As the companies explain in their brief, the Commission first determines a utility company's revenue requirement, which includes fixed costs and a reasonable return on equity, then designs a rate that allows the company to recover that revenue from its customers as accurately as possible. See Governor's Office of Consumer Services v. Illinois Commerce Comm'n, 220 Ill.App.3d 68, 72, 162 Ill.Dec. 737, 580 N.E.2d 920 (1991) ; Amax Zinc Co. v. Illinois Commerce Comm'n, 124 Ill.App.3d 4, 11, 79 Ill.Dec. 348, 463 N.E.2d 902 (1984). Here, there is no dispute over the Commission's calculation of the revenue requirement.
The Commission also denies that the reduction in rate base constitutes retroactive ratemaking. Citing Citizens Utilities Co. v. Illinois Commerce Comm'n (1971), 49 Ill.2d 458, and Amax Zinc Co. v. Illinois Commerce Comm'n (1984), 124 Ill. App.3d 4, the Commission urges that a rate order may properly be based on historical patterns or practices and that the rate base reduction ordered here correctly took account of the company's past receipt of the tax benefits in question. In Citizens Utilities the Commission had initially entered an order providing for the issuance of a certain number of shares of stock by the regulated subsidiary to its corporate parent as reimbursement of sums that the parent had expended in the subsidiary's behalf.
Unfortunately, this is not the nature of ratemaking. See Amax Zinc Co. v. Illinois Commerce Comm'n , 124 Ill. App. 3d 4, 11, 79 Ill.Dec. 348, 463 N.E.2d 902 (1984) (stating that ratemaking is not an exact science and lacks precision). Indeed, the Commission was within its authority to find that neither Gorman nor Moul provided a nonpareil opinion. ¶ 36 The Act requires "substantial evidence," not conclusive evidence.
REACT, 2015 IL App (2d) 140202, ¶ 51. "[P]recision in itemizing must not be conflated with fairness in allocating." Id. ¶ 72; see also Amax Zinc Co. v. Illinois Commerce Comm'n, 124 Ill. App. 3d 4, 11 (1984) ("The ratemaking process is lacking in precision and is not an exact science.").¶ 81 Accordingly, section 16-108(c) does not require the sort of precision that IIEC suggests a workshop or investigation would aim to provide.
Rather, the evidence indicates that the Commission properly followed statutory guidelines in evaluating Smith's application. Plaintiffs have failed to meet their burden of showing clearly an abuse of discretion. Bicek v. Quitter (1976), 38 Ill. App.3d 1027, 1030, 350 N.E.2d 125. See also Amax Zinc Co. v. Illinois Commerce Comm'n (1984), 124 Ill. App.3d 4, 10, 463 N.E.2d 902. For the foregoing reasons, we affirm the judgment of the circuit court of Cook County.