Illinois Gov. Pat Quinn this week vetoed a measure that would have raised billions for utility companies seeking to update the state’s electricity grid.

Senate Bill 1652 would have allowed Illinois utility companies to impose annual, automatic rate hikes for the next decade to pay for grid improvements. Quinn and other opponents said the legislation would have eroded “more than a century of consumer protections.”

Ironically, the same argument many electric companies have used to promote development of a smarter grid — the need for more resilient, responsive and self-healing energy systems — backfired in Illinois, with foes of the bill pointing to major power outages this summer as a reason to question the capabilities of the state’s utilities.

“More than 1.5 million people and businesses have had to deal with power outages and services disruptions this summer,” Quinn said upon vetoing the measure. “Now these same utilities are trying to change the rules to guarantee themselves annual rate increases and eliminate accountability. I will not support a bill that contains sweetheart deals for big utilities, which could leave struggling consumers to pick up the tab for costs such as lobbying fees and executive bonuses. We can ensure innovation and investment in our electric grid, and create new jobs, without compromising core safeguards for Illinois consumers.”

Earlier this summer, Illinois utility ComEd cited the results of an analysis by Black & Veatch that found smart metering could save its customers $2.8 billion over 20 years over and above the savings from more efficient electricity use. ComEd president and chief operating officer Anne Pramaggiore said the proposed utility bill — known as the Energy Infrastructure Modernization Act — could pave the way for such smart metering improvements to begin being deployed starting in 2012.

“As other states are building more efficient and reliable electric grids, Illinois is in danger of falling behind,” Pramaggiore said in August. “The jobs and economic development opportunities generated by this investment will provide a much-needed push to our state’s economy. Coupled with new pricing options and opportunities for customers to lower their electricity bills, this legislation will positively benefit every one of our customers.”

The bill vetoed by the governor had been approved by both houses of the Illinois General Assembly in May.

Quinn and other opponents of the legislation voiced support for smart-grid improvements, though not as financed in the bill. Upon exercising his veto, the governor said he backed the grid-improvement reforms proposed by the Illinois Commerce Commission and detailed in an amended bill under consideration by the state House of Representatives.

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