Chicago is considering replacing embattled Commonwealth Edison as the city’s electricity provider.
In a rare, once-in-a-generation move, Mayor Lori Lightfoot’s administration issued a “Request for Information” from companies interested in operating and distributing the city’s electricity. ComEd has held a franchise agreement with the city for decades and the last time it was renewed was in 1992.
But in Lightfoot’s plan to consider alternatives, the city may not necessarily be looking to drop ComEd. Seeking out competitors could be a power move aimed at getting a better deal out of the current negotiations with ComEd, which have been underway for more than a year. Or, it could result in a smaller competitor taking on just part of Chicago’s energy needs, such as electric charging stations.
“It’s a negotiating tactic, but it’s a meaningful negotiating tactic,” said Abe Scarr, director of Illinois Public Interest Research Group. “It’s not just sending a letter or talking to the press and saying strong words, it’s asking for information that could lead to competition.”
ComEd has been dealing with fallout from its involvement in a years-long bribery scheme. Meanwhile, activists and aldermen have been calling for a more radical end to ComEd’s near-monopoly in Chicago. They want the city to run its own electric utility, similar to how it provides residents water. They argue a public utility with democratic control would give residents more control over rates and move the city toward renewable energy more quickly.
Lightfoot has dismissed this idea of a publicly-run utility. The city commissioned a study that pegged the cost of Chicago running its own utility at $8.8 billion and recommended against the city embarking on the lengthy and costly process.
Instead, Lightfoot’s administration has been negotiating with ComEd for more than a year to renew the franchise agreement that expired at the end of 2020.
The RFI came as a surprise to Matthew Cason, co-chair of the Democratize ComEd campaign, which has continued to push for a publicly-run electric utility.
“ComEd has been playing this game for a long time, and I’m sure they know how to negotiate without negotiating anything at all,’ Cason said. “This is hopefully the city’s way of kind of putting pressure on them.”
Last fall, the mayor demanded an end to so-called formula rates — which essentially guarantee the company increased rates each year and have been hugely profitable. The mayor continues to push the company to sign a formal “Energy and Equity Agreement.”
“Whether it is continuing to disconnect residents during the COVID-19 pandemic or recent rate increases, it is clearer than ever that we need an electricity franchise that delivers better results for our residents,” Lightfoot said in a press release Friday.
In a statement, ComEd spokeswoman Shannon Breymaier said the company’s discussions with the city have been productive, and touted the reliability of Chicago’s electric grid during “unprecedented weather events.”
Cason said the city’s request for information could give the public new insights into the cost and delivery of energy to power their homes and businesses. But if the city were to simply switch providers, it might not actually lead to lower rates, clean energy, and reduced carbon emissions.
“If we ultimately end up with a different private provider at the end of the day, that still is going to be a private utility,” Cason said. “It’s going to have all the contradictions and issues of a private utility.”
Handing over control for Chicago’s massive utilities from one private company to another could be operationally daunting.
John Farrell, co-director of the Institute for Local Self-Reliance and director of the energy democracy initiative, said he’s not aware of a city that has switched electric utilities from one private, investor-owned company to another.
“It’s a fascinating tangle in terms of what it might mean operationally,” Farrell said.
“The question is: Are they going to get a good enough response that it gives them some real juice to move on?” he added. “It will depend heavily on what they get back from this as to whether or not it gives them any real leverage or not.”
Farrell said a lot of the big, private, investor-owned utilities don’t often “step on each other’s toes.” But he noted there are a plethora of smaller clean energy companies who might respond with innovative ideas.
“(They) could apply or just respond to the request and say, ‘Hey, we’re not going to manage transformers and substations, but we’d be happy to supply you with lots of local electricity to the system, and do a bunch of solar and energy storage and EV charging,” Farrell said.
Those are the very things Lightfoot has been pushing ComEd to do. She wants to create community solar sites in Chicago, support for CTA bus electrification, end late fees and provide relief to low-income customers.
Scarr said it would be complicated for another private, investor-owned utility to buy ComEd’s infrastructure, such as all the poles and wires that deliver electricity to homes and businesses.
But the city could decide to keep a franchise agreement with ComEd and also enter into another franchise agreement with a different company that provides electricity to residents.
“I think it’s unlikely that there would be duplicative infrastructure. I don’t think that’s really in anybody’s interest,” Scarr said. “But another company could also get a franchise to provide … innovative services and clean energy.”
City officials were careful to note the RFI does not mean the city will not enter into another agreement with ComEd. Instead, it allows the city to evaluate options and potentially negotiate a better agreement with the utility.
The city’s deadline to reply to the RFI is May 28. Officials say they want to move ahead with a new franchise agreement later this year.