Utility Watchdog Decries ComEd’s ‘Profit Machine,’ A 2011 Law It Says Increased Bills For Consumers

ComEd
ComEd benefited from 2011 law, Illinois PIRG says. WBEZ
ComEd
ComEd benefited from 2011 law, Illinois PIRG says. WBEZ

Utility Watchdog Decries ComEd’s ‘Profit Machine,’ A 2011 Law It Says Increased Bills For Consumers

A 2011 state law created a “profit machine” for Commonwealth Edison and its corporate parent while saddling Illinoisans with higher electricity bills for the past decade, a new report by a top utility watchdog concludes.

The so-called smart-grid law that ComEd persuaded state lawmakers to enact is now a part of an ongoing federal bribery probe into the utility’s statehouse lobbying efforts that were directed heavily at Democratic House Speaker Michael Madigan.

Illinois PIRG says that 2011 law, which it and other consumer groups opposed, has ComEd poised to reap annual profits of $1 billion by 2023 with far less oversight from state utility regulators and needs to be gutted.

“The narrative they’ve pushed for years that this law was great for consumers, and they continue to push even though it’s tied up in this bribery scheme has to be questioned, and that’s what we are trying to do with this report,” said Abe Scarr, the group’s director.

The law in question was one former Democratic Gov. Pat Quinn vetoed but was overridden on bipartisan legislative supermajorities.

Under the law, ComEd’s more than 4 million customers saw new electricity meters installed at their homes and businesses, ostensibly to enable them to use power more efficiently and cheaply. It was part of a broader investment in infrastructure the utility contended would make it more reliable.

But, as a tradeoff for those infrastructure expenditures, the law also changed the way ComEd’s rates were set, diminishing the say that the Illinois Commerce Commission traditionally had over the process and essentially assuring the company would always turn a profit.

In its report, “Guaranteed Profits, Broken Promises,” Illinois PIRG said that tradeoff proved to be an unbridled cash cow for the company and its parent, Exelon Corp., far exceeding investments ComEd made to its infrastructure.

The law “has created essentially a profit machine for ComEd and their parent company, Exelon,” Scarr said.

That rate-setting system is up for renewal in 2023. Democratic Gov. JB Pritzker has called for the system’s immediate abolition, but ComEd is actively pursuing an extension in Springfield despite the legal scrutiny of the law by federal investigators and the accompanying public-relations blemishes it all has brought to Illinois’ most powerful utility company.

“Some legislators continue to carry water for them and continue to push for an extension for formula rates, and to me it seems crazy that any legislator would consider that given the circumstances,” Scarr said. “But that’s where we continue to be in Illinois politics at the end of 2020.”

Scarr urged state lawmakers to:

  • give state utility regulators greater oversight into how electricity rates are set.

  • authorize an audit of ComEd’s infrastructure spending and its overall reliability.

  • force Exelon to divest its ownership of ComEd, because any reduction in energy costs that benefits consumers affects Exelon’s bottom line as an energy producer.

  • ban political contributions by utility companies.

  • stop ComEd from billing ratepayers for its charitable contributions.

In a statement, ComEd contended the smart grid law has led to billions of dollars in savings for customers through lower electricity rates and improved reliability.

Additionally, the company said the law passed with bipartisan backing and support from a broad coalition of community groups. The company said neither it nor a 2016 law were specifically identified as having “harmed” consumers when ComEd and U.S. Attorney John Lausch’s office agreed to a $200 million settlement last summer to end the federal criminal investigation.

“The Deferred Prosecution Agreement does not contain any allegations that consumers were harmed by legislation passed in Illinois. In fact, the bipartisan legislation that was passed…resulted in substantial benefits for ComEd’s customers, including reliability that has improved more than 70 percent since 2012 to record levels,” the company said.

Dave McKinney covers Illinois politics and government for WBEZ. Follow him on Twitter @davemckinney.

Editor’s note: ComEd is an underwriter of WBEZ.