We present a theoretical model of the behavior of a concentrated electrorheological fluid (ERF) which explicitly takes into account the effects of conductivity. The increase in shear viscosity under an electric field is due to a layered structure between the electrodes, made up of the remnants of particle chains adhering to the electrodes by electrostatic image forces, and a freely flowing liquid layer where all the shear flow is concentrated. This layered model can explain the variation of electric current with shear rate, as well as the rheological response of a dynamic yield stress proportional to the square of the applied electric field.