In a ruling handed down on September 21, 2017 the Illinois Supreme Court (Court) affirmed the Illinois Appellate Court’s decision to deny Rock Island Clean Line, LLC (Rock Island) a certificate of public convenience and necessity. Illinois Landowners Alliance NFP, et al., v. Illinois Commerce Commission, et al. Nos. 121302, 121304, 121305 and 121308. The certificate would have permitted Rock Island to operate as a public utility and to begin construction of a largely direct current, high-voltage transmission line in Illinois, which was to have been part of a 500-mile system bringing wind-generated power from parts of Iowa, Minnesota, South Dakota and Nebraska to Illinois. The Illinois Commerce Commission had originally granted Rock Island the certificate, but the Illinois Supreme Court agreed with the Illinois Appellate Court’s reversal of that decision. This note updates our report on May 1, 2017 concerning this important litigation.
Only a “public utility,” as defined in Section 3-105 of the Public Utilities Act, may be granted a certificate of public convenience and necessity, and the Court held that Rock Island failed to meet one of the requirements for public utility status. Specifically, Rock Island failed to show that it “owns, controls, operates or manages, within this State . . . any plant, equipment or property used or to be used for or in connection with . . . the production, storage, transmission, sale, delivery or furnishing of heat, cold, power, electricity, water, or light.” 220 ILCS 5/3-105(a). While Rock Island holds an option to purchase real property in Illinois in connection with the project, the Court stated that “having an option to buy something is not the same as owning or even controlling it.” Further, an earlier version of the Public Utilities Act expressly gave public utility status to any company that “now or hereafter … may” own, control, operate or manage the requisite property. The Court found it significant that the legislature had deleted the “now or hereafter may” language, indicating that future ownership or control no longer satisfied this element of public utility status.
The Court also addressed two of the policy concerns raised by Rock Island. It dismissed as “not well founded” the prospect that requiring present property ownership would bar new companies, such as Rock Island, from entering the utilities arena. It noted that nothing prevents Rock Island -- or other new entrants -- from first acquiring Illinois property “as a purely private power project,” and then applying for a certificate. Further, the Court stated that “the fact that there may be barriers and significant costs to new companies wishing to enter the state to establish a new public utility is in no way incompatible with the theory and operation of the Public Utilities Act.” That is because the Public Utilities Act “is based on a model of limited monopoly and reflects a policy of preventing rather than promoting competition with existing utilities.”
Having held that Rock Island failed to meet the property ownership requirement for public utility status, the Court did not reach the issue of whether Rock Island failed the “for public use” requirement as well, which was an additional argument advanced by appellees. Thus, even if Rock Island now proceeds to acquire the requisite Illinois property (as the Court suggested), and then resubmits its application for a certificate of public convenience and necessity, its application could still face a legal challenge based on whether Rock Island enjoys the essential “public utility” status.