Why the talks to renew ComEd’s deal to supply power to Chicago are stalled

ComEd Regional Headquarters located on the North Side of Chicago on Nov. 5, 2019. Manuel Martinez / WBEZ
ComEd Regional Headquarters located on the North Side of Chicago on Nov. 5, 2019. Manuel Martinez / WBEZ

Why the talks to renew ComEd’s deal to supply power to Chicago are stalled

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Negotiations are at a standstill between Commonwealth Edison and the City of Chicago over a deal to give the power company access to public property in exchange for providing energy to city residents, a top city official said Thursday.

Last summer, the utility giant agreed to pay a $200 million fine to the federal government after it admitted to orchestrating a bribery scheme aimed at influencing former Democratic House Speaker Michael Madigan. The ongoing scandal led to Madigan’s resignation, though he has not been charged with a crime and denies knowing about ComEd’s efforts to win his favor by rewarding the speaker’s political allies with lucrative contracts.

In the wake of the scandal last fall, Mayor Lori Lightfoot issued a list of demands to ComEd CEO Joe Dominguez in order for the city to renew its deal with the utility, known as a “franchise agreement.” Since then, the company and city have been trying to reach an agreement on those issues related to ethics, energy efficiency and equity.

“At this point, we’re far from where the mayor expects us to be,” Commissioner David Reynolds told aldermen Thursday. Reynolds leads the Department of Information and Assets, which oversees the franchise agreement.

Lightfoot indicated talks were not going well in late April when her administration put out a public “Request for Information” from other companies interested in providing energy to Chicagoans. Such a move could entirely replace ComEd as Chicago’s primary electricity provider — or, more likely, inject competition and provide Lightfoot’s team with leverage at the bargaining table. The deadline to respond is July 30.

ComEd’s previous franchise agreement lasted 30 years and expired at the end of 2020, though the existing terms remain in place until a new deal is negotiated. Lightfoot and aldermen have repeatedly said they would like a much shorter deal. Terence Donnelly, ComEd’s President and Chief Operating Officer, said the company plans to respond to the city’s formal request.

“Absolutely, we’re gonna respond,” Donnelly said. “We feel we have the lowest bills in the country… and the best reliability in the country.”

Donnelly later told aldermen that ComEd is seeking permission from the state regulator that controls energy costs to increase its rates next year. He estimated that the average monthly bill for a ComEd customer would be $83.

The rate increase is not a guarantee and could be impacted should state lawmakers approve new sweeping energy legislation when they get together next week.

“We’ve been closely monitoring the ongoing discussions in Springfield,” Reynolds told aldermen during a meeting of the Committee on Environmental Protection and Energy. “We believe it’s prudent to wait and see what legislation emerges from these discussions, and how that legislation may impact our negotiations with ComEd.”

Lightfoot and Chicago aldermen have been pushing ComEd to agree to a different rate structure that would result in lower energy bills for low-income customers and potentially the same or higher bills for wealthier customers.

This kind of progressive rate structure would require a change to state law. But Abe Scarr, director of Illinois Public Interest Research Group, a watchdog on energy and environmental policy issues, said the sweeping legislation is currently going through negotiations.

Scarr said no matter what happens at the state level, the city’s move to seek competitors to ComEd is a good thing, even if ComEd ultimately gets a renewal of its franchise agreement.

“They will have to answer some questions they may not have wanted to answer otherwise,” Scarr said. “I mean, of course, they’re very skilled at not answering questions even when answering questions, as was on display today, but giving some answers to questions and being on the public record… I can see (that) as beneficial.”

Aldermen peppered ComEd executives with questions for more than three hours Thursday, inquiring about everything from the company’s ethics practices to their plans to move toward renewable energy, like solar and wind, to how they plan to provide relief to low-income residents who cannot afford rising energy bills.

Ald. Matt Martin, 47th Ward, asked if the company planned to review its current policy for shutting off customers’ electricity if they haven’t paid.

Donnelly acknowledged that after a moratorium during the early months of the pandemic, ComEd did resume shut offs. Jane Park, ComEd’s Chief Customer Officer, again explained the billing relief programs the company offers and said she’s working to make sure customers take advantage of them.

“There was like $15 million for ComEd alone that wasn’t deployed,” Park said. “We’re trying to reach out through Chatham Business Association and other community and nonprofit groups to drive participation with that.”

A small coalition of socialist aldermen and activists don’t want to rely on ComEd to offer billing relief.

They have pushed the city to consider cutting ties with ComEd entirely and running its own public electric utility. It could allow local elected officials to have control over rates and would give the city a potential new revenue stream. But city officials have dismissed this idea – known as municipalization – arguing it is too costly and legally complicated to take back control of the current electrical grid owned by ComEd.

Ald. Brendan Reilly, 42nd Ward, noted that while there’s a lot up in the air when it comes to the future of ComEd’s relationship with the City of Chicago, the city needs to do everything it can to leverage “all of that consumer power.”

“We are a gigantic consumer of electricity,” Reilly said. “We’ve had these franchise agreements activated twice in the last century and I would just hate for us to lose this opportunity with the amount of leverage we do have as a consumer.”

Becky Vevea covers city politics for WBEZ. Follow her @beckyvevea.