US energy provider Commonwealth Edison Company (ComEd) announced today that it will refund customers US$46.2 million or US$8 per residential customer as part of a settlement following the illegal levying of a surcharge to fund a smart meter pilot.

The refunds for residential customers, which will appear as a credit on November bills, follow long-pending legal cases brought by the Illinois Attorney General’s Office, Citizens Utility Board and the Illinois Industrial Energy Consumers against ComEd on issues related to depreciation costs in ComEd’s 2007 rate case filing and from costs in the company’s smart meter pilot project in 2009.

Most of the money being refunded was tied to the Illinois Commerce Commission’s (ICC) approval in 2008 of a method that was argued to inflate the value of ComEd’s capital investments. The Illinois Appellate Court sided with the attorney general in 2010, but ComEd again challenged the ICC’s authority to order refunds. The Appellate Court again sided with the attorney general, prompting the settlement discussions.

Smart meter surcharge

In addition, some of the refund is due to a surcharge the ICC approved’ to fund a ComEd pilot program to install smart meters in customers’ homes. The attorney general argued there was no legal authority for the surcharge and won in court.

ComEd subsequently lobbied successfully for the 2011 smart grid law, which resulted in annual rate hikes to finance a US$2.6 billion grid modernization program, including smart meters in all homes and businesses.

“We are pleased to reach an agreement with the attorney general and other parties and to resolve this matter in the best interest of our customers,” ComEd Senior Vice President Thomas O’Neill said in a statement.