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City of St. Charles v. Commerce Com.





APPEAL from the Circuit Court of Cook County; the Hon. CORNELIUS J. HARRINGTON, Judge, presiding.


The cities of St. Charles, Naperville, Batavia, Geneva and Rock Falls have appealed from an order of the circuit court of Cook County confirming an order of the Illinois Commerce Commission which allowed an increase in rates for electric service to them from the Commonwealth Edison Company. The appeal is pursuant to section 69 of the Public Utilities Act. Ill. Rev. Stat. 1959, chap. 111 2/3, par. 73.

In July 1957, Edison filed revised rate schedules under section 36 and petitions for modification of certain rate contracts under section 41 of the Public Utilities Act. (Ill. Rev. Stat. 1957, chap. 111 2/3, pars. 36, 41.) These proposed rate and contract changes were intended to provide an increase of approximately $26,435,000 in Edison's gross revenue. Proceedings on the various filings were consolidated for hearing before two examiners setting en banc. Thirty-two cities, villages and municipal corporations, 21 associations and corporations, individual users and other parties in interest entered their appearances.

Extensive hearings were held and the record before the commission consisted of more than 5800 pages of testimony and 170 exhibits. On the basis of this record the Commission made findings with respect to the depreciated original cost, the depreciated reproduction cost, rate base, working capital, fair value, rate of return, operating revenues and expenses, taxes, and the classification of rates and rate schedules. A revision in certain rates not here material was ordered and as revised the Commission found the rates to be just and reasonable and ordered them to be made effective. This action constituted a determination that Edison was properly entitled to the added revenues which it sought in the proceedings and that the rate schedule as modified was an appropriate method of providing such added revenues. The increase in rates was general and will result in an average increase of charge of approximately 7.3% to almost all of Edison's some 1,900,000 customers.

The five cities purchase electric energy from Edison for redistribution to ultimate consumers within their respective service areas. They, together with eleven other reselling customers of Edison, are served under Rate 78. This rate has been closed to new customers since 1952 when the commission approved Edison's Rider 12 which forbids any customer from reselling electricity to third persons except where the practice was already established.

The five cities do not contend that the Commission erred in allowing an increase in revenue or in approving the form of rates with respect to all of the other customers of Edison. Their sole cause of complaint is that it is unreasonably discriminatory to serve them on the same rate classification with the other eleven resellers and that Edison should be required to provide a separate reselling rate classification for them, to the end that at least portions of the increased revenue allowed by the Commission should be obtained from customers other than the five cities.

Ten of the other 11 reselling customers of Edison have substantially smaller demands and usage than the five cities, and in the main are submetering landlords, owners of apartment houses, stores and hotels, or similar businesses. One of the 11 is an institution with usage approaching that of the smallest of the five cities. Also, the load factor (average load expressed as a percentage of the peak load) is higher for the five cities than for the 11 customers except in the case of the institution. Delivery of electric energy to such other customers is at lower voltages directly usable by the ultimate consumers to whom they resell. The five cities, on the average, have substantially larger demands and usage, and purchase electric energy delivered from Edison's transformers at 2400 to 34,500 volts. The electric energy so purchased is then resold through electric distribution systems, including primary distribution lines at 2400 or 2400/4160 volts. These considerations would tend to make the unit cost of service to the five cities lower than the unit cost of service to the other 11 customers on Rate 78.

The five cities argue that, by reason of these considerations, they are entitled to a measurably lower charge for electric energy than the charge to the other 11 smaller customers. In this we think they are correct, but the record shows that Rate 78, as revised, does provide lower rates to the five cities than to the 11 smaller customers. Estimates of the effect of Rate 78, as revised, indicate that for the 12 months ended June 30, 1957, the five cities would pay an average of 1.16c per kwh, while the 11 smaller customers would pay an average of 1.56c per kwh. The unit charge for electric energy to the 11 smaller customers is thus some 34% higher than the unit charge to the five cities.

The difference between the unit charge to the five cities and the 11 small customers served on Rate 78 is accomplished by the block principle of price scheduling. Rate 78 utilizes a descending scale of charges as the demand for additional maximum load and energy increases. Adjustments of the charges on account of increased demand are made as shown in the following table taken from the tariffs of Edison ("The Billing Demand" referred to is fixed by the highest 30 minutes demand established in each month):

Kilowatts of Billing Demand for the Month Demand Charge

$2.10 per KW for the first 200 1.90 per KW for the next 800 1.70 per KW for all over 1,000

Energy Demand Kilowatthours Supplied Net in the Month

2.33c per KWH for the first 6,000 1.30c per KWH for the next 24,000 1.00c per KWH for the next 70,000 .75c per KWH for the next 400,000 .69c per KWH for all over 500,000

Such two-part block rates are in general use by electric utilities for commercial and industrial customers which have many different ...

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