Forget ComEd: What If The City Of Chicago Ran Its Own Electric Utility?
The city of Chicago is in the midst of a once-in-a-generation negotiation with Commonwealth Edison, and the outcome will affect how much you pay for electricity — and who gets your money.
ComEd’s 30-year contract with City Hall allows the utility to provide power to city residents and determines how much the city can charge in customer fees. It expires at the end of this year.
The mayor and City Council will have to decide whether to renew that agreement at a time when ComEd is wrapped up in an ongoing federal corruption probe.
A growing group of activists and aldermen want to take ComEd out of the picture and have the city run its own electric service. It’s a process known as “municipalization” and organizers say it would give the public more control over how much electricity costs, what kind of energy is used and where the revenue goes.
Here’s what you need to know about how that would work — and whether the idea is politically viable.
What would the municipalization of ComEd involve?
ComEd is a private company that delivers electricity to homes and businesses. It’s so-called “franchise agreement” with the city allows it access to public property to put up all the poles, wires and other equipment that make up the energy grid.
But because it doesn’t actually create energy (their parent company, Exelon, does), the activists and some socialist aldermen argue it’s not necessary for ComEd to be the middleman.
They want the city to basically buy all of ComEd’s equipment and infrastructure, make some of ComEd’s employees city workers and essentially turn ComEd’s operation into a public agency. The city would handle all billing, maintenance and financial decisions.
“The fact that, like, someone is, like, taking out a payday loan to pay their electricity and that money is going either to a shareholders’ pockets or to, like, lobby or pay off a politician … I think we deserve better,” said Ben Richardson, an organizer with the Democratize ComEd campaign.
Activists like Richardson say a democratically-controlled municipal utility has the potential to act more quickly on climate change and do things like provide relief to low-income customers who face shut-offs when they can’t pay their bills.
The city is currently conducting a feasibility study to look at the costs and benefits of municipalization. In a statement, Mayor Lori Lightfoot says her administration “will explore ways to meet our sustainable energy goals while securing the best possible deal for taxpayers.”
That study is expected to be completed in the spring.
Is it legal for Chicago to buy out ComEd and run its own electric utility?
The short answer is yes.
State law allows local municipalities to run utility services, like providing water, electricity and garbage pickup. In fact, Chicago already does run its own water, sewer and garbage services.
And activists say running a power company would give the city more flexibility. For example, Lightfoot recently announced plans to end water shutoffs for people unable to pay their bills, following a WBEZ/American Public Media investigation about rising water costs. That kind of swift action is the benefit of having a city-run utility, say municipalization advocates.
Ursula Schryver, with the American Public Power Association, said there are 2,000 public power utilities in the country, with 42 in Illinois — including Springfield, Naperville and Winnetka.
“A lot of the public power utilities were formed years ago when the investor-owned utilities weren't willing to go into these smaller communities to serve them because it wasn't profitable for them,” Schryver said.
She said 20 public utilities have been created in the last 20 years, but the transition can take a long time.
“It's not an easy process, and I'm confident that ComEd would not just agree to sell the system without some sort of negotiations and expecting a decent amount of payoff,” Schryver said.
What would it cost?
A lot of money.
Ald. Daniel La Spata, 1st Ward, supports municipalization But even he acknowledges his colleagues in the City Council want to know: “How the heck would you pay for it?”
Based on past estimates and recent investments, ComEd said the value of the infrastructure system they own and operate is upward of $10 billion.
“And that’s a conservative estimate,” ComEd spokeswoman Micaeh Johnson said in a statement. “Municipalization would require a significant investment by Chicago taxpayers. This would be uncharted waters. We don’t know of any American city our size that has successfully gone from private to municipal ownership and operation.”
ComEd would have good reason to oppose a city takeover. Of its more than 4 million customers across northern Illinois, about 3.1 million are in Chicago, Johnson said. Losing those customers would deal a catastrophic blow to the company’s bottom line.
A spokeswoman for the mayor’s office said the feasibility study will include the financial implications of municipalization. La Spata said the city could borrow money up front and pay it off using future revenue “and still have hundreds of millions of dollars left over” to lower people’s bills, invest in renewables, or put toward city services, like schools, parks and libraries.
Is there political will from the mayor and other elected officials to take over providing electricity?
Right now, municipalization seems like a pretty tough sell to city politicians.
Launched by the Chicago Democratic Socialists of America, the Democratize ComEd movement has said the six socialist aldermen in the City Council are on board, but “the rest of them need convincing.”
That would mean flipping 44 other aldermen in the 50-member body.
And ComEd’s political influence is well-documented. WBEZ has reported on the ongoing federal investigation into whether ComEd and Exelon hired politically-connected workers and contractors to curry favor with state officials.
“ComEd and Exelon donations are in an order of magnitude higher in state-wide politics compared to the amount of money they give to [Chicago] City Council, but it's still clear that, you know, they are an incredibly politically powerful company,” said Liz Kantor, co-chair of the Democratize ComEd campaign.
A WBEZ review of state campaign finance records shows ComEd and its political action committee gave about $30,000 to 19 aldermen or their ward organizations since the 2015 city elections.
Mayor Lori Lightfoot received $1,500 from ComEd’s political action committee in 2019. But a review of campaign contributions from ComEd and Exelon employees shows the mayor got at least $86,000 from the company’s top executives in 2019.
Kantor said they are aware that aldermen and the mayor may not get on board with municipalization, but they know their push could help achieve a shorter franchise agreement with better terms, such as a rate structure where people and businesses who use more electricity — or make more money — would be charged more.
John Farrell, with the Energy Democracy Initiative, said that’s what happened in Minneapolis. He was part of a group pushing for municipalization and while it ultimately didn’t happen there, Minneapolis did negotiate a better, shorter franchise agreement with its private energy company.
“If I could give any advice to folks in Chicago … don’t give up your leverage,” he said. “Don’t sign it away for a long period of time, no matter what kind of deal the utility is willing to offer you, because the only accountability mechanism you have as a city is the fact that that deal is going to come up again.”
Becky Vevea covers city politics for WBEZ. Follow her @beckyvevea.