REPORT DIGEST

REPORT DIGEST

ILLINOIS COMMERCE COMMISSION

COMPLIANCE EXAMINATION

For the Two Years Ended:

June 30, 2007

Summary of Findings:

Total this report 6

Total last report 9

Repeated from last report 3

Release Date:

May 22, 2008

State of Illinois

Office of the Auditor General

WILLIAM G. HOLLAND

AUDITOR GENERAL

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Office of the Auditor General

Iles Park Plaza

740 E. Ash Street

Springfield, IL 62703

(217) 782-6046 or TTY (888) 261-2887

This Report Digest and Full Report are also available on

the worldwide web at

http://www.auditor.illinois.gov

SYNOPSIS

The Commission did not properly allocate salary expenditures or timely complete time studies for charges to the Transportation Regulatory Fund.

The Commission did not timely certify required information, post consumer rights, or file annual reports.

· The Commission had not established rules to evaluate how utilities are to recover and allocate costs incurred from the construction of generation or production facilities which have been cancelled.

{Expenditures and Activity Measures are summarized on the reverse page.}

ILLINOIS COMMERCE COMMISSION

COMPLIANCE EXAMINATION

For The Two Years Ended June 30, 2007

EXPENDITURE STATISTICS		FY 2007		FY 2006		FY 2005
Total Expenditures (All Funds)...................		$94,006,870		$75,755,650		$75,910,475
OPERATIONS TOTAL.................................. % of Total Expenditures........................		$28,471,803 30.3%		$26,456,558 34.9%		$29,951,062 39.5%
Personal Services................................... % of Operations Expenditures........... Average No. of Employees............... Average Salary per Employee...........		$17,540,206 61.6% 259 $67,723		$16,029,268 60.6% 265 $60,488		$16,117,240 53.8% 277 $58,185
Other Payroll Costs (FICA, Retirement).. % of Operations Expenditures...........		$6,672,052 23.4%		$5,938,784 22.4%		$7,141,724 23.8%
Contractual Services............................... % of Operations Expenditures...............		$1,640,762 5.8%		$1,512,764 5.7%		$1,424,457 4.8%
Lump Sum Expenditures......................... % of Operations Expenditures...............		$595,489 2.1%		$889,032 3.4%		$3,649,409 12.2%
All Other Operations Items..................... % of Operations Expenditures...........		$2,023,294 7.1%		$2,086,710 7.9%		$1,618,232 5.4%
AWARDS AND GRANTS TOTAL % of Total Expenditures.................................		$65,535,067 69.7%		$49,299,092 65.1%		$45,959,413 60.5%
Single State Insurance Registration...................... Statewide One-call Notice System...................... Grants to Emergency Telephone System Boards.. Reimbursement of Wireless Carriers................... High-Speed Data Transmission Facilities……….. Federal Railroad Association Grant.....................		$339,819 $45,125 $41,843,593 $21,822,255 $989,178 $495,097		$6,362,892 $38,975 $37,082,477 $5,814,748 $0 $0		$6,001,958 $38,458 $33,760,092 $6,158,905 $0 $0
Cost of Property and Equipment..................		$4,836,189		$4,946,634		$5,161,206
SELECTED ACTIVITY MEASURES	FY 2007		FY 2006		FY 2005
Total Receipts (In Thousands)..............................	$97,709		$90,775		$81,202
Total Accounts Receivable, Net (In Thousands)....	$26,815		$37,612		$41,719
Cases Filed (Not Examined).................................	849		837		778
Hearings Held (Not Examined).............................	1,797		2,218		2,232
Cases Resolved (Not Examined)...........................	830		982		906
Administrative Citations (Not Examined)...............	1,925		2,332		2,540
Investigations (Not Examined)..............................	1,677		1,714		1,980
Crossing Projects Ordered (Not Examined)...........	1,445		1,144		404
AGENCY DIRECTOR(S)
During Examination Period: Mr. Scott Wiseman (Through August 2, 2005) Mr. Gene Beyer, Acting (August 3, 2005 to July 28, 2006) Mr. Timothy Anderson (Since July 31, 2006) Currently: Mr. Timothy Anderson

The Commission failed to allocate $356,289 to the TRF

Time study compiled three months late

Required information was 12 to 53 days late

Rules were not established

FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

NONCOMPLIANCE WITH EXPENDITURE ALLOCATION REQUIREMENTS

The Commission did not properly allocate salary expenditures or timely complete time studies for charges to the Transportation Regulatory Fund (TRF). We noted:

· The Commission failed to allocate $356,289 for Bureau of Planning and Operations’ FY07 salaries to the TRF.

· One of 4 (25%) time studies was compiled three months after completion. (Finding 1, Pages 9-10)

We recommended the Commission correctly allocate expenditures to the TRF as required by State statute and complete semi-annual time studies timely.

Commission management agreed with the finding and stated the cause of the under allocation has been addressed.

REQUIRED INFORMATION NOT TIMELY REPORTED

The Commission did not timely certify required information, post consumer rights, or file annual reports. We noted the following:

· The Commission certified the amount to be paid from the Digital Divide Elimination Infrastructure Fund to the State Treasurer 12 days late.

· The Commission posted the Customer Bill of Rights for Water and Sewer Customers on its Internet website 20 days late.

· The Commission filed the FY06 Competition in Illinois Retail Electric Markets in 2005 report 53 days late.

· The Commission filed FY06 and FY07 Emission Allowance Reports with the General Assembly 17 and 27 days late. (Finding 2, Pages 11-12)

We recommended the Commission establish a control system to ensure future certifications, consumer information, and reports are filed timely.

Commission management concurred with the finding and stated they will work to certify required information, post consumer rights, and file annual reports timely.

UTILITY COST RECOVERY

The Commission had not established rules to evaluate how utilities are to recover and allocate costs incurred from the construction of generation or production facilities which have been cancelled. Commission officials stated they have attempted several times to have the Act changed. (Finding 3, page 13) This finding was first reported in 2003.

We recommended that the Commission comply with the statutory mandate by promulgating the required rules or continue to seek legislation to eliminate the requirement for such rules. (For previous response, see digest footnote #1.)

Commission management concurred with the recommendation and stated they will continue to seek statutory changes. Personnel further stated that if an electric utility were to petition the Commission for a construction certificate, the Commission would have more than enough time to establish rules.

OTHER FINDINGS

The remaining findings concerned employee evaluations, program monitoring, and documentation and are reportedly being given attention by the Commission. We will review the Commission’s progress implementing all recommendations in our next examination.

AUDITORS’ OPINION

We conducted a compliance examination of the Illinois Commerce Commission as required by the Illinois State Auditing Act. We have not audited any financial statements of the Commission for the purpose of expressing an opinion because the agency does not, nor is it required to, prepare financial statements.

____________________________________

WILLIAM G. HOLLAND, Auditor General

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AUDITORS ASSIGNED

This examination was conducted by the staff of the Office of the Auditor General.

DIGEST FOOTNOTE

#3 UTILITY COST RECOVERY-Previous Board Response

2005: Section 9-216 of the Act was adopted in 1986 when there were several multi-billion dollar electric generating facilities under construction. In 1997 the Electric Service Customer Choice and Rate Relief Law was passed and deregulated electric generation. Since that law became effective, most Illinois electric utilities have either sold or transferred their generating plants to third parties or unregulated affiliates. The 1997 law also amended Section 8-503 of the Public Utilities Act to eliminate the Commission's authority to order the construction of electric generating facilities. While generating facilities are currently being built in Illinois, they are being built either by unregulated affiliates of public utilities or by non-public utility companies. The Commission is not involved in the permitting process of these plants, nor will the costs of new generating capacity be able to be included in customer rates.

As a result of the significant changes in the electric industry and the statutory scheme under which the Commission now regulates electric utilities, the Commission believes that rules governing the allocation of costs of constructing cancelled electric generating facilities are no longer needed.

The ICC has submitted legislation to amend and eliminate section 9-216. That legislation is pending before the legislature.