                      ILLINOIS OFFICIAL REPORTS
                                  Appellate Court




       Ameren Illinois Co. v. Illinois Commerce Comm’n, 2012 IL App (4th) 100962




Appellate Court       AMEREN ILLINOIS COMPANY, Petitioner, v. (No. 4-10-0962) THE
Caption               ILLINOIS COMMERCE COMMISSION; THE PEOPLE OF THE
                      STATE OF ILLINOIS; THE CITY OF CHAMPAIGN; THE CITIZENS
                      UTILITY BOARD; AARP; THE INTERNATIONAL BROTHERHOOD
                      OF ELECTRICAL WORKERS (LOCAL) UNIONS 51, 309, 649, 702,
                      AND 1306); THE GRAIN AND FEED ASSOCIATION OF ILLINOIS;
                      CONSTELLATION NEWENERGY, INC.; CONSTELLATION
                      NEWENERGY-GAS DIVISION, LLC; CHARTER
                      COMMUNICATIONS, INC.; THE CITY OF URBANA; THE CITY OF
                      DECATUR; THE TOWN OF NORMAL; THE CITY OF
                      BLOOMINGTON; ILLINOIS INDUSTRIAL ENERGY CONSUMERS;
                      AIR PRODUCTS & CHEMICALS COMPANY; ARCHER-DANIELS-
                      MIDLAND COMPANY; ASF KEYSTONE; CARGILL, INC.;
                      CATERPILLAR, INC.; CONOCOPHILLIPS; ENBRIDGE ENERGY,
                      LLP; GBC METALS, LLC; ILLINOIS CEMENT COMPANY; LINDE
                      NA, INC.; OLIN CORPORATION; TATE & LYLE INGREDIENTS
                      AMERICA, INC.; UNITED STATES STEEL CORPORATION-
                      GRANITE CITY WORKS; VISCOFAN USA, INC.; WASHINGTON
                      MILLS HENNEPIN, INC.; and THE UNIVERSITY OF ILLINOIS
                      Respondents.–AIR PRODUCTS & CHEMICALS COMPANY;
                      ARCHER-DANIELS-MIDLAND COMPANY; ASF-KEYSTONE;
                      CARGILL, INC.; CATERPILLAR, INC.; CONOCOCPHILLIPS
                      COMPANY; ENBRIDGE ENERGY, LLP; GBC                 METALS
                      COMPANY; ILLINOIS CEMENT COMPANY; LINDE NA, INC.;
                      OLIN CORPORATION; TATE & LYLE INGREDIENTS AMERICA,
                      INC.; THE UNIVERSITY OF ILLINOIS; UNITED STATES STEEL
                      CORPORATION-GRANITE CITY WORKS; VISCOFAN USA, INC.;
                           and WASHINGTON MILLS HENNEPIN, INC., Petitioners, v. (Nos. 4-
                           10-0976, 4-11-0075) THE ILLINOIS COMMERCE COMMISSION;
                           CENTRAL ILLINOIS LIGHT COMPANY, d/b/a AMERENCILCO,
                           CENTRAL ILLINOIS PUBLIC SERVICE COMPANY, d/b/a
                           AMERENCIPS, and ILLINOIS POWER COMPANY, d/b/a AMERENIP
                           (Collectively AMEREN ILLINOIS); THE PEOPLE OF THE STATE OF
                           ILLINOIS, by Lisa Madigan, Attorney General; AARP; THE CITIZENS
                           UTILITY BOARD; the Cities of CHAMPAIGN, URBANA, DECATUR,
                           and BLOOMINGTON; THE TOWN OF NORMAL; CONSTELLATION
                           NEWENERGY-GAS DIVISION, LLC; THE GRAIN AND FEED
                           ASSOCIATION; IBEW SYSTEM COUNCIL U-50, on Behalf of
                           LOCALS 702, 51, 309, 1306, and 649; and THE KROGER COMPANY,
                           Respondents.
District & No.             Fourth District
                           Docket Nos. 4-10-0962, 4-10-0976, 4-11-0075 cons.


Rule 23 Order filed        January 10, 2012
Rule 23 Order
withdrawn                  March 13, 2012
Opinion filed              January 10, 2012
Held                       In proceedings arising from petitioner’s application for a rate increase of
(Note: This syllabus       its electric- and gas-delivery services and the establishment of new riders,
constitutes no part of     the appellate court affirmed the orders of the Illinois Commerce
the opinion of the court   Commission granting petitioner an increase of $44 million, even though
but has been prepared      an increase of $226 million was requested, and a rider by which
by the Reporter of         petitioner’s tax liability under the Public Utilities Revenue Act could be
Decisions for the          collected from its customers.
convenience of the
reader.)


Decision Under             Petition for review of orders of Illinois Commerce Commission, Nos.
Review                     090306 through 090311.


Judgment                   No. 4-10-0962, Affirmed.
                           No. 4-10-0976, Affirmed.
                           No. 4-11-0075, Dismissed.




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Counsel on                 Edward C. Fitzhenry and Matthew Tomc, both of Ameren Services
Appeal                     Company, Albert D. Sturtevant and Rebecca L. Segal, both of Carpenter
                           Lipps & Leland, LLP, of Chicago, and Mark A. Whitt (argued) and
                           Christopher T. Kennedy, both of Carpenter Lipps & Leland, LLP, of
                           Columbus, Ohio, for petitioner.

                           James E. Weging (argued), Special Assistant Attorney General, of
                           Chicago, for respondent Illinois Commerce Commission.

                           Lisa Madigan, Attorney General, of Chicago (Michael A. Scodro,
                           Solicitor General, and Paul Berks, Assistant Attorney General, of
                           counsel), for the People.

                           Eric Robertson (argued), of Lueders, Robertson & Konzen, of Granite
                           City, and Conrad R. Reddick, of Wheaton, for petitioners in Nos. 4-10-
                           0976 and 4-11-0075 and respondents in No. 4-10-0962.


Panel                      JUSTICE KNECHT delivered the judgment of the court, with opinion.
                           Presiding Justice Turner and Justice Appleton concurred in the judgment
                           and opinion.




                                              OPINION

¶1          Ameren Illinois Company, d/b/a Ameren Illinois, is a public utility company that
        distributes electricity and gas to consumers in roughly the lower two-thirds of Illinois. In
        June 2009, three utility companies, which ultimately merged to form Ameren Illinois, filed
        the underlying action: Illinois Power Company, d/b/a AmerenIP; Central Illinois Light
        Company, d/b/a AmerenCILCO; and Central Illinois Public Service Company, d/b/a
        AmerenCIPS (collectively referred to as Ameren Illinois).
¶2          In June 2009, Ameren Illinois sought a rate increase for both its electric- and gas-delivery
        services and the establishment of new riders. Initially, Ameren Illinois sought a rate increase
        of almost $226 million but later reduced its request to an increase of $130 million. The
        consolidated appeals follow the orders of the Illinois Commerce Commission (Commission)
        ultimately granting Ameren Illinois an increase of $44 million and granting Ameren Illinois
        a rider by which its tax liability under the Public Utilities Revenue Act (Revenue Act) (35
        ILCS 620/2a.1 (West 2008)) will be collected from its customers.
¶3          Ameren Illinois appeals the orders, arguing the Commission unlawfully changed its rate-

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     making policy and the interpretation of its rules. Ameren Illinois contends the Commission’s
     improper pro forma adjustments for accumulated depreciation reserve (ADR) and
     accumulated deferred income taxes (ADIT) unlawfully decreased Ameren Illinois’s revenue
     requirement by $26 million.
¶4       The Illinois Industrial Energy Consumers (IIEC), which includes large electricity
     consumers such as the University of Illinois, Air Products and Chemicals Company, Archer-
     Daniels-Midland Company, Cargill, Inc., Caterpillar, Inc., and ConocoPhillips, appeals the
     Commission’s decision granting Ameren Illinois a rider that allows Ameren Illinois to collect
     its Revenue Act tax expense through line itemization on the bills of Ameren Illinois
     customers. Before the Commission, IIEC filed two applications for rehearing and two
     appeals, appeal Nos. 4-10-0976 and 4-11-0075. In addition to challenging the Commission’s
     decisions regarding the Revenue Act tax, IIEC urges this court to affirm the pro forma
     adjustments for ADR and ADIT.
¶5       The Commission, in addition to defending its decisions in the underlying rate case,
     contends this court lacks jurisdiction over appeal No. 4-11-0075. We dismiss appeal No. 4-
     11-0075 for lack of jurisdiction and affirm the Commission’s decisions.

¶6                                      I. BACKGROUND
¶7       A utility initiates a rate case by filing tariffs that provide for a rate increase.
     Commonwealth Edison Co. v. Illinois Commerce Comm’n, 405 Ill. App. 3d 389, 394, 937
     N.E.2d 685, 671 (2010) (citing 220 ILCS 5/9-201 (West 2006)). Upon such filing, the
     Commission suspends the tariffs and conducts an investigation and hearing. 220 ILCS 5/9-
     201(b) (West 2010). If the Commission begins a proceeding on the propriety of a utility’s
     proposed rates, the utility bears the burden of showing the proposed rates are just and
     reasonable. 220 ILCS 5/9-201(c) (West 2010).
¶8       When establishing the rates a public utility may charge its customers, the Commission
     considers the utility’s operating costs, rate base, and allowed rate of return. Citizens Utilities
     Co. of Illinois v. Illinois Commerce Comm’n, 124 Ill. 2d 195, 200, 529 N.E.2d 510, 512
     (1988). “A public utility is entitled to recover in its rates certain operating costs” and “earn
     a return on its rate base, or the amount of its invested capital.” Citizens Utilities, 124 Ill. 2d
     at 200, 529 N.E.2d at 512. “Recovery of the utility’s operating costs and the return on its rate
     base is known as the utility’s annual revenue requirement.” Commonwealth Edison, 405 Ill.
     App. 3d at 394, 937 N.E.2d at 672. “The components of the ratemaking determination may
     be expressed in ‘the classic ratemaking formula R (revenue requirement) = C (operating
     costs) + Ir (invested capital or rate base times rate of return on capital).’ ” Citizens Utilities,
     124 Ill. 2d at 200-01, 529 N.E.2d at 512-13 (quoting City of Charlottesville, Virginia v.
     Federal Energy Regulatory Comm’n, 774 F.2d 1205, 1217 (D.C. Cir. 1985)).
¶9       As Ameren Illinois states, this appeal involves the rate-base component of the revenue
     requirement, as well as the treatment of ADR and ADIT. In determining a utility’s rate base,
     the Commission may only include “the value of such investment which is both prudently
     incurred and used and useful in providing service” to the utility’s customers. 220 ILCS 5/9-
     211 (West 2010). Affecting the value of a utility’s rate base are both new investments and

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       the decline in value due to depreciation. Commonwealth Edison, 405 Ill. App. 3d at 395, 937
       N.E.2d at 695. When depreciation loss is recorded, two accounts are affected: depreciation
       expense and accumulated depreciation. Commonwealth Edison, 405 Ill. App. 3d at 395, 937
       N.E.2d at 695. Depreciation expense is the decline in value of an asset; it is recovered as part
       of the utility’s operating costs. See Business & Professional People for the Public Interest
       v. Illinois Commerce Comm’n, 146 Ill. 2d 175, 239-40, 585 N.E.2d 1032, 1059 (1991)
       (hereinafter BPI II).
¶ 10       Accumulated depreciation is the total of the depreciation expense accrued on an asset
       since that asset was placed in service. Commonwealth Edison, 405 Ill. App. 3d at 395, 937
       N.E.2d at 695. Assets’ book values are determined by subtracting accumulated depreciation
       from the assets’ cost. Commonwealth Edison, 405 Ill. App. 3d at 395, 937 N.E.2d at 695.
       Accumulated depreciation, however, cannot exceed the cost of the assets. Commonwealth
       Edison, 405 Ill. App. 3d at 395, 937 N.E.2d at 695.
¶ 11       As stated in Ameren Illinois’s opening brief, ADIT quantifies “the income taxes that are
       deferred when the tax law provides for deductions with respect to an item in a year other than
       the year that the item is treated as an expense for financial reporting purposes.” ADIT, for
       regulated entities, is treated as no-cost capital and reduces rate base.
¶ 12       To determine accurately a utility’s revenue requirement, “a utility must present its rate
       data in accordance with a proposed one-year test year.” BPI II, 146 Ill. 2d at 237-38, 585
       N.E.2d at 1058. The use of a test year prevents a utility from overstating its revenue
       requirement by using low revenue data from one year and high expense data from another.
       BPI II, 146 Ill. 2d at 238, 585 N.E.2d at 1058.
¶ 13       At its option, a utility may propose pro forma adjustments to the test-year data in order
       to include known and measurable changes that would affect the operating results of the test
       year. See 83 Ill. Adm. Code 287.40 (2011). Section 287.40 of title 83 of the Illinois
       Administrative Code (Administrative Code) states the following:
           “A utility may propose pro forma adjustments (estimated or calculated adjustments made
           in the same context and format in which the affected information was provided) to the
           selected historical test year for all known and measurable changes in the operating results
           of the test year. These adjustments shall reflect changes affecting the ratepayers in plant
           investment, operating revenues, expenses, and cost of capital where such changes
           occurred during the selected historical test year or are reasonably certain to occur
           subsequent to the historical test year within 12 months after the filing date of the tariffs
           and where the amounts of the changes are determinable.” 83 Ill. Adm. Code 287.40
           (2011).

¶ 14                                        A. The Rate Case
¶ 15        On June 5, 2009, Ameren Illinois filed tariffs proposing rates reflecting an increase in gas
       and electric delivery service of approximately $226 million. Later, Ameren Illinois revised
       its proposal for a rate increase of approximately $130 million. Ameren Illinois used the 2008
       calendar year as its historical test year and proposed pro forma adjustments, including an
       adjustment for additional plant investment planned between the end of 2008 and May 2010.

                                                 -5-
       During the case, Ameren Illinois changed the latter date to February 2010.
¶ 16        On July 8, 2009, the Commission suspended Ameren Illinois’s proposed tariffs and
       initiated this case. Petitions seeking leave to intervene were filed by a number of entities,
       including the People of the State of Illinois and IIEC. Evidentiary hearings were held in
       December 2009.

¶ 17                                1. Accumulated Depreciation
¶ 18                                     a. April 2010 Order
¶ 19        Before the Commission, Ameren Illinois maintained the plant-in-service component of
       the rate base reflected the historical cost of its capital assets used to provide service, less
       accumulated depreciation on those assets as of the end of the test year, December 31, 2008.
       In addition, Ameren Illinois maintained the rate base included known and measurable post-
       test-year pro forma capital additions that would be placed in service by February 2010.
       Ameren Illinois purported to have included adjustments to accumulated depreciation to
       reflect additional depreciation associated with the pro forma capital additions. Ameren
       Illinois maintained its methodology had been endorsed by the Commission.
¶ 20        IIEC maintained Ameren Illinois’s approach overstated its net plant and rate base because
       Ameren Illinois accounted for the plant addition increases to gross utility plant but ignored
       the contemporaneous offset of changes in accumulated depreciation. IIEC argued plant
       additions would not increase the net plant because those additions would be offset by
       increases to ADR and ADIT that would occur during the same post-test-year pro forma time
       period.
¶ 21        The Commission found the 2008 historical test year was permissible under the
       Commission’s rules. The Commission acknowledged IIEC pointed to evidence
       distinguishing the record from this case from the recent decisions Ameren Illinois asked the
       Commission to follow. The Commission held that “[a] fresh look” at the competing
       proposals, “aided by evidence presented for the first time in this record,” shows IIEC’s
       objections are “well founded.” The Commission further found it had not in the earlier
       decisions cited by Ameren Illinois addressed the effect of section 9-211 of the Public Utilities
       Act (220 ILCS 5/9-211 (West 2008)) in this context. The Commission concluded two parts
       of the record evidence were “particularly compelling.” The first was that of the staff’s
       accounting expert who opined the regulatory accounting required the plant-in-service balance
       and the accumulated reserve for depreciation balance be representative of the same point in
       time. The second was IIEC’s analysis showing the result of the policy that allowed only one
       part of net plant in determining rate base. Particularly compelling to the Commission was the
       evidence showing Commonwealth Edison, in a recent case, benefitted from “a significantly
       overstated rate base” as a result of not applying ADR.
¶ 22        The Commission mandated Ameren Illinois reflect the balance of ADR and ADIT as of
       February 2010 in its rate base because Ameren Illinois had included pro forma plant
       additions in its rate base as of the same date. The Commission concluded, “Section 9-211
       essentially requires the Commission to ensure that a utility’s approved rate base does not
       exceed the investment value the utility actually uses to provide service.” The Commission

                                                 -6-
       continued, “The measure of the amount of investment so dedicated must account for both
       increases and decreases (over a consistent period) at any point in time.” At the conclusion
       of this part of its ruling, the Commission noted the following for future rate cases: “To avoid
       confusion respecting proposals in future rate cases, the Commission finds that if a utility has
       recovered in rates the cost of an asset through depreciation expense, the associated amount
       of accumulated depreciation should be deducted from rate base.”

¶ 23                       b. The May 2010 Application for Rehearing
¶ 24       Ameren Illinois filed an application for rehearing, asking the Commission to reconsider
       the Commission’s pro forma adjustments for ADR and ADIT. Ameren Illinois argued the
       Commission’s adjustment violated test-year rules, constituted a reversal in Commission
       policy, understated significantly Ameren Illinois’s actual net plant, calculated an adjustment
       to the ADR and ADIT that had not been proposed, and contained accounting errors.
¶ 25       The Commission granted Ameren Illinois’s application. The IIEC and the State
       advocated the “roll forward” adjustments for ADR and ADIT, but the two parties disagreed
       as to methodology and amounts.

¶ 26                 c. The Commonwealth Edison September 2010 Decision
¶ 27       On September 30, 2010, the Second District entered its opinion in Commonwealth
       Edison, reaching the same decision on accumulated depreciation as the Commission did in
       April 2010. In Commonwealth Edison, the Commission’s order, consistent with a stipulation
       between Commonwealth Edison (ComEd) and the staff, included in ComEd’s rate base pro
       forma capital additions through June 2008 but did not include the increase in the
       accumulated reserve for depreciation of the embedded or existing plant. Commonwealth
       Edison, 405 Ill. App. 3d at 404, 937 N.E.2d at 702.
¶ 28       On appeal, IIEC maintained (1) the Commission exceeded its authority because the rate-
       base increase violated section 9-211 of the Public Utilities Act, (2) the Commission violated
       the Administrative Code “by mismatching 2008 gross plant investment and 2006 test-year
       accumulated depreciation,” and (3) the Commission was not bound by its earlier decisions
       to the contrary. Commonwealth Edison, 405 Ill. App. 3d at 404, 937 N.E.2d at 702-03.
       Regarding section 9-211, the Second District held “[s]ection 9-211 essentially requires the
       Commission to ensure that a utility’s approved rate base does not exceed the investment
       value that the utility actually uses to provide service” and “[t]he measure of the amount of
       investment so dedicated must account for both increases and decreases over a consistent
       period.” Commonwealth Edison, 405 Ill. App. 3d at 405, 937 N.E.2d at 703. By not including
       both the increases and decreases, the Commission, according to the Second District,
       “approved a rate base that exceeds the investment value ComEd actually dedicates to utility
       services.” Commonwealth Edison, 405 Ill. App. 3d at 405, 937 N.E.2d at 703.
¶ 29       The Second District further found section 287.40 of title 83 of the Administrative Code,
       which governs pro forma adjustments to a historical test year, establishes an “increase in the
       accumulated depreciation on the existing plant during the post-test-year period, in which the
       additional plant is being factored into the rate base, is a change that affects ratepayers and

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       *** must be factored into the rate base.” Commonwealth Edison, 405 Ill. App. 3d at 406, 937
       N.E.2d at 704. In addition, the Second District determined ComEd’s position to the contrary
       is inconsistent with the matching principles of section 287.20 and concluded the Commission
       abused its discretion in excluding from the rate base the increase in accumulated depreciation
       during the pro forma period. Commonwealth Edison, 405 Ill. App. 3d at 420, 937 N.E.2d at
       715.

¶ 30                 d. The Commission’s November 2010 Order on Rehearing
¶ 31        In its November 2010 order on rehearing, the Commission remained unpersuaded it was
       “altering the manner that it adjusts accumulated depreciation reserve” and concluded no
       additional steps needed to be taken before making “such an adjustment.” The Commission
       observed “Staff has pointed out that multiple orders over the years have reflected an
       adjustment for accumulated depreciation through the pro forma adjustment period while
       other orders have not.” The Commission stated it had “relied on the record in the various
       cases in coming to its conclusions.”
¶ 32        The Commission further concluded the failure to estimate actual net plant would have
       been avoided had Ameren Illinois “more accurately estimated its plant additions for this
       period” and such failure was “not indicative of weakness in the Commission’s conclusion.”
       The Commission concluded the order on rehearing “should reflect an aggregated reduction
       to the reserve for accumulated depreciation of $15.2 million for all six Ameren Illinois
       utilities.” The Commission further concluded the appropriate valuation of aggregated net
       plant for the six utilities was $3.352 billion.

¶ 33                                    2. The Revenue Act Tax
¶ 34                                         a. Background
¶ 35        In every rate case, the Commision determines what part of the utility’s costs each class
       of customers will be responsible for. Ameren Illinois has five rate classes, ranging from DS-
       1, residential customers, to DS-5, providers of street lighting and protective lighting service.
       DS-4 contains the largest customers, with demands exceeding 1,000 kilowatt-hours (kWh).
       IIEC companies fall within DS-4. According to the April 2010 order, the general preference
       of the Commission is to allocate costs among these classes “as close to the cost of serving
       each class as is reasonably possible and/or appropriate.” To do this, the Commission typically
       uses a cost of service study (COSS) that compares the costs of each customer class to
       revenues produced by each class. At times, certain circumstances warrant allocating costs on
       non-cost-based criteria.
¶ 36        This case concerns the Commission’s decision on how to allocate Ameren Illinois’s tax
       expense under the Revenue Act. Utilities became subject to a tax on invested capital under
       the Revenue Act shortly after the personal property tax was eliminated in 1970. See 35 ILCS
       620/2a.1 (West 1996); see also 35 ILCS 620/1a (West 2010). This tax was initially assessed
       on utilities at a rate of 0.8% of the utility’s invested capital. 35 ILCS 620/2a.1 (West 1996).
       Effective January 1, 1998, however, the legislature altered section 1a of the Revenue Act by
       deleting the reference to the tax assessment at a rate of 0.8% and imposing a tax on the utility

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       based on the amount of kWh distributed. See Pub. Act 90-561, art. 3, § 25, eff. Jan. 1, 1998
       (1997 Ill. Laws 6302, 6305); see also 35 ILCS 620/2a.1(a) (West 2010).

¶ 37                         b. The Commission’s April 29, 2010, Order
¶ 38        Here, Ameren Illinois proposed to the Commission that its Revenue Act tax liability be
       allocated and collected from its customers based on kWh sales. IIEC opposed Ameren
       Illinois’s proposal. Before the Commission, IIEC maintained the Revenue Act tax should be
       allocated on a demand basis by the same manner it was assessed and collected before the
       1997 revisions to the Revenue Act. IIEC contended kWh sales are only one of several factors
       that determine a utility’s Revenue Act tax responsibility. IIEC maintained the main factor
       determining Revenue Act tax liability was the utility’s 1997 level of invested capital. IIEC
       argued the tier levels set forth in the Revenue Act were created to approximate the same level
       the utilities had paid based on invested capital.
¶ 39        IIEC further maintained there was a very weak correlation between kWh sales and the
       utilities’ Revenue Act tax liabilities. IIEC also argued most of the current Revenue Act tax
       was inherited 1997 invested capital tax. IIEC maintained the Revenue Act’s language did not
       express an expectation tax burdens would be shifted from one customer class to another.
¶ 40        Ameren Illinois argued IIEC’s approach was improper because, under the new tax
       structure, as a utility delivers more or less energy, the tax amount will increase or decrease
       no matter the amount of capital investment. Ameren Illinois also maintained its proposal was
       consistent with clear legislative intent.
¶ 41        The staff agreed with Ameren Illinois. The staff recognized Ameren Illinois’s proposal
       would shift responsibility for tax costs from smaller to larger customers on the system. The
       DS-4 customers, who accounted for 43% of the system usage, would be allocated 43% of the
       Revenue Act tax costs, while those customers at the time accounted for only 8% of the costs.
       The residential DS-1 customers’ allocation would decline from 56% to 30%. Staff
       maintained plant in service was no longer a part of the Revenue Act tax determination.
¶ 42        The Commission found interesting IIEC’s argument invested capital (or plant in service),
       not kWh, was the primary cost causer. The Commission, however, citing section 1a of the
       Revenue Act, concluded the legislature intended to replace the plant-in-service tax with a
       kWh tax “in response to the changing nature of the Illinois electric utility industry,” in which
       utilities had shed much of their plant in service and became regulated distribution utilities.
¶ 43        The Commission determined Ameren Illinois’s and the staff’s interpretation of the
       Revenue Act was more reasonable, stating the following:
                “In the absence of any clear legislative intent to the contrary, [Ameren Illinois] should
            recover [Revenue Act] tax costs in base rates through the kWh-based Distribution
            Delivery Charge from the DS-1, DS-2, and DS-5 classes. [Ameren Illinois] should create
            a kWh charge to reflect the [Revenue Act] tax allocation that applies to the DS-3 and DS-
            4 classes.”
¶ 44        The Commission also found, while addressing the issue of rate mitigation for the rate
       classes, the Revenue Act tax should be recovered as a separate line item on bills. The


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       Commission determined “ratepayers should be made aware of taxes they are being charged.”

¶ 45                       c. IIEC’s June 2010 Application for Rehearing
¶ 46       Following the Commission’s April 2010 order and May 6, 2010, corrected order, IIEC
       filed its first application for rehearing. Attached to IIEC’s application is an affidavit by
       Robert R. Stephens, an expert who testified in the initial hearing. According to Stephens,
       Ameren Illinois, through its rates that took effect in early May 2010, was not collecting the
       Revenue Act tax expenses through base rates, but primarily through tax additions riders.
       Stephens opined Ameren Illinois’s rates would collect almost $4 million more than the
       amount approved by the Commission. IIEC also asked the Commission to reverse its
       decisions allocating the Revenue Act tax on kWh delivered and collecting the Revenue Act
       tax on a separate kWh charge for DS-3 and DS-4 classes.
¶ 47       On June 15, 2010, the Commission issued a “Notice of Commission Action,” granting
       in part and denying in part IIEC’s application for rehearing. In this notice, the Commission
       stated it had intended to treat the Revenue Act tax as a pass-through tax, which would appear
       as a line item on the customer’s bill:
                “With regard to the [Revenue Act] tax and its recovery, it was the Commission’s
           intent in its Order to exclude the [Revenue Act] tax from the revenue requirement, treat
           the [Revenue Act] tax as a pass[-]through tax, have the [Revenue Act] tax recovered
           through a volumetric charge, and have the [Revenue Act] tax separately identified as a
           line item on the customer’s bill as other pass-through taxes are identified.”
¶ 48       Subsequently, IIEC sought clarification on the partial grant of its application for
       rehearing. This request was denied. At the rehearing proceeding, IIEC presented additional
       evidence to show the Revenue Act tax was not a pass-through tax.

¶ 49                d. The Commission’s November 2010 Order on Rehearing
¶ 50       In its November 4, 2010, order on rehearing, the Commission made no findings regarding
       IIEC’s pass-through tax argument. Instead, the Commission noted it had expressed the intent
       to exclude the Revenue Act tax from the revenue requirement and treat the Revenue Act tax
       as a pass-through tax.

¶ 51                  e. IIEC’s December 2010 Application for Rehearing
¶ 52       On December 6, 2010, IIEC filed its second application for rehearing, seeking rehearing
       on the November 4, 2010, Commission order. IIEC argued, in part, the Commission’s notice
       of commission action contradicted its April 2010 order, in which the Commission found the
       Revenue Act tax should be recovered in base rates. IIEC further argued no findings or
       analysis to support the Commission’s determination appears in its notice. IIEC asked for a
       rehearing on these matters. The Commission denied IIEC’s rehearing application.




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¶ 53                           B. Motion To Consolidate Appeals
¶ 54       Three appeals were filed regarding this rate case: case Nos. 4-10-0962, 4-10-0976, and
       4-11-0075. In case No. 4-10-0962, on December 6, 2011, Ameren Illinois filed its notice of
       appeal of the Commission’s orders. Two days later, in case No. 4-10-0976, IIEC filed its
       notice of appeal. After the Commission denied IIEC’s December 2010 application for
       rehearing, IIEC, in January 2011, filed its second appeal in case No. 4-11-0075.
¶ 55       In January 2011, IIEC moved to consolidate the appeals in case Nos. 4-10-0962 and 4-
       10-0976. The motion was unchallenged and the appeals were consolidated.
¶ 56       In March 2011, IIEC moved to consolidate the appeal in case No. 4-11-0075 with the
       consolidated appeals in case No. 4-10-0962 and case No. 4-10-0976. On March 7, 2011, the
       Commission moved to dismiss case No. 4-11-0075 on jurisdictional grounds. On March 24,
       2011, this court consolidated the appeals but determined we would consider the
       Commission’s jurisdictional arguments with the case.

¶ 57                                        II. ANALYSIS
¶ 58                                   A. Standards of Review
¶ 59        On appeal of a rate case, this court will reverse a Commission decision if we find one of
       the following: (1) “[t]he findings of the Commission are not supported by substantial
       evidence based on the entire record”; (2) the Commission lacked jurisdiction over the
       decision; (3) the decision violates state or federal law; or (4) “[t]he proceedings or manner
       by which the Commission considered and” made its decision violated state or federal laws
       to the prejudice of the appellant. 220 ILCS 5/10-201(e)(iv) (West 2010); see also Central
       Illinois Public Service Co. v. Illinois Commerce Comm’n, 268 Ill. App. 3d 471, 476, 644
       N.E.2d 817, 821 (1994).
¶ 60        When considering the propriety of a Commission decision, we take the findings and
       conclusions of the Commission on questions of fact as prima facie true and consider any
       rule, regulation, order, or decision of the Commission to be prima facie reasonable. 220
       ILCS 5/10-201(d) (West 2010). “[T]he burden of proof upon all issues raised by the appeal
       shall be upon the person or corporation appealing from such rules, regulations, orders or
       decisions.” 220 ILCS 5/10-201(d) (West 2010).
¶ 61        The Commission’s interpretation of a statute it is charged with administering and
       enforcing is entitled to substantial weight and deference. People ex rel. Birkett v. City of
       Chicago, 202 Ill. 2d 36, 46, 779 N.E.2d 875, 881 (2002). “[A] reasonable construction of an
       ambiguous statute by the agency charged with that statute’s enforcement, if
       contemporaneous, consistent, long-continued, and in concurrence with legislative
       acquiescence, creates a presumption of correctness that is only slightly less persuasive than
       a judicial construction of the same act.” Birkett, 202 Ill. 2d at 46, 779 N.E.2d at 881. A court
       may overturn the Commission’s interpretation of its own rules if its construction is clearly
       erroneous, arbitrary, or unreasonable. See Illinois Federation of Teachers v. Board of
       Trustees, 191 Ill. App. 3d 769, 774, 548 N.E.2d 64, 67 (1989). Less deference will be
       afforded, however, when the Commission’s decision is a departure from past practice.
       Business & Professional People for the Public Interest v. Illinois Commerce Comm’n, 136

                                                -11-
       Ill. 2d 192, 228, 555 N.E.2d 693, 709 (1989) (hereinafter BPI I) (“[N]o matter how much
       discretion the Commission is afforded under the [Public Utilities] Act, its decisions are
       entitled to less deference when it drastically departs from past practice.”).
¶ 62        In contrast, the Commission’s interpretation of a statute it is not charged with
       administering and enforcing is not entitled to any deference. Such interpretation is a question
       of law, which we review de novo (BPI I, 136 Ill. 2d at 204, 555 N.E.2d at 698).

¶ 63                                       B. ADR and ADIT
¶ 64                1. Section 10-101 Did Not Bar the Commission’s Decision
                                      Concerning ADR and ADIT
¶ 65                                a. Ameren Illinois’s Argument
¶ 66        Ameren Illinois first argues the Commission’s order violates Illinois law because the
       Commission improperly changed its rules regarding the application of accumulated
       depreciation without providing prior notice of the change or instituting a rulemaking
       proceeding under section 10-101 of the Public Utilities Act (220 ILCS 5/10-101 (West
       2008)). Section 10-101 provides in relevant part:
            “Any proceeding intended to lead to the establishment of policies, practices, rules or
            programs applicable to more than one utility may, in the Commission’s discretion, be
            conducted pursuant to either rulemaking or contested case provisions, provided such
            choice is clearly indicated at the beginning of such proceeding and subsequently adhered
            to.” 220 ILCS 5/10-101 (West 2008).
¶ 67        Ameren Illinois argues the Commission’s orders “represent a drastic departure from
       established Commission policy” and, thus, section 10-101’s hearing and notice requirements
       were triggered. In support, Ameren Illinois cites orders of the Commission dated 2003
       through September 2008, nine months before Ameren Illinois’s June 2009 rate filing, in
       which the Commission rejected the argument ADR and ADIT should be rolled forward to
       coincide with pro forma adjustments. In Commonwealth Edison Co., Ill. Comm. Comm’n
       No. 01-0423, the Commission approved a pro forma adjustment, but rejected a proposed
       depreciation reserve adjustment, upon concluding such an adjustment would improperly shift
       the test year. See Commonwealth Edison Co., 224 P.U.R.4th 357, 2003 Ill. PUC LEXIS 311,
       at *112 (Mar. 28, 2003). In Commonwealth Edison Co., Ill. Comm. Comm’n No. 05-0597,
       the Commission rejected the same argument on the same basis, finding in part “Commission
       rules and test year ratemaking principles prohibit such an adjustment.” Commonwealth
       Edison Co., 250 P.U.R.4th 161, 2006 Ill. PUC LEXIS 43, at *33 (July 26, 2006). The
       Commission noted the intervenor’s “proposal merely [took] one part of the rate base and
       move[d] it one additional year into the future.” Id. In North Shore Gas Co./Peoples Gas
       Light & Coke Co., Ill. Comm. Comm’n Nos. 07-0241, 07-0242 cons., the Commission again
       rejected the same accumulated-depreciation adjustment. The court found the earlier decision
       in Commonwealth Edison Co., Ill. Comm. Comm’n No. 05-0597, controlling and followed
       it to avoid an arbitrary and capricious action. See North Shore Gas Co., Ill. Comm. Comm’n
       Nos. 07-0241, 07-0242 cons., at 16, http://www.icc.illinois.gov/docket/files.aspx?no=07-
       0241&docId=119858 (Final Order Feb. 5, 2008).

                                                -12-
¶ 68        In September 2008, in Commonwealth Edison Co., Ill. Comm. Comm’n No. 07-0566,
       the Commission again rejected the roll-forward adjustment. The Commission found “these
       arguments are not novel arguments as the Commission has reviewed the merits of this
       position in at least three cases in the recent past.” Commonwealth Edison Co., Ill. Comm.
       Comm’n No. 07-0566, at 28, http://www.icc.illinois.gov/docket/files.aspx?no=07-
       0566&docId=128596 (Final Order Sept. 10, 2008). The Commission concluded it “strove
       to make clear” that the adjustment was improper. Id. at 29. The Commission stated in order
       for it “to do an about face with regard to its prior decisions,” a party must make a clear
       showing with proper evidentiary and legal support. Id. at 30. Ameren Illinois further noted
       throughout the appeal in the Second District’s ComEd decision, the Commission defended
       its determinations rejecting the roll-forward adjustment.
¶ 69        According to Ameren Illinois, the Commission’s “about face” on this requirement
       violates precedent as shown in BPI I and BPI II. Ameren Illinois maintains both of these
       cases establish the Commission violates section 10-101 when it changes a rule, policy, or
       practice without first providing a proceeding on the proposed change.
¶ 70        Ameren Illinois further maintains the Commission’s abrupt change without notice and
       a proceeding violated its rights to due process because it may not arbitrarily abandon prior
       interpretations of its rules. See Citizens Utility Board v. Illinois Commerce Comm’n, 166 Ill.
       2d 111, 132, 651 N.E.2d 1089, 1099-1100 (1995).

¶ 71                           b. Commission’s and IIEC’s Arguments
¶ 72       The Commission acknowledges, since the adoption of section 287.40, it generally had
       not imposed post-test-year accumulated depreciation from the embedded-rate-base
       adjustment when post-test-year, pro forma capital adjustments were added to the rate base.
       The Commission emphasizes, however, previous cases in which post-test-year ADR was
       applied due to an agreement between the utility and staff. See, e.g., Illinois Gas Co., No. 08-
       0482, 2009 WL 2355058, at 3, 5 (Ill. Comm. Comm’n Apr. 24, 2009). The Commission also
       notes one case, involving a predecessor of Ameren Illinois, in October 2003 where the
       Commission imposed post-test-year ADR from the embedded rate base when post-test-year
       pro forma capital adjustments were made and there was declining or relatively static amounts
       of historical net plant in service. See In re Central Illinois Public Service Co., No. 02-0798,
       2003 WL 23473070, at *7-*8 (Ill. Comm. Comm’n Oct. 22, 2003). The Commission further
       maintains two commissioners dissented from the September 2008 order in the 2008 ComEd
       case, urging an adjustment for ADR should be imposed in all cases when post-test-year pro
       forma capital adjustments were allowed to the rate base. See Commonwealth Edison Co., Ill.
       Comm. Comm’n No. 07-0566, http://www.icc.illinois.gov/docket/files.aspx?no=07-
       0566&docId=130490 (Nov. 7, 2008) (Lieberman and Elliott, dissenting).
¶ 73       The Commission also contends the application of section 10-101 in this scenario would
       have an absurd result. To accept Ameren Illinois’s interpretation of section 10-101 of the
       Public Utilities Act, the Commission reasons, would result in a situation where the
       Commission, in determining just and reasonable rates, would have to wait until the resolution
       of a future case to comply with its statutory duty because of decisions in earlier rate cases.


                                                -13-
       Instead, the Commission emphasizes the fact it has the authority to determine each case
       before it freely because it “is not a judicial body and its orders do not have the effect of res
       judicata” (Lakehead Pipeline Co. v. Illinois Commerce Comm’n, 296 Ill. App. 3d 942, 956,
       696 N.E.2d 345, 354 (1998)). The Commission further maintains the law permits it to
       deviate from past practices without triggering a reversal. See generally Citizens Utility
       Board, 166 Ill. 2d at 132, 651 N.E.2d at 1099 (“[W]here the Commission’s decisions
       drastically depart from past practices, they are entitled to less deference.”).
¶ 74       IIEC further agrees section 10-101’s requirements are not implicated here. IIEC contends
       this case is not a “proceeding intended to lead to the establishment of policies, practices,
       rules or programs applicable to more than one utility.” 220 ILCS 5/10-101 (West 2008).

¶ 75                                        c. Conclusion
¶ 76       We disagree with Ameren Illinois that the Commission’s decision in this case is an
       arbitrary abandonment of prior interpretation of its rules. As it argues above, the Commission
       is authorized to determine each case before it, even when it considers issues identical to those
       in a previous case. See Lakehead Pipeline Co., 296 Ill. App. 3d at 956, 696 N.E.2d at 354.
¶ 77       Ameren Illinois goes to great lengths to show the Commission repeatedly and
       consistently refused to impose post-test-year ADR from the embedded-rate-base adjustment
       when post-test-year, pro forma capital adjustments were added to the rate base. The record
       and cases show, however, the Commission’s decision that resulted in a change in the way the
       Commission will apply post-test-year ADR was not arbitrary. The Commission’s April 2010
       order shows the Commission, when reaching its decision, considered evidence showing “the
       adjustment approved in a recent Commonwealth Edison case” resulted in “a significantly
       overstated rate base.” (Emphasis added.) The Commission also noted it considered a legal
       argument not addressed in the cases cited by Ameren Illinois: the application of section 9-
       211 of the Public Utilities Act (220 ILCS 5/9-211 (West 2008)). In this case, the
       Commission, noting the Ameren Illinois cases did not address section 9-211 in this context,
       concluded section 9-211 “essentially require[d] the Commission to ensure that a utility’s
       approved rate base does not exceed the investment value the utility actually uses to provide
       service.”
¶ 78       Upon review of the Ameren Illinois cases, we agree none show the Commission
       addressed section 9-211 in this context. In fact, in the earlier three cases, none show the
       argument was even raised. See Commonwealth Edison Co., 224 P.U.R.4th 357, 2003 Ill.
       PUC LEXIS 311, at *111 (Mar. 28, 2003). In Commonwealth Edison Co., Ill. Comm.
       Comm’n No. 01-0423, the Commission approved a pro forma adjustment, but it rejected a
       proposed depreciation reserve adjustment upon concluding such an adjustment would
       improperly shift the test year. See Commonwealth Edison Co., 224 P.U.R.4th 357, 2003 Ill.
       PUC LEXIS 311, at *112 (Mar. 28, 2003); Commonwealth Edison Co., 250 P.U.R.4th 161,
       2006 Ill. PUC LEXIS 43, at *33 (July 26, 2006); North Shore Gas Co./Peoples Gas Light
       & Coke Co., Ill. Comm. Comm’n Nos. 07-0241, 07-0242 cons.,
       http://www.icc.illinois.gov/docket/files.aspx?no=07-0241&docId=119858 (Final Order Feb.
       8, 2008). Thus, it is not evident in those cases the Commission even considered section 9-


                                                -14-
       211 when stating it would not apply post-test-year accumulated depreciation from the
       embedded rate base when adjusting the rate base for post-test-year pro forma capital
       adjustments. In the latter ComEd decision before the Commission, intervenors raised the
       argument, but the Commission did not address it in its conclusion. Instead, the Commission
       focused on the holdings of the previous decisions and followed those. Commonwealth
       Edison, Ill. Comm. Comm’n No. 07-0566 at 22, 28-30,
       http://www.icc.illinois.gov/docket/files.aspx?no=07-0566&docId=128596 (Final Order Sept.
       10, 2008). Interestingly, the Commission stated it would make “an about face with regard to
       its prior decisions” when there is “a clear showing as to the appropriateness of such a change
       by way of proper evidentiary and legal support for us to consider such departures from settled
       precedent.” Id. at 30.
¶ 79        Here, the Commission cites new legal authority, in addition to evidence of a significantly
       overstated rate base in violation of such authority. In light of the fact the Commission
       addressed arguments not addressed before, the Commission’s decision is not arbitrary.
¶ 80        Second, although the Commission in its brief concedes it “may have been in the process
       of making a change in rate regulation in the present case as a matter of policy,” we are not
       convinced (1) a change in policy exists, (2) the Commission’s action violates section 10-101,
       or (3) BPI I and BPI II mandates reversal.
¶ 81        A plain reading of section 10-101 of the Public Utilities Act does not establish it applies
       here. Ameren Illinois emphasizes the following language in section 10-101:
            “Any proceeding intended to lead to the establishment of policies, practices, rules or
            programs applicable to more than one utility may, in the Commission’s discretion, be
            conducted pursuant to either rulemaking or contested case provisions, provided such
            choice is clearly indicated at the beginning of such proceeding and subsequently adhered
            to.” 220 ILCS 5/10-101 (West 2008).
¶ 82        Section 10-101 does not explicitly require the Commission, when considering a new legal
       argument, e.g., whether a statute requires a change in a “policy,” to hold a proceeding before
       resolving the argument. In addition, the rate case itself is not a “proceeding intended to lead
       to the establishment of policies, practices, rules or programs applicable to more than one
       utility,” and the Commission has discretion whether to hold a proceeding.
¶ 83        Moreover, BPI I and BPI II also do not establish section 10-101 applies, as both are
       distinguishable and not controlling. In these cases, the practice that was abandoned by the
       Commission had been created by the Commission and abandoned without any reliance on
       statute or other authority. See BPI I, 136 Ill. 2d at 219, 555 N.E.2d at 705. In BPI I, the
       intervenors argued the Commission, in setting rates over a five-year period for a utility,
       violated its past practice of setting rates on a year-to-year basis. BPI I, 136 Ill. 2d at 219, 555
       N.E.2d at 705. In considering the intervenors’ claims, the supreme court noted the
       Commission created, in General Order 210 (83 Ill. Adm. Code 285.150 (1985)), a single test
       year by which revenues and expenses could be more accurately determined. BPI I, 136 Ill.
       2d at 219, 555 N.E.2d at 705. Despite General Order 210, however, the Commission, in BPI
       I, without announcing a rule change, considered a five-year test range when creating the
       order for a five-year moratorium. BPI I, 136 Ill. 2d at 225-26, 555 N.E.2d at 708. The


                                                 -15-
       Commission notably did not consider, as here, whether its existing policy or practice ran
       afoul of statutory law. The supreme court ruled the Commission had improperly altered and
       amended its own rules without following the procedures of section 10-101. BPI I, 136 Ill. 2d
       at 226-27, 555 N.E.2d at 708-09; see also BPI II, 146 Ill. 2d at 240-41, 585 N.E.2d at 1060.
¶ 84       In this case, the Commission did not amend its practice or policy on its own volition. The
       Commission, instead, relied on a legal argument the record shows had not been addressed
       before as well as on recent facts to determine a statute would be violated if its current
       practice continued. The Commission has “the authority to address each matter before it
       freely, even if it involves issues identical to a previous case.” Lakehead Pipeline Co., 296 Ill.
       App. 3d at 956, 696 N.E.2d at 354. The BPI decisions do not establish section 10-101 applies
       in such circumstances.

¶ 85               2. The Commission’s Interpretation of Section 9-211 Is Proper
¶ 86        Section 9-211 of the Public Utilities Act (220 ILCS 5/9-211 (West 2010)) provides the
       following:
            “The Commission, in any determination of rates or charges, shall include in a utility’s
            rate base only the value of such investment which is both prudently incurred and used
            and useful in providing service to public utility customers.”
¶ 87        Ameren Illinois argues the Commission’s decision is unlawful because the Commission
       erroneously interpreted section 9-211 of the Public Utilities Act. Ameren Illinois maintains
       the Commission, as well as the Second District, improperly added words to the section. Both
       the Commission, in its April 2010, order and the Second District found the following:
       “Section 9-211 essentially requires the Commission to ensure that a utility’s approved rate
       base does not exceed the investment value that the utility actually uses to provide service.”
       Commonwealth Edison, 405 Ill. App. 3d at 405, 937 N.E.2d at 703. Ameren Illinois
       maintains section 9-211 does not say anything about “investment value” or dictate a standard
       the Commission should apply to value investments included in rate base. Instead, Ameren
       Illinois argues the plain language of section 9-211 is to limit cost recovery to only those
       investments that are “both prudently incurred and used and useful in providing service” (220
       ILCS 5/9-211 (West 2010)).
¶ 88        We first address the appropriate standard of review for this argument. Section 9-211 is
       a statute the Commission is charged with administering and enforcing. We therefore give the
       Commission’s interpretation of the statute substantial weight and deference. See Birkett, 202
       Ill. 2d at 46, 779 N.E.2d at 881. We note less deference is given when the Commission’s
       decision is a departure from past practice. BPI I, 136 Ill. 2d at 228, 555 N.E.2d at 709. No
       party, however, has established less deference should be afforded here as none has
       contradicted the Commission’s April 2010 conclusion the Commission had not addressed
       section 9-211 in this context before.
¶ 89        Applying the deferential standard of review, we find no error in the Commission’s
       interpretation of section 9-211. First, contrary to Ameren Illinois’s argument section 9-211
       mentions investment value: “The Commission, in any determination of rates or charges, shall
       include in a utility’s rate base only the value of such investment which is both prudently

                                                 -16-
       incurred and used and useful in providing service to public utility customers.” (Emphasis
       added.) 220 ILCS 5/9-211 (West 2010). To read the statute as Ameren Illinois suggests
       requires us to ignore the “value of such investment” words, something this court may not do.
       See Cassens Transport Co. v. Illinois Industrial Comm’n, 218 Ill. 2d 519, 524, 844 N.E.2d
       414, 419 (2006) (holding a court “must construe the statute so that each word, clause, and
       sentence is given a reasonable meaning”). Second, the rate base is a utility’s “invested
       capital.” See Citizens Utilities, 124 Ill. 2d at 200, 529 N.E.2d at 512. If each investment
       complies with section 9-211, it follows the rate base will as well; i.e, the rate base will not
       exceed the value of investments used to provide service. We find no error in the
       Commission’s interpretation of section 9-211 as the rate base did not exceed the investment
       value the utility uses to provide service.
¶ 90       Our decision is supported by the Second District’s decision in Commonwealth Edison.
       In that case, the Second District found, as the Commission did here, section 9-211
       “essentially requires the Commission to ensure that a utility’s approved rate base does not
       exceed the investment value that the utility actually uses to provide service.” Commonwealth
       Edison, 405 Ill. App. 3d at 405, 937 N.E.2d at 703. The Second District concluded the
       Commission’s approval of a base rate that included a post-test-year pro forma adjustment
       but did not include a corresponding post-test-year adjustment for accumulated depreciation
       violated section 9-211 because its value was inflated. Commonwealth Edison, 405 Ill. App.
       3d at 405, 937 N.E.2d at 703.

¶ 91              3. The Commission Lawfully Found ADR and ADIT Adjustments
                  Were Consistent With the Public Utilities Act or Section 287.40
                                of Title 83 of the Administrative Code
¶ 92        Ameren Illinois makes three arguments supporting its claim the Commission unlawfully
       and unreasonably concluded the ADR and ADIT adjustments were consistent with the Public
       Utilities Act and section 287.40 of title 83 of the Administrative Code. First, Ameren Illinois,
       citing BPI I, contends the Commission cannot circumvent its own rules by moving the test
       year to the end of the pro forma period. Second, Ameren Illinois maintains the Commission’s
       ADR and ADIT adjustments are impermissible adjustments based solely on attrition factors.
       Third, Ameren Illinois argues the “roll forward” ADR and ADIT adjustments prevent it from
       recovering its prudent cost of service.
¶ 93        IIEC and the Commission contend Ameren Illinois’s arguments are based on the
       supposition section 287.40 of title 83 of the Administrative Code is meant only to favor
       utilities by increasing rate base. Both maintain section 287.40 allows for ADIT and ADR
       adjustments because both adjustments in this case were known and measurable changes in
       plant investment through the post-test-year period allowed for pro forma capital adjustments.
       These parties also maintain ADR and ADIT adjustments are not attrition, and Ameren
       Illinois’s latter argument is simply a complaint its own witnesses’ testimony should have
       been accepted over the testimony of the other parties’ witnesses.
¶ 94        Two provisions of the Administrative Code are relevant to Ameren Illinois’s argument:
       sections 287.20 and 287.40 of title 83. Section 287.20 sets forth the test-year requirements:

                                                -17-
           “A utility, at its option, may propose either one of the following periods as its proposed
           test year:
                (a) Historical. Any consecutive 12[-]month period, beginning no more than 24
           months prior to the date of the utility’s filing, for which actual data are available at the
           time of filing new tariffs; or
                (b) Future. Any consecutive 12[-]month period of forecasted data beginning no
           earlier than the date new tariffs are filed and ending no later than 24 months after the date
           new tariffs are filed.” 83 Ill. Adm. Code 287.20 (2011), adopted at 27 Ill. Reg. 12380,
           12382 (eff. Aug. 1, 2003).
       The test-year rule’s purpose “is to prevent a utility from overstating its revenue requirement
       by mismatching low revenue data from one year with high expense data from a different
       year.” BPI II, 146 Ill. 2d at 238, 585 N.E.2d at 1058.
¶ 95       Section 287.40 of title 83 of the Administrative Code allows for pro forma adjustments
       in a post-test-year period:
           “A utility may propose pro forma adjustments (estimated or calculated adjustments made
           in the same context and format in which the affected information was provided) to the
           selected historical test year for all known and measurable changes in the operating results
           of the test year. These adjustments shall reflect changes affecting the ratepayers in plant
           investment, operating revenues, expenses, and cost of capital where such changes
           occurred during the selected historical test year or are reasonably certain to occur
           subsequent to the historical test year within 12 months after the filing date of the tariffs
           and where the amounts of the changes are determinable. Attrition or inflation factors
           shall not be substituted for a specific study of individual capital, revenue, and expense
           components.” 83 Ill. Adm. Code 287.40 (2011), adopted at 27 Ill. Reg. 12380, 12384
           (eff. Aug. 1, 2003).
¶ 96       Ameren Illinois argues section 287.40 does not abolish the concept of a 12-month test
       period, but the Commission’s “roll forward” of the balances of ADR and ADIT to the end
       of the pro forma period does. Ameren Illinois contends the decision to “roll forward” the
       balances of ADR and ADIT an additional 14 months resulted in an improper extension of
       the test year. Ameren Illinois also maintains it had the right under section 287.40 to propose
       an adjustment to the test-year plant and the Commission arbitrarily moved the test year
       because Ameren Illinois exercised those rights.
¶ 97       We disagree with Ameren Illinois’s conclusions. The “roll forward” of ADR and ADIT
       balances does not offend the test-year requirements of section 287.20. The purpose of the
       test-year requirements is to insure the revenue and expenses match. See BPI II, 146 Ill. 2d
       at 238, 585 N.E.2d at 1058. A pro forma adjustment as Ameren Illinois proposes is, as the
       Commission concluded, “not consistent with any reading of the Commission’s test[-]year
       rules that is also consistent with the limitations of section 9-211 of the [Public Utilities] Act.”
       Suggesting it can pick and choose which pro forma adjustments to propose, while
       intervenors are not allowed to show how such pro forma adjustments will inflate base rate
       and to show what other pro forma adjustments are appropriate, contradicts such purpose.
¶ 98       While Ameren Illinois has the right to propose pro forma adjustments, such adjustments

                                                  -18-
      must “reflect changes affecting the ratepayers in plant investment, operating revenues,
      expenses, and cost of capital.” (Emphasis added.) 83 Ill. Adm. Code 287.40 (2011). We
      agree with the Second District’s conclusion this language establishes an increase in ADR and
      ADIT during the post-test-year period is a change affecting ratepayers and must be factored
      into the rate base. See Commonwealth Edison, 405 Ill. App. 3d at 406, 937 N.E.2d at 703.
      This interpretation is consistent with the interpretation by the Commission and the Second
      District that section 9-211 requires the rate base does not exceed the investment value a
      utility actually uses to provide utility services (see Commonwealth Edison, 405 Ill. App. 3d
      at 405, 937 N.E.2d at 704). Section 9-211 cannot be satisfied if a utility is allowed to select
      which pro forma adjustments apply but intervenors are denied the opportunity to establish
      why such adjustments are inflated or propose additional pro forma adjustments.
¶ 99       Ameren Illinois next argues the Commission is not permitted under section 287.40 to
      approve pro forma adjustments based solely on attrition factors. Ameren Illinois contends
      if inflation cannot increase base rate, attrition may not decrease base rate. Ameren Illinois
      further maintains although ADR and ADIT balances may increase during the pro forma
      period, this does not mean the adjustments are based on the type of specific study section
      287.40 requires.
¶ 100      IIEC argues the pro forma adjustments for ADR and ADIT are not based on attrition as
      the Commission defines the term. IIEC, citing a 1982 decision, argues the Commission has
      described attrition as “primarily the result of the effect of inflation on operating expenses and
      rate base, the loss of margin from declining sales volumes, and increases in the cost of capital
      as a consequence of the rising cost of senior securities.” Peoples Gas Light & Coke Co., No.
      82-0082, 1982 Ill. PUC LEXIS 1, at *29 (Ill. Comm. Comm’n Dec., 28, 1982). IIEC further
      contends these adjustments are not attrition, as they are made according to schedules
      prescribed by the Commission, are certain to occur, and are known and measurable.
¶ 101      We deem this argument forfeited. Ameren Illinois cites no decision or order interpreting
      the meaning of attrition or establishing ADR and ADIT are attrition. Ameren Illinois cites
      one case, Iowa-Illinois Gas & Electric Co., 1993 Ill. PUC LEXIS 245, at *55-57 (Ill. Comm.
      Comm’n July 21, 1993), in which the Commission determined the utility had applied “a
      judgmental inflation factor without the particularized study required.” This decision does not
      provide any help in determining how the Commission would define attrition and whether
      attrition was improperly attributed in this case. It, and thus Ameren Illinois, falls far short of
      establishing the ADR and ADIT balances during the pro forma adjustment period are the
      result of attrition. See Ill. S. Ct. R. 341(h)(7) (eff. July 1, 2008) (“Points not argued are
      waived ***.”); Elder v. Bryant, 324 Ill. App. 3d 526, 533, 755 N.E.2d 515, 522 (2001)
      (“Allegations of trial court error summarily raised without supporting authority are deficient
      and warrant a finding of waiver.”).
¶ 102      We also note IIEC’s argument does not cure Ameren Illinois’s error. IIEC incorrectly
      attributes the above attrition definition to the Commission. In that case, the attrition
      definition was provided by the utility, not the Commission. See Peoples Gas Light & Coke
      Co., No. 82-0082, 1982 Ill. PUC LEXIS 1, at *29 (Ill. Comm. Comm’n Dec. 28, 1992)
      (“Respondent’s witness testified that, for Respondent, attrition is primarily the result of the
      effect of inflation on operating expenses ***.”).

                                                 -19-
¶ 103     Ameren Illinois further argues the Commission’s “roll forward” adjustment prevents it
      from recovering its prudent cost of service, which it is allowed to do under Citizens Utilities
      Board, 166 Ill. 2d at 121-22, 651 N.E.2d at 1095. Ameren Illinois contends if the alleged
      purpose of the “roll forward” is to create an accurate snapshot of the net plant at the time of
      service, that purpose has failed. Ameren Illinois contends the Commission failed to depict
      an accurate picture of its net plant as of February 2010 because Ameren Illinois’s proposed
      pro forma plant addition adjustment ($278 million) to rate base did not include all capital
      additions actually placed in service during the pro forma period ($380 million). The
      inequality that results when all depreciation is reflected but not all new investment will be
      added demonstrates, according to Ameren Illinois, the Commission should not “roll forward”
      the full amount of the increases for ADR and ADIT for all existing plants.
¶ 104     This argument does not establish section 287.40 of title 83 of the Administrative Code
      and section 9-211 of the Public Utilities Act should not be interpreted to allow post-test-year
      adjustments for ADR and ADIT. As IIEC points out, Ameren Illinois does not contend the
      $102 million in actual capital additions not included in pro forma adjustments would or
      should have satisfied section 287.40 requirements, such as the requirement pro forma
      adjustments be known and measurable. Ameren Illinois also has not argued this inequality
      could not have been avoided either by its having chosen a different test year or by better
      anticipating known and measurable capital additions. We are not convinced this alleged
      inequity is caused by the misinterpretation of section 287.40 and section 9-211. It seems a
      greater inequality would result as to the true value of a rate base if a pro forma adjustment
      of $278 million would have been allowed to inflate rate base, without a corresponding pro
      forma adjustment of known and measurable factors decreasing rate base.

¶ 105      4. The Commission’s Adjustments Are Supported by Substantial Evidence
¶ 106     a. The Evidence Supports a “Roll Forward” Adjustment of ADR and ADIT
¶ 107     Ameren Illinois first maintains the evidence presented does not support a “roll forward”
      adjustment of ADR and ADIT. Ameren Illinois contends the “matching principle” is violated
      by the rolling forward of these adjustments. Ameren Illinois begins this argument by
      revisiting the argument the test rules should not be circumvented by applying the ADR and
      ADIT pro forma adjustments. We need not revisit it. Ameren Illinois, citing staff, further
      argues strict adherence to the matching principle requires the alignment of all components
      of the revenue requirement, including service costs and rate-of-return information.
¶ 108     Without any citation to authority, Ameren Illinois also contends the goal of a pro forma
      plant adjustment is not to determine what a utility’s actual net plant will be at some point but
      to allow the utility to “recover prospective investment in rate base and therefore mitigate
      regulatory lag.” In addition, Ameren Illinois urges this court not to follow the Second
      District’s decision in Commonwealth Edison, arguing the Second District improperly stood
      in the shoes of the Commission and rejected an established policy on its own judgment.
¶ 109     These arguments fail. First, Ameren Illinois fails to cite any authority supporting its claim
      the purpose of section 287.40 is to mitigate regulatory lag. This argument is therefore
      forfeited. Ill. S. Ct. R. 341(h)(7) (eff. July 1, 2008) (“Points not argued are waived ***.”).

                                                 -20-
        Second, Ameren Illinois’s urging this court to disregard Commonwealth Edison as an
        improper exercise of deference fails. Whether the Second District was correct is not the
        question before this court. It is thus irrelevant whether the Second District should have been
        deferential to the Commission in its case and upheld the practice of not including post-test-
        year ADR and ADIT. This case comes to us on the decision of the Commission, interpreting
        section 9-211 and section 287.40, together, as requiring the adjustments. As we determined
        above, we are required to give the Commission’s decision deference as it was interpreting
        a statute and rule it was to enforce. See Birkett, 202 Ill. 2d at 46, 779 N.E.2d at 881.
        Applying this deference, we found no error in those interpretations. While we have found the
        Second District’s decision supports our deferential finding, it is not within our province to
        determine if the Second District was correct.
¶ 110        We turn back to Ameren Illinois’s matching-principle argument. In its November 2010
        order on rehearing, the Commission concluded the matching principle is not violated by
        applying pro forma adjustments proposed by the intervenors and the pro forma adjustment
        proposed by Ameren Illinois. The Commission, observing one could argue any pro forma
        adjustment violates the matching principle, found its adoption of the proposed pro forma
        adjustments of Ameren Illinois and those of the intervenors was consistent with the matching
        principle because it resulted in a rate-base value reflecting “both increases and decreases at
        a consistent point in time.”
¶ 111        Ameren Illinois asserts the decision to “roll forward” ADR and ADIT is not supported
        by substantial evidence. “ ‘Substantial evidence’ has been defined as evidence which a
        reasoning mind would accept as sufficient to support a particular conclusion and consists of
        more than a mere scintilla of evidence but may be somewhat less than a preponderance.”
        Central Illinois Public Service Co., 268 Ill. App. 3d at 479, 644 N.E.2d at 823. “[A]
        reviewing court must not put itself in the place of the Commission and conduct an
        independent investigation, nor should it substitute its judgment for that of the Commission.”
        Central Illinois Public Service Co., 268 Ill. App. 3d at 479, 644 N.E.2d at 823. “ ‘Merely
        showing that the evidence presented would support a different conclusion than the one
        reached by the Commission is not sufficient. Rather, the appellant must affirmatively
        demonstrate that the opposite conclusion is ‘clearly evident.’ ” Illinois Power Co. v. Illinois
        Commerce Comm’n, 382 Ill. App. 3d 195, 201, 887 N.E.2d 678, 683 (2008).
¶ 112        We find substantial evidence supports the Commission’s decision. Ameren Illinois
        proposed a pro forma capital addition of $280 million. The record contains evidence showing
        the rate base would have exceeded the investment value as of the end of February 2010, the
        date of the pro forma adjustment, had no adjustments for ADR and ADIT been made. We
        do not find such adjustments under section 287.40 of title 83 of the Administrative Code
        violate the matching principle.
¶ 113        Ameren Illinois next argues the evidence shows an automatic “roll forward” exacerbates
        regulatory lag and eviscerates the purpose of pro forma adjustments. In support, Ameren
        Illinois cites evidence showing the Commission’s “roll forward” adjustments cut against the
        purpose of pro forma adjustments as they fail to establish a level of plant investment that
        actually exists when new rates are in effect. In addition, Ameren Illinois disputes the
        contention that the ADR and ADIT balance adjustments are necessary to prevent Ameren

                                                 -21-
      Illinois from overearning its authorized rate of return. Ameren Illinois contends the utilities
      in the above-cited rate cases did not overearn, despite the Commission’s refusal to make
      post-test-year ADR and ADIT adjustments, as shown by the fact those utilities all seek
      another rate increase.
¶ 114      We do not find these arguments convincing. Again, we note Ameren Illinois has not
      provided authority for its argument the purpose of section 287.40 is to mitigate regulatory
      lag. This argument is forfeited.
¶ 115      Moreover, the fact the pro forma adjustments for ADR and ADIT and the addition of the
      pro forma adjustment Ameren Illinois proposed do not establish a level of plant investment
      that actually exists when the rates are in effect does not mean substantial evidence does not
      support the Commission’s decision. As the Commission’s November 2010 order on
      rehearing shows, the utility bears some of the responsibility for the mismatch of these
      amounts: “Had [Ameren Illinois] more accurately estimated its plant additions for the period,
      pro forma plant additions would more closely resemble its actual plant additions.”
¶ 116      We further find unconvincing the simple fact rate cases have been filed in the above-
      referenced cases as evidence those utilities did not overearn based on the fact adjustments
      were not made for post-test-year ADR and ADIT balances. The potential reasons for the
      proposed rate increases are myriad. Any reliance on the mere fact rate increases have been
      requested as proof ADR and ADIT adjustments are unnecessary to prevent inflated rate bases
      is pure speculation.

¶ 117   b. The Commission’s Method in Applying the Adjustments to ADR and ADIT
                                Is Supported by Substantial Evidence
¶ 118                               i. Ameren Illinois’s Argument
¶ 119      Ameren Illinois challenges the Commission’s decision by arguing the Commission
      ignored (1) the differing assumptions and flaws underlying the parties’ various proposed
      adjustments and (2) material evidence presented on rehearing that weighed against making
      the specific adjustment. Regarding its first argument, Ameren Illinois cites the April 2010
      order in which the Commission anticipated its interpretation of section 287.40 “ ‘may allow
      for a situation where a utility’s gross plant increase would be outpaced by its additional
      accumulated depreciation.’ ” Such a situation, according to Ameren Illinois, resulted for one
      of its utilities to have a decreased rate base “net plant” even when that utility shows a trend
      of increasing actual net plant over the same period. Ameren Illinois also cites a staff
      recommendation for a “limited projects” test, when a post-test-year adjustment to ADR is
      appropriate. The staff recommended test-year balances of ADR and ADIT would not be
      rolled forward if the utility’s proposed pro forma adjustment to plant was less than
      substantial in comparison to projects expected to be in service during the pro forma period.
      Ameren Illinois contends this approach would lead to another paradox: a utility would
      receive a larger rate-base increase by recognizing some, but not most, of its pro forma capital
      additions.
¶ 120      Ameren Illinois concludes this argument by maintaining the various “roll forward”
      adjustments proposed differed in methodology and amount and demonstrate the uncertainty

                                                -22-
      for when such adjustments should be applied and calculated.
¶ 121       Ameren Illinois last contends the Commission ignored material evidence against making
      the specific adjustment. Ameren Illinois argues if the ADR and ADIT for embedded plant
      were within the Commission’s discretion, the methodology used should have resulted in a
      “net plant” and rate base that accurately depict the investment value the utility uses to
      provide service. Ameren Illinois contends the methodology did not. Ameren Illinois argues
      it is uncontested it invested more capital than what was included in the rate base as pro forma
      adjustments. Ameren Illinois argues, assuming ADR-ADIT are inseverable from pro forma
      capital adjustments, “any proper measure of the pro forma adjustments to ADR and ADIT
      would have to account for the amount of plant additions included in adjustment.” Ameren
      Illinois argues the proper match would have been “to deduct only a percentage of the
      increases to accumulated depreciation and ADIT based on the ratio of pro forma plant
      additions to the total plant placed in service during the pro forma period.” Despite the
      Commission’s conclusion it may not often have actual values for plant additions during other
      pro forma periods, Ameren Illinois argues the Commission should not disregard such
      evidence if it is available on rehearing.
¶ 122       Ameren Illinois asks this court, at a minimum, to remand the case so the Commission
      may determine what portion of the estimated pro forma period increase to ADR and ADIT
      should be added to rate base.

¶ 123                              ii. The Commission’s Argument
¶ 124       The Commission contends its decision is supported by adjustments set forth in schedules
        and appendices in the record. The Commission maintains the accumulated-depreciation
        calculation found by the Commission is supported by staff evidence. The Commission
        further maintains it did not improperly ignore evidence of actual gross plant during the pro
        forma period, concluding instead such evidence to update pro forma adjustments under
        section 287.40 is improper on rehearing.

¶ 125                                   iii. IIEC’s Argument
¶ 126      IIEC contends the Commission independently and appropriately determined the post-test-
      year rate base adjustment. IIEC, citing People ex rel. Hartigan v. Illinois Commerce
      Comm’n, 117 Ill. 2d 120, 135, 510 N.E.2d 865, 871 (1987), also contends the Commission
      is to be an active participant in rate-making proceedings and must, under section 9-201(c)
      of the Public Utilities Act (220 ILCS 5/9-201(c) (West 2008)), determine just and reasonable
      rates. IIEC maintains the Commission’s decision is supported by the record, is explained
      fully, and is a legitimate application of the Commission’s expertise.
¶ 127      IIEC also maintains the Commission did not commit reversible error when it ignored
      Ameren Illinois’s actual data presented on rehearing. IIEC emphasizes Ameren Illinois
      proposed a historical test year. The actual information provided by Ameren Illinois occurred
      outside the test year and was not presented to the Commission under section 287.40 as a pro
      forma adjustment. Under the Commission’s test-year rules, according to the IIEC, Ameren
      Illinois’s actual data is not permissible.

                                                -23-
¶ 128                                      iv. Conclusion
¶ 129     Having reviewed the parties’ arguments and the record, we find Ameren Illinois has
      failed to establish affirmatively the opposite conclusion is “ ‘clearly evident.’ ” Illinois
      Power Co., 382 Ill. App. 3d at 201, 887 N.E.2d at 683. We are not convinced the mere fact
      other scenarios may not permit the application of ADR and ADIT pro forma adjustments in
      the manner presented here undermines the conclusion of the Commission to apply those
      adjustments as it did. These scenarios show instances where a utility may choose not to seek
      pro forma adjustment, but do not in this case show the Commission’s decision lacked
      substantial evidence. As IIEC and the Commission argue, the record contains evidence
      supporting the Commission’s decision regarding the calculations underlying the rate base.
      Ameren Illinois does not challenge the numbers, arguing instead the ADR and ADIT
      adjustments should not apply at all.
¶ 130     In addition, we find Ameren Illinois has not shown the Commission’s decision not to
      consider evidence of capital adjustments occurring post-test year but not sought to be
      considered as a pro forma adjustment under section 287.40 was unreasonable. See 220 ILCS
      5/10-201(d) (West 2008) (“[O]rders or decisions of the Commission shall be held to be
      prima facie reasonable ***.”). This holding is consistent with the test-year (section 287.20)
      and pro forma adjustment (section 287.40) rules. In addition, the Commission’s conclusion
      Ameren Illinois could have better estimated its pro forma adjustments and prevented this
      scenario from occurring is not unreasonable. It is not difficult to foresee the procedural
      nightmare that would result if utilities are permitted the opportunity to continue to seek
      changes to rate base after the first order is entered and during the rehearing proceedings.

¶ 131                                C. The Revenue Act Tax
¶ 132               1. The Commission Lawfully Allocated Ameren Illinois’s
                                     Revenue Act Tax Expense
¶ 133                                    a. IIEC Argument
¶ 134     IIEC contends the Commission’s decision to allocate the Revenue Act tax exclusively
      on the basis of kWh delivered is unlawful. IIEC begins by citing section 16-108(c) of the
      Public Utilities Act (220 ILCS 5/16-108(c) (West 2008)), which requires “[c]harges for
      delivery services shall be cost based.” IIEC highlights the following language in the April
      2010 order, which also indicates the Commission should assign tax costs to the cost causers:
          “[T]he Commission recognizes that allocation of the [Revenue Act] tax among the
          electric rate classes involves millions of dollars. Properly assigning these tax costs to the
          cost causers is clearly important to both customers and the Commission. What drives
          these tax costs, however, is not entirely clear.” (Emphasis added in IIEC brief.)
¶ 135     IIEC then, citing the June 2010 notice that stated the Revenue Act tax would be treated
      as a pass-through tax, argues this treatment of Ameren Illinois’s Revenue Act tax expense
      as a pass-through tax violates the Commission’s cost-causation policy. IIEC states the record
      shows that almost 84% of Ameren Illinois’s Revenue Act tax expense is attributable to
      Ameren Illinois’s historical plant in service. According to IIEC, although the revised


                                                 -24-
        Revenue Act tax calculation used different terms, the purpose of the tax was to maintain
        utilities’ invested capital-tax liabilities at the 1997 plant-in-service levels.
¶ 136        IIEC argues in the 2008 test year, Ameren Illinois paid $170 million in Revenue Act tax,
        and about 77% of that expense was a function of Ameren Illinois’s 1997 invested capital tax
        payment–a function of Ameren Illinois’s 1997 plant in service. IIEC contends only $39.1
        million of that expense was unrelated to Ameren Illinois’s 1997 invested capital tax. IIEC
        argues even this portion is only due in part to increases in kWh deliveries, as the remaining
        portion is due to statewide caps, inflation measures, and tax payments by other utilities. IIEC
        emphasizes evidence it presented shows changes in Ameren Illinois’s kWh deliveries had
        only a weak explanatory value for changes in the utility’s Revenue Act tax.
¶ 137        IIEC concludes this argument by maintaining because the unrefuted record evidence
        shows Ameren Illinois’s kWh deliveries affect less than 25% of the Revenue Act tax
        expense, the Commission’s decision to allocate the entirety of the tax expense exclusively
        on the basis of kWh delivered was not supported by substantial evidence. According to IIEC,
        the Commission improperly used the legislative tax calculation instead of relying on
        evidence.
¶ 138        IIEC also argues the Commission improperly relied on “[t]he disconnect between plant
        in service and the [Revenue Act tax] apparent from the fact that as the level of a utility’s
        plant increases or decreases, that specific change would have no impact on the utility’s
        distribution tax,” while ignoring the disconnect between Revenue Act tax expense and
        Ameren Illinois’s kWh deliveries. IIEC maintains Ameren Illinois’s 1997 plant-in-service
        amount is fixed and is embedded in the Revenue Act tax expense Ameren Illinois incurs.
        IIEC maintains the Commission erred in changing how the Revenue Act tax liability is
        allocated among customers.
¶ 139        IIEC further maintains the Commission’s decision improperly rests on its
        misapprehension of the legal effect of the 1997 revisions. IIEC argues the Commission
        properly concluded in its April 2010 order “the statutory language does not expressly direct
        that the manner in which the tax is allocated be changed.” IIEC contends the Commission’s
        decision to use kWh delivery for the basis for the Revenue Act tax expense disturbs its
        unique rate-making authority, as the Public Utilities Act requires cost-based rates and cost
        allocations based on causation. The Commission, according to IIEC, should have continued
        to use the plant-in-service allocator or “the more refined dual factor allocation of [Revenue
        Act] tax expense” proposed by IIEC and rejected the proposal to allocate Revenue Act tax
        based exclusively on kWh delivered.

¶ 140                            b. The Commission’s Argument
¶ 141       The Commission argues its decision to recover the Revenue Act tax on a kWh basis is
        lawful and supported by the evidence. The Commission maintains Public Act 90-561,
        effective January 1, 1998, fundamentally changed the regulation of electric public utilities.
        The Commission argues evidence shows while the General Assembly wanted to maintain the
        total amount of revenue the previous provisions provided, the current Revenue Act tax had
        “nothing to do with plant investment.” See Pub. Act 90-561 (eff. Jan. 1, 1998) (amending

                                                 -25-
      35 ILCS 620/1a (West 1996) (“[T]his amendatory Act of 1997 is intended to provide for a
      replacement for the invested capital tax on electric utilities *** and replace it with a new tax
      based on the quantity of electricity that is delivered in this State.” (1997 Ill. Laws 6195,
      6304)).
¶ 142     The Commission emphasizes shortly after the Revenue Act revisions took effect, it
      approved allocating the Revenue Act tax on a kWh basis for ComEd in 1999. See In re
      Commonwealth Edison Co., No. 99-0117, 1999 WL 1016974, at *31-*32 (Ill. Comm.
      Comm’n Aug. 26, 1999). The predecessors of Ameren Illinois had not altered their method
      of assigning tax liability to their customers. As a result, according to the Commission,
      evidence shows significant cross-subsidization had taken place. DS-4 customers received
      43% of the kWh taxed but were assessed only 8% of the Revenue Act tax. Residential
      customers received 30% of the kWh taxed but were assessed 56% of the Revenue Act tax.

¶ 143                             c. Ameren Illinois’s Argument
¶ 144     Ameren Illinois begins by reminding this court the Commission’s decisions are prima
      facie reasonable. See 220 ILCS 5/10-201(d) (West 2008). Ameren Illinois contends IIEC’s
      claims miss the mark. Ameren Illinois points to the language in the amendatory act and states
      it was meant to preserve the same level of tax revenue, not to preserve the same basis for the
      tax. Ameren Illinois contends what former factors caused the tax is irrelevant; new factors
      maintain the tax.
¶ 145     Ameren Illinois also argues the Commission had not abandoned its rate-making authority,
      but had the Commission ignored the new basis for the Revenue Act tax, it would have done
      so arbitrarily. Ameren Illinois contends IIEC admits it is the interpretation of the effect of the
      amendatory act, not the language of the statute itself, that matters. Ameren Illinois further
      contends because this is an application of the law, the de novo review does not apply.
      According to Ameren Illinois, it does not matter what standard of review applies, because
      the General Assembly stated its legislative intent in the Revenue Act itself. Ameren Illinois
      concludes because “the tax is assessed on kWh sales, it makes sense to also allocate that cost
      based on kWh sales.” (Emphasis in original.)

¶ 146                                     d. Conclusion
¶ 147     Rate design, because of its complexity, “is uniquely a matter for the Commission’s
      discretion.” Central Illinois Public Service Co. v. Illinois Commerce Comm’n, 243 Ill. App.
      3d 421, 446, 610 N.E.2d 1356, 1373 (1993). Decisions of the Commission are prima facie
      reasonable. 220 ILCS 5/10-201(d) (West 2008).
¶ 148     In formulating the rate design for this case, the Commission considered the effect of a
      change in the Revenue Act. Section 2a.1 of the Revenue Act imposes a tax upon a utility
      based on the amount of kWh distributed by that utility during the taxable period. 35 ILCS
      620/2a.1 (West 2008). In section 1a of the Revenue Act, the General Assembly set forth its
      “Legislative Intent” in creating the Revenue Act tax:
          “The General Assembly previously imposed a tax on the invested capital of electric


                                                 -26-
           utilities to replace in part the personal property tax that was abolished by the Illinois
           Constitution of 1970. Subsequent to the enactment and imposition of the invested capital
           tax on electric utilities, State and federal laws regulating the provision of electricity have
           been enacted which provide for the restructuring of the electric power industry into a
           competitive industry. In response to this restructuring, this amendatory Act of 1997 is
           intended to provide for a replacement for the invested capital tax on electric utilities,
           other than electric cooperatives, and replace it with a new tax based on the quantity of
           electricity that is delivered in this State. The General Assembly finds and declares that
           this new tax is a fairer and more equitable means to replace that portion of the personal
           property tax that was abolished ***.” 35 ILCS 620/1a (West 2008).
¶ 149      The legislative intent cannot be clearer. Contrary to IIEC’s argument, the legislature did
      not intend that plant-in-service control. The legislature intended to “replace” the invested
      capital tax, not “modify” it. The legislature refers to the kWh-based tax as “a new tax” that
      is “a fairer and more equitable means to replace” the abolished personal property tax. 35
      ILCS 620/1a (West 2008). No reading of section 1a permits the conclusion the legislature
      intended invested capital remain part of the analysis.
¶ 150      As all parties acknowledge, neither section 1a nor 2a.1 of the Revenue Act explicitly
      directs the Commission how to allocate a utility’s Revenue Act tax expense among
      customers. The issue then becomes whether the Commission’s decision in setting the rate
      design, in which it decided to allocate the Revenue Act tax by the same means (based on
      distributed kWh) it is assessed on the utility, violates the Public Utilities Act’s direction that
      charges for delivery services shall be cost-based (220 ILCS 5/16-108(c) (West 2008)). We
      hold it does not.
¶ 151      In rejecting IIEC’s contention 1997 invested capital or plant in service, not kWh, is the
      primary cost causer, the Commission effectively held kWh distributed determines a utility’s
      Revenue Act tax cost. This interpretation is consistent with the plain language in section 1a
      of the Revenue Act (35 ILCS 620/1a (West 2008)) and in section 2a.1, itself, which imposes
      a tax based on the amount of kWh distributed (35 ILCS 620/2a.1 (West 2008)). The record
      shows the legislature desired invested capital be removed from the equation because public
      utilities were shedding much of its plant in service and the new kWh-based tax would insure
      revenue regardless of the plant in service. Allocating Revenue Act tax liability the same way
      the liability is assessed is consistent with the Revenue Act and the Public Utilities Act.

¶ 152                  2. The November 2010 Order Contains Sufficient
                        Findings and Conclusions for Appellate Review
¶ 153    IIEC argues the November 2010 order does not contain findings and conclusions
      adequate to allow for informed judicial review of its decision “re-interpreting” the April 2010
      order to permit the removal of the Revenue Act tax from base rates and allow recovery of
      such tax as a pass-through tax.
¶ 154    IIEC points to the language in the April 2010 order that specifies the Revenue Act tax
      expense should be recovered in base rates through existing base-rate charges for rate classes
      DS-1, DS-2, and DS-5 and through a new base rate per kWh charge for classes DS-3 and DS-

                                                  -27-
        4. IIEC claims despite such language, the Commission “summarily reversed its position,”
        stating it had intended to remove the Revenue Act tax expense from base rates and treat it
        as a pass-through tax. In this reversal, the Commission, according to the IIEC, did not
        include any findings or analysis to support this about-face.
¶ 155        The Commission argues IIEC’s contention lacks merit. The Commission maintains IIEC
        is attempting to use an ambiguity in the April 2010 order as a means to overturn the
        Commission’s decision. In support, the Commission notes, contrary to IIEC’s alleged
        surprise at the line itemization of the Revenue Act tax, the April 2010 order specifically
        addressed the issue of itemizing the Revenue Act tax on customers’ bills. The Commission
        emphasizes, in the hearings before the April 2010 order, the issue of line itemization was
        discussed and IIEC argued against collecting Revenue Act tax in this manner. The
        Commission maintains it specifically found Ameren Illinois “should recover the [Revenue
        Act] tax through a separate line item on bills,” upon finding “ratepayers should be made
        aware of taxes they are being charged.” In reaching the decision not to exclude the Revenue
        Act tax on customers’ bills as Ameren Illinois suggested, the Commission observed, “As
        argued by Staff and IIEC, the Commission cannot agree that customers are not concerned
        about their bill total as long as increases in individual components are arguably reasonable.”
¶ 156        The Commission further contends the language cited by IIEC, stating the Revenue Act
        tax should be recovered in base rates, followed discussion about whether the Revenue Act
        tax should be allocated as it was in 1997 or by kWh delivery. This ambiguity, according to
        the Commission, was cleared after the parties sought rehearing and the Commission, in June
        2010, stated the following:
             “With regard to the [Revenue Act] tax and its recovery, it was the Commission’s intent
             in its Order to exclude the [Revenue Act] tax from the revenue requirement, treat the
             [Revenue Act] tax as a pass[-]through tax, have the [Revenue Act] tax recovered through
             a volumetric charge, and have the [Revenue Act] tax separately identified as a line item
             on the customer’s bill as other pass-through taxes are identified.”
¶ 157        “To be considered adequate, the Commission’s findings merely need to be specific
        enough to allow intelligent review of the Commission’s decision.” Central Illinois Public
        Service Co., 268 Ill. App. 3d at 480, 644 N.E.2d at 824. The Commission is not required to
        “make a finding on each evidentiary fact or claim.” Central Illinois Public Service Co., 268
        Ill. App. 3d at 480, 644 N.E.2d at 824.
¶ 158        Here, the Commission’s decision is supported by adequate findings. Contrary to IIEC’s
        contentions, the Commission did not reverse its earlier decision when it released the June
        2010 notice. The Commission clarified a misstatement that had been made and reiterated its
        intent to recover the Revenue Act tax through a separate line item on bills. When that intent
        was initially revealed in the April 2010 order, it followed a discussion by the parties
        regarding whether the Revenue Act tax should be recovered as a separate line item and how
        such treatment would affect rate moderation efforts. In light of rate-moderation concerns, the
        Commission reasoned customers should be aware of the individual components of their bills.
        These findings, in addition to those that determined the Revenue Act tax should be allocated
        and assessed by kWh delivered, are specific enough to permit intelligent review.


                                                -28-
¶ 159             3. IIEC Has Not Shown the Commission’s Decisions Concerning
                      the Recovery of the Revenue Act Tax Are Not Supported by
                        Substantial Evidence or Are Arbitrary and Capricious
¶ 160        IIEC challenges both the decision to treat the Revenue Act tax as a pass-through tax and
        the decision to collect the Revenue Act tax expense as a separate kWh charge, when other
        tax expenses are recovered in other ways. IIEC contends no party requested pass-through
        treatment of the Revenue Act tax. Moreover, IIEC argues the Commission improperly treats
        the Revenue Act tax as one imposed on utility customers and not on the utility itself.
¶ 161        When considering whether substantial evidence supports a decision, we are mindful of
        our responsibility to reverse a decision only when the appellant has affirmatively
        demonstrated a contrary result is clearly evident. See Illinois Power Co., 382 Ill. App. 3d at
        201, 887 N.E.2d at 683. We find IIEC has not met its burden.
¶ 162        Rate making is a function of the Commission. See Central Illinois Public Service Co.,
        243 Ill. App. 3d at 446, 610 N.E.2d at 1373. That the Revenue Act tax should not be treated
        as a “pass through” tax is not clearly evident. In making its decision, the Commission had
        lawfully determined the Revenue Act allowed allocation of the Revenue Act tax expense
        based on kWh delivered. A corresponding decision was how to allocate that expense. Among
        available choices were to include the Revenue Act tax expense in the rate base or to list the
        amount allocated to each customer on the bill. The Commission made this decision after the
        possibility of line-item treatment was argued and considered. That no party raised the issue
        is of no consequence, because the Commission is not limited to the proposals presented it.
        See, e.g., City of Champaign v. Illinois Commerce Comm’n, 141 Ill. App. 3d 457, 461, 490
        N.E.2d 119, 121-22 (1986). IIEC has not shown how recovery through line itemization rather
        than including the expense in rate base is unreasonable.
¶ 163        IIEC also has not shown the decision to collect the Revenue Act tax expense through a
        kWh charge for DS-3 and DS-4 customers is arbitrary and capricious. IIEC contends the
        Commission “assumed the tax is imposed on utility customers.” In support, IIEC cites the
        language from the April 2010 order, indicating the Commission “believes ratepayers should
        be made aware of the taxes they are being charged.” IIEC contends the Revenue Act tax is
        a tax assessed on the utility and not the customers and the treatment of such is arbitrary and
        capricious.
¶ 164        We disagree with IIEC. The Commission did not assume the Revenue Act tax is a tax on
        utility customers. According to language in the April 2010 order, the Commission was fully
        aware the Revenue Act tax liability belonged to the utility, but also that it would be allocated
        among customers: “What remains unclear to the Commission, despite IIEC’s assurances, is
        that the legislature did not intend for any change in how a utility’s [Revenue Act] tax liability
        is allocated to customers.” (Emphasis added.) A more fair and reasonable interpretation of
        the IIEC-cited Commission language is the Commission believed taxpayers should be aware
        they are effectively paying for these taxes. The Commission’s approach reasonably does that
        and also allows Ameren Illinois to recover its tax expense, which it is allowed to do. See
        generally Citizens Utilities Board, 166 Ill. 2d at 123, 651 N.E.2d at 1095.

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¶ 165                                D. Motion To Consolidate
¶ 166       After the April and May 2010 orders directing Ameren to recover the Revenue Act tax
        expense in base rates in existing kWh delivery charges for some customers and a new per
        kWh delivery charge for DS-4 and DS-5 customers, Ameren, according to an IIEC witness,
        filed tariffs that removed Revenue Act tax expense from base rates and collected them
        primarily through a rider as a line item on customers’ bills. In June 2010, after petitions for
        rehearing had been filed, the Commission issued a notice that informed parties it had
        intended to exclude the Revenue Act tax from the revenue requirement and treat it as a pass-
        through tax, separately identified as a line item on customers’ bills. The November 2010
        order on rehearing incorporated the Commission’s June 2010 notice.
¶ 167       IIEC then made two filings in regard to this rate case: its first notice of appeal, case No.
        4-10-0976, and a second petition for rehearing. IIEC argued it filed the second petition for
        rehearing to preserve its right to challenge what it perceived to be a shift in the
        Commission’s treatment of the Revenue Act tax expense. IIEC anticipated an argument
        section 10-113 of the Public Utilities Act (220 ILCS 5/10-113 (West 2008)), which does not
        allow argument on appeal on any grounds not set forth in an application for rehearing before
        the Commission, might prevent it from seeking review of the November 2010 order on
        rehearing. After the Commission denied its second application for rehearing, IIEC filed its
        second notice of appeal, case No. 4-11-0075.
¶ 168       On appeal, IIEC sought to consolidate case No. 4-11-0075 with consolidated case Nos.
        4-10-0962 and 4-10-0976. In March 2011, the Commission moved to dismiss case No. 4-11-
        0075 on jurisdictional grounds. We consolidated the appeals, but concluded we would
        consider the Commission’s jurisdictional arguments with the case.
¶ 169       In opposing IIEC’s motion to consolidate, the Commission, citing Harrisonville
        Telephone Co. v. Illinois Commerce Comm’n, 212 Ill. 2d 237, 243-47, 817 N.E.2d 479, 483-
        86 (2004), contends this court lacks jurisdiction over IIEC’s second appeal, case No. 4-11-
        0075. The Commission maintains section 10-113(a) of the Public Utilities Act allows only
        one rehearing of a Commission’s order absent the passage of two years’ time. See 220 ILCS
        5/10-113(a) (West 2008). The Commission then argues the second appeal was untimely
        because it was not filed within 35 days of the service of the November 2010 order on
        rehearing. See 220 ILCS 5/10-201(a) (West 2008). The Commission further notes the
        question of issue preclusion, with one “possible exception,” would not bar any of IIEC’s
        claims on appeal. The Commission, citing IIEC’s first application for rehearing, states IIEC
        challenged the Commission’s April 2010 order’s allocation of the Revenue Act tax. The one
        “possible exception,” according to the Commission, is IIEC’s failure to specifically reference
        the line itemization on customers’ bills that was ordered in a different section of the April
        2010 order and could have been raised on the first application for rehearing.
¶ 170       IIEC, in its reply brief, maintains it did raise the issue of line itemization, an item
        included in Ameren Illinois’s tax rider, in its first application for rehearing:
            “The Final Order did not authorize the removal of the [Revenue Act] Tax from base rates
            and their recovery through a rider. (See, Final Order generally.) However, the compliance
            rates filed by Ameren [Illinois] recover the [Revenue Act] Tax in Ameren’s Tax


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          Additions Rider after its removal from base rates.”
      IIEC concludes because all of its arguments on appeal were presented in the first application
      of rehearing, all are properly presented to this court in case No. 4-10-0976. IIEC then
      “suggests that the jurisdictional issue, insofar as it affects the arguments made in this appeal,
      is moot.”
¶ 171     We disagree with IIEC. The issues are properly preserved for review in case No. 4-10-
      0976. That alone does not render the issue of jurisdiction moot in case No. 4-11-0075. The
      question remains whether IIEC’s second appeal complies with jurisdictional rules. We find
      it does not.
¶ 172     As the Commission contends, this court will not have jurisdiction to review a decision
      of the Commission unless an appeal is filed within 35 days of that decision. 220 ILCS 5/10-
      201(a) (West 2008). Section 10-113(a) of the Public Utilities Act mandates “[o]nly one
      rehearing shall be granted by the Commission,” but a party may seek an additional hearing
      after two years. 220 ILCS 5/10-113(a) (West 2008). IIEC’s petition for a second rehearing
      was improper and impermissible under section 10-113(a). The filing of the second
      application for rehearing did not extend the 35-day time period in which to file case No. 4-
      11-0075. See Harrisonville Telephone Co., 212 Ill. 2d at 243-47, 817 N.E.2d at 483-86. We
      have no jurisdiction over case No. 4-11-0075 and dismiss the appeal.
¶ 173     IIEC argues we should not read sections 10-113(a) and 10-201(a) of the Public Utilities
      Act so strictly because it unfairly bars claims raised by the Commission for the first time
      after the first application for rehearing is filed. This argument, however, does not apply here
      because the record shows all of the claims IIEC seeks to raise in appeal case No. 4-11-0075
      are properly before this court in appeal case No. 4-10-0976. No unfairness results to IIEC by
      the dismissal of case No. 4-11-0075.

¶ 174                                    III. CONCLUSION
¶ 175       For the reasons stated, we dismiss case No. 4-11-0075 for lack of jurisdiction and affirm
        the orders of the Commission.

¶ 176      No. 4-10-0962, Affirmed.
¶ 177      No. 4-10-0976, Affirmed.
¶ 178      No. 4-11-0075, Dismissed.




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