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Lower capacity prices to offset ComEd's requested rate increase for grid costs

hasasked the Illinois Commerce Commission for a rate increase amounting to about$3 a month for the average customer in 2017, but ratepayers would likely notsee any increase on their monthly bills until about midway through that year.

Threeyears ago, ComEd secured lower capacity prices in 's forwardcapacity auction, enabling the utility to offset a rate increase for a yearstarting in June. Moreover, the Exelon Corp. subsidiary lowered the average customer'sbill by $3 for 2016 in the previous year's rate-setting .

Ifapproved by the ICC, the new rates would kick in on Jan. 1, 2017. ComEd SeniorVice President of Regulatory and Energy Policy Thomas O'Neill said the offsetfrom lower capacity prices will last until the 2017/2018 delivery year pricesbecome effective in June 2017. At that time, the average customer's bill wouldrise by about $4 per month.

ComEdoutlined its planson April 13 in filing its annual formula rate , required under the EnergyInfrastructure Modernization Act, or EIMA, which was put in place by theIllinois General Assembly in October 2011. EIMA spurred new performance-basedformula rates and investment toward modernization of the grid and smart gridtechnology.

"We'veseen record reliability in the past three years. We are experiencing recordlevels of customer satisfaction, and we're generating savings to our customerseven as we invest in our system and pass on those charges — or in last year'scase, decreases to customers — through the annual formula rate process that'sworking quite well," O'Neill said.

Aspart of the new performance-based rate structure, the company, beginning eachApril, proposes new rates by submitting the previous year's actual expenses andthe current year's projected capital investments. That process resulted in anapproximately $67 million decrease for 2016. But for 2017, ComEd is requestinga total increase of about $138 million to recover the cost of investmentsalready made, which will result in $2 of the projected monthly bill increasefor customers. "This year's request reflects one of the peak investmentyears of the smart grid program as well as other substantial investments thatwe continue to make in our system for the benefit of our customers,"O'Neill said.

Thecompany is also asking FERC, in an annual transmission rate filing submittedseparately on April 13, for a $94 million increase to take effect in June. Thiswill result in the additional $1 increase on the average customer's bill. Thisincrease reflects investments that ComEd is making in new transmissioncapacity. The company also has been working to harden the grid againstpotential cyberattacks.

"This,of course, comes at a time when virtually all industries are recognizing theneed to bolster their defenses in this area," O'Neill said. Cybersecurityenhancements totaled approximately $16 million in 2015, and that figure willincrease in 2016 to about $120 million, O'Neill said.

OnApril 11, ComEd released a report, "Delivering on the Smart GridPromise," which discussed in more detail its smart grid investmentsunderway to meet the EIMA requirements. ComEd's 2015 capital investment was$2.4 billion, with $663 million earmarked for EIMA. More than 1 million smartmeters were installed in 2015, exceeding the company's goal by 9%.

Customersin 2015 experienced a 12% reduction in the frequency of power outages comparedwith 2014, while the length of outages that did occur was reduced by 42%. Thecompany also sped up storm restoration performance as well, with 45% of outagesrestored within an hour, and 99% restored within 13 hours. "Smartmeters are enabling efficiencies and savings that are passed on to allcustomers, including those who do not yet have a smart meter," O'Neillsaid.