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Illinois Power Co. v. Illinois Commerce Comm'n

Case Date: 07/25/2000
Court: 5th District Appellate
Docket No: 5-98-0808 Rel

Notice
Decision filed 09/06/00.  The text of this decision may be changed or corrected prior to the filing of a Petitioner for Rehearing or the disposition of the same.

NO. 5-98-0808

IN THE

APPELLATE COURT OF ILLINOIS

FIFTH DISTRICT

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ILLINOIS POWER COMPANY, AMEREN
CORPORATION, CENTRAL ILLINOIS PUBLIC
SERVICE COMPANY, and UNION ELECTRIC
COMPANY,

     Petitioners,

v.

THE ILLINOIS COMMERCE COMMISSION; THE
STATE OF ILLINOIS; THE COUNTY OF COOK;
ILLINOIS INDUSTRIAL ENERGY CONSUMERS;
ENRON ENERGY SERVICES, INC.; NORTHERN
ILLINOIS GAS COMPANY, d/b/a Nicor Gas;
INTERNATIONAL BROTHERHOOD OF
ELECTRICAL WORKERS, AFL-CIO, LOCAL
UNIONS 15 & 51; MT. CARMEL PUBLIC UTILITY
COMPANY; NATIONAL ENERGY MARKETERS
ASSOCIATION; CITIZENS UTILITY BOARD;
BLACKHAWK ENERGY SERVICES, INC.; and
PEOPLES ENERGY SERVICES CORPORATION,

     Respondents.

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)		 Appeal from an Order of the
Illinois Commerce Commission.






Nos. 98-0013 & 98--0035

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JUSTICE CHAPMAN delivered the opinion of the court:

This appeal is from a final order and the adoption of final rules by the IllinoisCommerce Commission (ICC), which adopted regulations implementing section 16-121 ofthe Electric Service Customer Choice and Rate Relief Law of 1997 (the Customer ChoiceLaw) (220 ILCS 5/16-121 (West 1998)). Petitioners complain that certain of these rulesviolate the right to commercial free speech, are in conflict with the Customer Choice Law,and are arbitrary and capricious. We note that petitioner Commonwealth Edison Company'sappeal has been dismissed. We affirm.

BACKGROUND

Before the Customer Choice Law, Illinois electric customers received virtually alltheir electricity from their local utility companies. Each local utility company was verticallyintegrated, meaning that each one produced electric energy, transmitted it to the generalvicinity of the consumer, and distributed it to the customers' businesses and homes. Theseutilities were traditionally very heavily regulated, due largely to the fact that they facedvirtually no competition for the sale of electricity in their respective service areas.

The enactment of the Customer Choice Law moved the Illinois electric industry fromthis heavily regulated world toward a competitive marketplace. The Customer Choice Lawpursues the competitive market through the deregulation of certain products and servicescalled "competitive services." The Customer Choice Law allows an electric utility to offerany competitive service to customers without ICC approval.

The Customer Choice Law also opened the electricity market to participants otherthan the existing, vertically integrated utilities. The Customer Choice Law allows thecreation of entities called "alternative retail electric suppliers" (ARES), which are authorizedto sell and market electricity to customers. ARES may or may not be affiliated with anexisting utility company. Therefore, the Customer Choice Law contemplates three sourcesfrom which customers may purchase electricity in this competitive market: traditionalelectric utilities, ARES that are affiliated with a utility company, or an ARES that areunaffiliated with an existing utility company.

Because facilities that transmit and distribute electricity are not easily replicated, theCustomer Choice Law provides that the existing utility companies will continue to controlthe transmission and distribution of electricity in their service areas, even after theintroduction of competition to the market. There is a fear, however, that the utilities will usetheir control of the delivery services to give competitive advantages to ARES that areaffiliated with the utilities, to the detriment of unaffiliated ARES and, ultimately, to thedetriment of the successful creation of a competitive market. Therefore, the CustomerChoice Law provides for the establishment of regulations that are to prevent a utility fromusing its control of the transmission and distribution (the "delivery services") to discriminateagainst electricity service providers. These regulations, which were intended to implementsection 16-121 of the Customer Choice Law, were adopted by the ICC in the form of finalrules. Petitioners appeal, complaining that some of these rules are unconstitutional and/orthat they are invalid for other reasons.

STANDARD OF REVIEW

Under the Public Utilities Act (220 ILCS 5/10-201(d) (West 1998)), any party whoappeals an order of the ICC bears the burden of proving all issues raised on appeal and mustovercome the presumption of reasonableness accorded to ICC orders. In analyzing ICCorders, Illinois courts have held that decisions of the ICC are entitled to great deference,because they are the judgment of an administrative body that is "informed by experience."United Cities Gas Co. v. Illinois Commerce Comm'n, 163 Ill. 2d 1, 12 (1994), quotingVillage of Apple River v. Illinois Commerce Comm'n, 18 Ill. 2d 518, 523 (1960).

The ICC is an administrative agency, and judicial review of its orders is limited. SeePeople ex rel. Hartigan v. Illinois Commerce Comm'n, 148 Ill. 2d 348, 366 (1992). Although the ICC is not required to make findings regarding every step, its findings of factmust be sufficient to allow for informed judicial review, and they will be affirmed if they arebased on substantial evidence in the record. See Hartigan, 148 Ill. 2d at 366. The ICC'sfindings of fact are prima facie correct and will not be overturned by a reviewing courtunless they are against the manifest weight of the evidence, beyond the statutory authorityof the ICC, or violative of constitutional rights. See Hartigan, 148 Ill. 2d at 367.



DISCUSSION

Petitioners assert that certain sections of the final order of the ICC are constitutionallyinvalid and should be struck down. First, petitioners assert that section 450.25 of the finalrules (83 Ill. Adm. Code