Commonwealth Edison Co. on Monday agreed to a $1.7-billion customer refund and rate reduction, called the largest of its kind in U.S. history, to settle years-old legal challenges rooted in its massive nuclear power program.
If the agreement wins court and regulatory agency approval, the utility’s 3.2 million customers in Northern Illinois will receive a $1.34-billion refund in the form of credits on their monthly bills beginning Nov. 19.
In addition, rates would be reduced $339 million annually.
The company said the credits would average $22.68 a month for single-family residential customers for one year. For small businesses, it would amount to $146.43 a month.
The company’s stock rose on news of the settlement, closing at $31.125, up 87.5 cents a share, in New York Stock Exchange trading.
Analysts said removing the uncertainty of future liability was positive news.
Illinois Atty. Gen. Roland Burris said the refunds over the course of a year would be equivalent to what three months of electrical service would normally cost.
The settled cases, some dating back 10 years, are rooted in challenges brought by consumer groups over how much customers should pay to finance the building of nuclear power plants. Commonwealth Edison is the largest nuclear power utility in the country.
The settlement, worked out privately in negotiations between the utility and various litigants, was announced at a news conference attended by the participants.
“It is the largest utility rate refund in the history of the country,” said Howard Learner, counsel for Business and Professional People in the Public Interest.
“Consumers are winners. The massive figures speak for themselves,” he said. “This . . . provides a fair conclusion for consumers of the long and winding road of litigation over Edison’s costly nuclear plants in the last decade.”
He added in an interview:
“What this makes clear is the tremendous financial penalties for those utilities which have bet on a nuclear future, and it should give caution to those companies who are thinking about reviving nuclear projects.
“We are not pro or con nuclear; but it has to be done at a reasonable cost. Consumers should not be forced to pay for the entirety of cost overruns.”
James O’Connor, the company’s chairman and chief executive, said he believes shareholders will understand that the move was made to end the “delay and uncertainty” that could have cast a continued shadow over the stock.
He said he hopes the company will not have to cut its dividend, now at $1.60, having been reduced from $3 in November.
Both sides credited Sam Skinner, former White House chief of staff who became the company’s $490,000-a-year president earlier this year, as having played an integral part in the settlement.
Donald Jacobs, chairman of the regulatory affairs committee of Commonwealth Edison’s board, said the decision to build the three newest nuclear power plants in question “has proven to be prudent as evidenced by their utilization and performance record.”
“These units have been in full service for five to eight years, account for nearly one-fourth of the company’s total generation and have saved customers more than $3.2 billion in fuel costs,” said Jacobs, dean of the Kellogg Graduate School of Management at Northwestern University.