IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 

 

LAWRENCE H. GRESS, and on behalf of 

himself and others similarly situated, 

Plaintiff, 

v.

 

COMMONWEALTH EDISON COMPANY, 

an Illinois corporation; JOHN DOES 1-100, 

 

Defendant.

 No. 20-cv-04405 

 

 

STEVEN BROOKS, DAVID CHAVEZ, 

1540 N. MILWAUKEE LLC d/b/a DSTRKT 

BAR & GRILL, and CARMICHAEL 

LEASING CO., INC., for themselves 

individually and for all class members 

similarly situated, 

Plaintiffs, 

v.

 

COMMONWEALTH EDISON COMPANY, 

d/b/a ComEd, and EXELON 

CORPORATION 

Defendants.

 

No. 20-cv-04555 

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1

SOUTH BRANCH LLC, TFO GOLUB 

BURNHAM LLC, d/b/a THE BURNHAM 

CENTER, TFO GOLUB IT 2.0 LLC, d/b/a 

INTERNATIONAL TOWER, and 

ROCKWELL ON THE RIVER LLC, for 

themselves individually and for all class 

members similarly situated, 

Plaintiffs, 

v. 

COMMONWEALTH EDISON COMPANY 

d/b/a ComEd; and EXELON 

CORPORATION, 

Defendants. 

No. 20-cv-04980 

CITIZENS UTILITY BOARD, 

Plaintiff, 

v. 

 

COMMONWEALTH EDISON COMPANY, 

an Illinois corporation, 

 

Defendant. 

 No. 20-cv-04405 

 

 

INTERVENOR-PLAINTIFF CITIZENS UTILITY BOARD’S RESPONSE 

TO DEFENDANT’S MOTION TO DISMISS 

 Intervenor-Plaintiff Citizens Utility Board (“CUB”) was granted leave to intervene in this 

action to represent the interests of Illinois utility consumers. (Order on Mot. to Intervene, dkt. 

69.) CUB filed its complaint against Defendant Commonwealth Edison Company (“ComEd”) on 

January 5, 2021, alleging that ComEd bribed elected officials to help pass legislation that 

fundamentally changed the way electric rates are determined in Illinois. (CUB Compl., dkt. 76.) 

These allegations are undisputed, as ComEd has admitted to the alleged misconduct and already 

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paid the federal government $200 million through a Deferred Prosecution Agreement to avoid 

criminal prosecution. (See Deferred Prosecution Agreement, dkt. 75-1.) CUB’s complaint seeks 

civil damages against ComEd on behalf of Illinois utility consumers for violating their rights 

under the Racketeering Influenced Corrupt Organizations Act (“RICO”), as well as for civil 

conspiracy and unjust enrichment. 

ComEd has moved to dismiss the complaint filed by CUB, as well as the complaint filed 

by the putative class, in a combined, 27-page brief. (ComEd’s Mem., dkt. 85.) The putative class 

plaintiffs (the “Class Plaintiffs”) are filing a response to that motion and have been granted leave 

to file a corresponding 27-page brief. (Dkt. 91.) Rather than burdening the Court with duplicative 

legal argument, CUB hereby joins the Class Plaintiffs’ brief as to its legal arguments, as CUB’s 

claims are mirrored in the Class Plaintiffs’ consolidated complaint. (Compare CUB Compl., dkt. 

76 (containing RICO, civil conspiracy, and unjust enrichment claims) with Class Pls.’ Compl., 

dkt. 75 (containing same claims and others).) 

That said, CUB has a unique perspective on the facts of the case, the results of ComEd’s 

bribery, and its significant experience with the ratemaking process before the Illinois Commerce 

Commission (“ICC”). As a statutory representative of ratepayers in those proceedings, CUB has 

appeared in the ICC opposite ComEd for decades. In truth, ComEd’s argument that “formula” 

ratemaking did not effectuate an unprecedented shift in the ICC’s authority is not accurate. (See 

ComEd’s Mem., dkt. 85, at 4–9.) Instead, as discussed below, the entire purpose of Energy 

Infrastructure Modernization Act (“EIMA”) was to cement both the inputs and outputs of 

traditional ratemaking and displace the ICC on the key issues—turning ratemaking into a process 

by which ComEd primarily recites its actual costs and then receives a guaranteed rate of return. 

And certainly, the ICC can do nothing but implement the statute that it is given by the 

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legislature. As ComEd admitted in its Deferred Prosecution Agreement, it turns out that ComEd 

bribed elected officials to pass those laws. 

For these reasons, the “filed-rate” doctrine does not mean that ComEd gets away with 

this. Neither the purposes of that doctrine nor its application in prior cases requires that result, as 

the Class Plaintiffs’ brief discusses in depth. The below provides CUB’s perspective for the 

Court’s consideration alongside the rest of the briefing. 

I. “Formula” ratemaking was an unprecedented change to traditional ratemaking. 

Utilities have been regulated by Illinois agencies for more than a hundred years. Utilities 

are natural monopolies, which are closely regulated by the Illinois Commerce Commission 

(“ICC”), both in how they operate—for instance, in their environmental impacts and ensuring 

equity between consumers—and in how much they can charge. See 220 ILCS 5/1-102 

(describing purpose and intent of the Public Utilities Act). Prior to the EIMA, ComEd and 

utilities like it had to submit a ratemaking application to the ICC if it wanted to increase its rates, 

consisting of hundreds of pages of financial schedules to justify the higher costs which would 

then be closely scrutinized by the parties—nearly always including CUB—and the ICC itself. 

See 220 ILCS 5/9-201(a). The Commission would then hold a hearing on the “propriety” of the 

rate. 220 ILCS 5/9-201(b). 

Under traditional ratemaking (which still applies to most utilities in Illinois) ComEd had 

to justify every dollar that it took from ratepayers’ pockets by securing ICC approval that the rate 

was “just and reasonable.” See 220 ILCS 5/9-101. Critically, that included the return that ComEd 

secured on capital improvements. That is, when ComEd spent money to expand its “rate base,” it 

had to justify the return that it should secure from consumers in the form of higher utility rates. 

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See 220 ILCS 5/9-201(c) (giving Commission power to “establish the rates or other charges . . . 

which [the ICC] shall find to be just and reasonable”). 

EIMA completely overhauled that process. Rather than proceeding in traditional 

ratemaking in which ComEd had to justify the return it received, ComEd is now subject to 

“formula” ratemaking. See 220 ILCS 5/16-108.5 (discussing a new “performance-based formula 

rate”). At its heart, formula ratemaking is designed to “provide[] for guaranteed payment of 

utilities’ costs and a rate of return for its investments in infrastructure.” People ex rel. Madigan 

v. Illinois Commerce Comm’n, 38 N.E.3d 87, 89 (Ill. App. Ct. 2015) (emphasis added). Under 

EIMA and its formula ratemaking process, the inputs and the outputs of the ratemaking process 

on ComEd’s capital investments are effectively set. See 220 ILCS 5/16-108.5(c). And ComEd’s 

rate of return is guaranteed: an averaged return of Treasury bonds, plus a premium of 580 basis 

points. 220 ILCS 5/16-108.5(c)(3). 

The ICC has a very different job under the EIMA’s “formula” process. Instead of 

“establish[ing] the rate” as it does in traditional ratemaking, it reviews the inputs into the formula 

for accuracy. As ComEd repeatedly emphasized in its first rate filing after EIMA, the ICC’s 

primary job is to “review the filing.” 220 ILCS 5/16-108.5(c); In re Commonwealth Edison 

Tariffs and Charges Submitted Pursuant to 16-108.5 of the Public Utilities Act, No. 11-0721 (Ill. 

Comm. Comm’n), attached hereto as Exhibit A. When the ICC pushed back in that first 

proceeding, by interpreting EIMA to allow more discretion than ComEd would have liked in 

establishing the formula inputs, ComEd again flexed its legislative muscle to ensure the inputs 

were rigged in its favor, and to avoid meaningful ICC discretion. 

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II. ComEd not only secured formula-based ratemaking with EIMA, but further 

exercised its power over the legislature by “fixing” it two years later. 

After EIMA’s passage in November of 2011, ComEd filed its first formula-based 

ratemaking application. And in May of 2012, the ICC issued its first order under the law.

Commonwealth Edison Co., No. 11-0721, 2012 WL 2499567 (May 29, 2012). In that order, the 

ICC interpreted EIMA to restrict ComEd’s earnings on certain cost categories—that is, the ICC 

pushed back on ComEd’s ability to unilaterally determine what its cost inputs into the rate 

formula should be. 

ComEd didn’t agree. On June 5, 2012, ComEd applied for a rehearing regarding the 

ICC’s Order, arguing that the ICC erred in refusing to accept ComEd’s inputs into the rate 

formula, including: (i) the Commission’s definition of the term “pension asset”—undefined in 

the original EIMA—to include for ratemaking purposes only ComEd’s overfunding of its 

pension, rather than the far larger sum of pension-related contributions that ComEd requested to 

recoup; (ii) the Commission’s finding that an average “rate base” (the value of the property on 

which ComEd would receive a return) should be used, rather than the year-end rate base that 

ComEd advocated for, because the year-end snapshot did not reflect the fact that plants were not 

in service for the entire year; and (iii) that, for purposes of determining the proper interest rate on 

the “reconciliation balance” (the difference between what ComEd needed in revenue for a prior 

year, and what it received), the Commission determined that a “hybrid” interest rate of its own 

creation should apply, rather than ComEd’s desired interest rate (the weighted average cost of 

capital). 

While ComEd made that filing within the ICC, it also jumpstarted its legislative 

machinery. Two resolutions, Senate Resolution 821 and House Resolution 1157, were filed on 

June 18, 2012 insisting that “[n]o statutory authority” was given to the ICC to draw conclusions 

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counter to ComEd on the above issues. 2012 House Res. 1157. The House resolution was

adopted on August 17, 2012. But the ICC refused to back down and rejected ComEd’s 

arguments. In re Commonwealth Edison, 300 P.U.R. 4th 1 (Oct. 3, 2012). 

In 2013, ComEd went back to the legislature once again, and the Illinois General 

Assembly passed an amendment to EIMA meant to “correct the ICC’s interpretations that were 

identified . . . in Senate Resolution 821 and House Resolution 1157.” Senate President John 

Cullerton, Legislative Transcript, March 14, 2013. This amendment again worked upstream of 

the ICC to ensure that ComEd would get its way, and remarkably, applied retroactively to the 

two ICC decisions previously made under EIMA. As the Illinois Appellate Court later observed, 

“the General Assembly amended the Act . . . expressly superseding and preempting the 

Commission’s order of October 3, 2012. With the amendment, the General Assembly expressly 

adopted ComEd’s calculation of its rate base and the interest ratepayers must pay to ComEd on 

the reconciliation amount.” Commonwealth Edison Co. v. Illinois Commerce Comm’n, 8 N.E. 3d 

513, 523 (Ill. App. Ct. 2014). Finding itself overruled by the legislature, the ICC had no choice 

but to cede authority on these issues to the dictates of EIMA. Id.1

III. The ratemaking process today. 

With formula ratemaking in place, the disputes handled by the ICC today concern 

interpretation of the Public Utility Act’s terms. There is little occasion to challenge ComEd’s 

expenditures that form its rate base because the entire assessment is predicated on ComEd’s 

“actual costs”—which all come from a required filing, the FERC Form 1—so challenging these 

1

 This brief provides additional context on the ratemaking process under “formula” ratemaking

instituted by EIMA. Also at issue in the case is the Future Energy Jobs Act (“FEJA”), which continued 

formula ratemaking. ComEd points out that CUB supported that bill, which is true but irrelevant. CUB 

takes the legislative landscape as it finds it; ComEd can’t claim that CUB’s ultimate support in a process 

irrevocably tainted by bribery somehow washes ComEd’s hands clean. As the Class Plaintiffs’ brief 

discusses, damages are a matter for trial. 

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costs would largely prove futile. See 220 ILCS 5/16-108.5. While the ICC theoretically retains 

discretion to determine whether ComEd’s expenditures are “just and reasonable,” and “used and 

useful,” challenges to ComEd’s ratemaking now center on methods of accounting for certain 

costs. 

For these reasons—and as explained in full in the Class Plaintiffs’ brief—ComEd’s 

argument that the ICC has effectively blessed the charges passed on to consumers is a falsity. 

The ICC implements the statute that it is given, which ComEd admittedly engaged in legislative 

bribery to help secure. When the ICC didn’t do what ComEd wanted, ComEd just went to the 

legislature again in the 2013 trailer bill to EIMA—proving the extent of the control it had. 

For this reason, the filed-rate doctrine does not allow ComEd to get away scot-free with 

the money its scheme overcharged consumers. The doctrine arises from two underlying 

principles: (1) the need to prevent carriers from engaging in price discrimination between utility 

consumers, and (2) the preservation of the exclusive role of agencies in setting and approving 

uniform rates. See Arsberry v. Illinois, 244 F.3d 558, 562 (7th Cir. 2001). Neither concern is 

remotely implicated here. CUB is present in the action as a statutorily-mandated representative 

of utility consumers, and seeks a remedy for all of them. See 220 ILCS 10/5(2)(e). And the 

complaint does not ask the Court to set aside the judgment of the ICC—the ICC did not, and 

cannot, pass judgment on whether the formula rate process itself was the product of legislative 

bribery. In cases where the Court is neither being asked to substitute its judgment for the wellconsidered judgment of an agency, nor institute a discriminatory pricing scheme, the filed-rate 

doctrine does not apply. E.g., Ice Cream Liquidation, Inc. v. Land O’Lakes, Inc., 253 F. Supp. 2d 

262, 276 (D. Conn. 2003) (“Thus, as we interpret plaintiff’s complaint, plaintiff is not asking the 

Court to engage in judicial rate-making by substituting its judgment for that of the USDA, nor to 

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create discriminatory rates that would apply to some handlers and not others.”). ComEd’s motion 

should be denied. 

CONCLUSION

 Plaintiff-Intervenor Citizens Utility Board respectfully requests that the Court deny 

Commonwealth Edison’s Motion to Dismiss (dkt. 84) and grant any further relief as may be 

appropriate and just. 

Respectfully submitted, 

 

Dated: March 8, 2021 /s/Ari J. Scharg 

 One of Plaintiff-Intervenor’s Attorneys 

 

Jay Edelson 

jedelson@edelson.com 

Ari J. Scharg 

ascharg@edelson.com 

J. Eli Wade-Scott 

ewadescott@edelson.com 

Michael Ovca 

movca@edelson.com 

EDELSON PC

350 North LaSalle, 14th Floor 

Chicago, Illinois 60654 

Tel: (312) 589-6370 

Fax: (312) 589-6378 

 

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