Cloud Computing

The Illinois Commerce Commission released a report detailing findings from a previously issued notice of inquiry (NOI) regarding the regulatory treatment of cloud-based computing arrangements. According to the commission, cloud computing generally refers to delivering computing resources - whether in the form of software, storage capacity, or other services - over the Internet. It said that increasingly, businesses in other sectors, including heavily regulated ones, are adopting cloud-based solutions over on-premises solutions in an effort to improve customer service, enhance cyber security, and generate greater value for customers.

The commission stated that utilities currently are permitted to earn a rate of return on their investments in on-site computing assets, which are treated as capital expenses. But, the commission disclosed, they do not earn a return on comparable spending on cloudbased solutions, because they are presently categorized as operating expenses. The commission said that its preliminary review of comments submitted in the NOI proceeding indicate that that disparate accounting treatment may incentivize utilities to invest in on-premises solutions over cloud-based solutions.

The commission commented that it is considering opening a rulemaking to evaluate the effect of existing accounting rules on utility decisions as to investments in information technology innovations.