefits in examining how the BOMA/Chicago buildings could act as behind-the-meter microgrids in a pilot program with ComEd or others.


Transparency

How can this initiative be structured to ensure an appropriate cost/benefit balance – especially for consumers not located within an area served by a microgrid?




Insert a statement in the Final Report identifying the range of total costs cited in current microgrids.

Market Building Will a utility-led initiative in this area preclude the use of other options? Competitive options should be included.

Insert a statement in the Final Report clarifying that microgrid ownership by the utilities represent the re-entry of Illinois utilities in the power generation sector.


Insert a statement in the Final report recommending that microgrid initiatives start with a series of five (5) year pilot projects with reimbursement from utility stockholders if financial metrics are not met.

Page | 20

Working Group

Comment Issue

5 5B Creating a “transactional platform” to facilitate peer-to-peer energy transactions

General Comment There may be benefits in examining how the demand response capabilities of BOMA/Chicago members could be leveraged to facilitate a pilot transaction program with ComEd.


Transparency Will current retail electricity transaction need to run through the “platform”?

Insert a statement in the Final Report clarifying whether the “transactional platform” has a controlling function on all retail energy contracts.



Insert a statement in the Final Report clarifying that the costs cost transactional platforms should be paid for through use fee.

Market Building Will a utility-led initiative in this area preclude the use of other energy supply options?

Insert a statement in the Final Report clarifying whether the “transactional platform” controls retail energy contracts, and that the platform must be open to all.


Insert a statement in the Final report recommending a five (5) year pilot project to prove out functionality prior to full deployment.

Working Group

Comment Issue

6 6A Fund electrification of transportation with a network of charging stations

General Comment There may be benefits in examining how a comprehensive EV charging network connected to large service BOMA/Chicago members could serve as a pilot program.


Transparency

How can this initiative be structured to ensure an appropriate cost/benefit balance – especially for consumers that choose not to use EVs?




Insert a statement in the Final Report identifying the range of total costs cited in large scale EV charging station build out in other regions of the US.

Market Building Will a utility-led initiative in this area preclude the use of other options?

Insert a statement in the Final Report reviewing the history of EV station development in Illinois.


Insert a statement in the Final report recommending that EV charging initiatives start with a series of five (5) year pilot projects with reimbursement from utility stockholders if financial metrics are not met.

Page | 21

Working Group

Comment Issue

6 6B The promotion of decarbonization through a range of policy options

General Comment There may be benefits in examining how information reported by BOMA/Chicago to the City of Chicago energy benchmarking program could be used to research carbon intensity and energy use in the downtown area.


Transparency How can we ensure that payments related to decarbonization lead to firm reductions?



Concepts such as carbon taxes could lead to cost increases that would make Chicago and Illinois less cost competitive for BOMA/Chicago tenants.

Insert a statement in the Final Report identifying the range of total costs applied to commercial real estate for carbon taxes in other regions of the US.

Market Building What market-based options can BOMA/Chicago members use to manage their cost risk of potential carbon taxes?

Insert a statement in the Final Report a more robust explanation of “market based” carbon solutions.

Limits What are the metrics to measure success and efficacy of a decarbonization program?

Insert a statement in the Final report recommending that decarbonization be managed at the generation level by the Illinois Environmental Protection Agency

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