In a new Illinois House speaker, scandal-tainted Commonwealth Edison may have a powerful new friend in its pursuit of locking in a controversial and profitable method of setting electricity rates that has cost consumers billions of dollars in the past decade.
As recently as 2019, Democratic House Speaker Emanuel Chris Welch favored a long-term extension of ComEd’s soon-to-expire and highly lucrative ratemaking template. Federal prosecutors connected passage of the 2011 bill that originally authorized those rates to the company’s long-running Springfield bribery scheme.
ComEd’s so-called formula ratemaking expires in 2022 and figures to be part of talks surrounding a big utility omnibus that could surface this spring in Springfield, with Welch potentially playing a prominent role in its development.
The rate-making system put in place a decade ago weakened state regulators’ oversight of utility rates and essentially guaranteed ComEd would always turn a profit.
Welch’s previous support of the policy came just before news of ComEd’s bribery scheme first broke. In a recent statement to WBEZ, a spokesman for the speaker insisted that locking in ComEd’s manner of setting electricity rates isn’t a priority for him at the moment.
But that assurance isn’t assuaging some consumer advocacy groups that contend formula rates have cost residential and business consumers nearly $5 billion since 2012.
And last week, the new speaker invited only deeper scrutiny of himself by allowing one of ComEd’s contract lobbyists to organize and host his first campaign fundraiser as the No. 1 House Democrat – a move that surprised some consumer advocates considering how ComEd’s past lobbying misdeeds damaged the utility’s brand and remain very much a fresh issue.
“I think the perception – and we don’t know if it’s the reality – is that it seems like it’s business as usual between ComEd and the Illinois General Assembly, and hopefully that’s not the case,” said Robert Gallo, state director for Illinois AARP.
An uncertain future for ComEd’s “profit machine”
ComEd’s standing in Springfield has taken a hit since the company acknowledged in federal court filings last summer that it engaged in a bribery scheme to influence Welch’s predecessor, ex-House Speaker Michael Madigan. The company paid a record $200 million settlement and admitted to spending more than $1.3 million on no-work jobs and contracts for members of Madigan’s political organization and other associates.
Madigan has not been charged and has denied knowing he was the target of ComEd’s corrupt bribery efforts, which spanned from 2011 to 2019. But revelations from the company’s deferred prosecution agreement with U.S. Attorney John Lausch’s office were serious enough to topple Madigan, a man characterized for decades as Illinois’ most powerful politician.
Before Madigan’s decision to suspend his bid for a 19th term last month, Welch chaired a fall legislative probe into whether the former speaker engaged in misconduct in his dealings with ComEd. But the inquiry dissolved without any disciplinary findings against Madigan, with Welch repeatedly accusing Republicans of turning the proceedings into “political theater.”
Madigan helped ComEd win formula rates in 2011, a form of ratemaking that seriously eroded state regulators’ oversight of how much the company charges customers for delivering electricity. The new rate structure established a pathway – or as the Illinois PIRG consumer-rights group characterized it, a “profit machine” – where ComEd was guaranteed never to lose money so long as it kept investing in its power grid.
ComEd has jealously protected that ratemaking template.
In 2019, allies of the company introduced two similar bills in the House and Senate that initially would have extended formula ratemaking into perpetuity, but later amended that extension to 10 years. Both Welch and newly installed Senate Minority Leader Dan McConchie, R-Hawthorne Woods, were co-sponsors of the measure.
On lopsided, bipartisan roll calls, the legislation sailed through committees to the House and Senate floors, only to stall out as word surfaced that federal investigators probing ComEd had raided the homes of Madigan associates in May of 2019.
Last August, Democratic Gov. JB Pritzker, citing revelations in ComEd’s deferred prosecution agreement, called for an immediate end to formula rates.
So far in 2021, formula-rate legislation has not been introduced in Springfield.
Welch declined an interview with WBEZ after the station asked him whether the ComEd scandal had dampened his trust for the company or his support for extending formula rates. Likewise, Welch was silent about specific ethics reforms he favors arising from the ComEd bribery scandal, though he vaguely pledged an ethics push this spring.
“Given the range of policy issues on the speaker’s plate, including a new ethics package to restore the public’s confidence in Springfield, we’re going to have to pass on an interview about this right now,” Welch spokesman Sean Anderson said in an emailed statement. “As for the bill, it’s old and not currently pending, and thus not a focus of the speaker right now.”
WBEZ asked Welch to respond to questions about his original justification for supporting the 2019 legislation, whether anything from the deferred prosecution agreement altered his opinion about backing the measure, whether he regards ComEd as a trustworthy player in Springfield and what his stance is regarding Pritzker’s call for an immediate end to formula rates.
A Welch spokesman did not give specific responses to those questions.
For his part, McConchie vowed greater scrutiny over any ComEd push for a rate extension.
“Given the new information about ComEd’s participation in the culture of corruption that was allowed to fester under the former Illinois speaker, the leader will be taking an especially close look at the transparency of energy legislation that is introduced this year,” McConchie spokeswoman Whitney Barnes said.
ComEd made clear it wants the current method of ratemaking left in place.
“We do not support going back to the ratemaking process in effect before the  law, which was so broken that ComEd’s credit rating was just above junk bond levels, resulting in tens of millions of dollars in unnecessary borrowing costs borne by ComEd customers and poor system performance due to chronic underinvestment,” company spokesman Paul Elsberg said.
Utility watchdogs demand clarity
Illinois PIRG and another leading utility watchdog, Illinois AARP, both worry whether Welch’s past support of the ComEd initiative has migrated with him into the speaker’s suite at the statehouse, but each stresses they are keeping an open mind about the new speaker.
Still, Gallo seized on Welch’s ambiguous statement that he’s not currently focused on an extension of ComEd’s current rate-making process “right now.”
“It’s our focus ‘right now’ and has been for a long time so when will it be a focus of the speaker?” Gallo asked. “We are looking forward to meeting with him to understand when it’s going to be a ‘focus’ and how ratepayers’ interests are going to be considered versus what we’ve seen all along in the past, which is ComEd’s interests are always considered.”
Welch still has months to address ComEd’s legislative wishlist, but he is facing short-term blowback from his virtual fundraiser, which ComEd lobbyist Liz Brown-Reeves helped organize and host. It was a virtual event held on Feb. 1 and included an appearance by Pritzker.
Brown-Reeves, a former Madigan staffer for nearly a decade before she launched her own lobbying firm, has represented Exelon Generation, a subsidiary of ComEd’s parent company, Exelon Corporation, since 2014. Her lobbying relationship with ComEd itself started two days before the 2019 formula-rate extension bill Welch co-sponsored moved unanimously out of a House committee.
Welch’s spokesperson didn’t respond to a question about the speaker’s rationale in letting a ComEd lobbyist play a role in his fundraiser. Brown-Reeves declined to comment.
Elsberg, the ComEd spokesman, insisted the utility company did not play a role in the Welch fundraiser and that Brown-Reeves – who represents ComEd, its parent company Exelon, and 30 lobbying clients – acted on her own.
“ComEd did not have any involvement in this event,” he said in a statement. “Like most companies, ComEd engages external lobbyists to support our efforts to inform policymakers about sound energy policies. Many of those lobbyists have other clients and participate in political fundraising independent of ComEd.”
“Naturally, while we have successfully implemented state-of-the-art ethics and reporting reforms for lobbyists engaged in ComEd business, we do not control or report on lobbying or fundraising activities that our external lobbyists do for others,” he said.
ComEd, which has contributed more than $13,000 to Welch between 2013 and 2020, did not donate to the speaker at his fundraiser. The company spokesman said Brown-Reeves’ involvement did not breach any provision of the deferred prosecution agreement or violate any company ethical guidelines.
Illinois PIRG Director Abe Scarr said the fundraiser doesn’t appear to have broken any state rules, but it underscores a real problem that lawmakers need to address on the ethics front when it comes to the way state-regulated entities like ComEd operate.
“Utilities have had too much influence whether it’s through hiring an army of lobbyists, or campaign contributions, or charitable contributions that they get to charge back to customers” Scarr said. “We think that we need to change those rules. I would hope that the speaker and… all members of the General Assembly will join with us in wanting to re-balance power in the state and give the public a stronger voice in energy policy.”
Dave McKinney reports on Illinois politics and government for WBEZ. Follow him on Twitter at @davemckinney.