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Long known for flooding Springfield with campaign cash and well-connected lobbyists, ComEd is now politically toxic at the Capitol. So this year it’s remaining in the background while labor unions take the lead in selling the Climate Unions Jobs Act as a way to preserve and create high-paying jobs, and help Illinois transition away from energy sources that contribute to climate change.
While the union group proclaims independence from the energy company, its executive director is a registered lobbyist who once listed a company under ComEd parent Exelon among his clients.
Critics contend the bill is another bailout for a highly profitable company, and marvel at the sheer gall of the attempt given the freshness of a bribery scandal that’s still unfolding.
“They are telling everybody and their brother if you want clean energy and union jobs, you have to give us more money to subsidize these nuclear power plants, which is absolute nonsense,” said Stephan Blandin, an attorney who filed a class-action lawsuit against ComEd following the bribery scandal. “It’s a scam.”
The union proposal is among a flurry of energy bills under consideration this spring. If an overhaul ultimately passes, the final product likely will be an amalgamation of the various plans, including those backed by environmental groups, consumer advocates and other energy companies.
Gov. J.B. Pritzker has talked about the need for a clean energy bill for months, and his office is working on a proposal to be introduced as soon as next week. The administration recently released an audit that recommends subsidies for nuclear plants owned by Exelon that would be tacked on to customers’ bills.
Approving an energy package puts lawmakers in a bind. They’re eager to avoid looking like they’re doing ComEd’s bidding at the expense of voters amid the bribery scandal. But many also want to claim credit for moving toward clean energy and saving more than 1,500 jobs at two nuclear power plants parent company Exelon has said it will shut down this year if it doesn’t get more state help.
“Some of the members of the legislature want to be pro-labor, and they’re basically letting the consumers down,” said former Gov. Pat Quinn, who has fought ComEd for more than 40 years. “This criminal and civil cases aren’t finished yet. All the facts have not been revealed … but they’re ready to help ComEd and Exelon to an extraordinary degree again.”
Exelon says additional subsidies are needed to help nuclear plants compete with cheaper power from carbon-producing coal and natural gas plants.
It’s the same approach the company took in 2016 as it rallied labor, environmental and consumer groups to support the state’s last major energy overhaul — one of two bills at the heart of ComEd’s deferred prosecution agreement with federal authorities.
ComEd critics worry that the past may be about to repeat itself.
“If the General Assembly believes that the policies passed during the scheme were good but not biased enough toward ComEd and Exelon, that consumers should be forced to pay even more to get even less, then it should pass this bill,” said Abe Scarr, director of the Illinois Public Interest Research Group, a consumer watchdog. “But in doing so, it should defend its position to Illinois voters rather than obscuring its intent.”
Members of the Climate Jobs Illinois coalition, the group behind the bill, said at a news conference last month that ComEd was not the driving force behind their plan, which they said includes new measures to hold utilities accountable and $150 million in annual assistance for low-income customers.
“I do not know what Exelon’s position is on our proposal,” Pat Devaney, secretary-treasurer of the Illinois AFL-CIO, said in late March. “We sought input and feedback from many, many different stakeholders through the process and have had many meetings on it, but I don’t currently know if Exelon — I would imagine no — has taken a position on it.”
Exelon, which has announced plans to split from ComEd and its other regulated utilities, hasn’t taken a position on any of the legislation pending in Springfield, company spokesman Paul Adams said.
While there seems to be broad agreement about the importance of the nuclear fleet, “the details matter and it remains to be seen whether the pending proposals will adequately address the challenges facing our nuclear plants,” Adams said in a statement.
The union coalition declined to make Joe Duffy, its executive director and former Exelon Generation lobbyist, available for an interview. Duffy, who ran Attorney General Kwame Raoul’s 2018 campaign, “was briefly hired as a subcontractor for a lobbying firm contracted with Exelon for 10 months in 2019,” coalition spokeswoman Natalie Bauer Luce said in a statement.
His work “did not pertain to the issues Climate Jobs Illinois is advocating for before the General Assembly,” Bauer Luce said.
Duffy’s contract was not renewed in late 2019 when Exelon “reconstituted our team in Springfield,” Adams said. “He currently does not work on behalf of Exelon or its family of companies.”
Ending formula rates or doubling down?
One of the key points of the disagreement between supporters and opponents of the bill is how it would affect the way the rates paid by ComEd customers are determined.
One of ComEd’s key legislative victories during the years it was handing out jobs and contracts in an effort to influence Madigan, who has not been charged with any wrongdoing, was a provision that diminished the role of state regulators in determining what the company could charge its customers.
Instead, the bill created so-called formula rates, which guaranteed the company would reap higher profits from customers as it spent more on upgrades to the state’s energy grid.
The company said Friday that it has filed with state regulators for a $51 million increase to its distribution rate, which amounts to 20 cents more per month on the average customer’s bill. Combined with a previously approved increase for power prices and a requested increase from federal regulators for transmission services, the average customer would pay about $1.60 more per month beginning in 2022.
Backers of the union bill say their plan would ditch formula rates and return the power to approve or deny rate increases to the Illinois Commerce Commission. But opponents say the proposed structure would give only the appearance of regulatory oversight while further guaranteeing utility profits.
The proposal “is complex, sophisticated legislation, but can be summarized simply: It doubles down on the worst policies passed during ComEd’s corrupt scheme and makes them even worse,” Scarr said.
Testimony from state regulators at a recent legislative hearing bolsters that assessment, albeit in more bureaucratic language.
“The new mechanism has many of the characteristics of formula rates, particularly in the first few years of the transition,” Jim Zolnierek, chief of the Public Utilities Bureau at the ICC, told a Senate committee Thursday. “It also provides for potential increase in the rates of return that the companies currently earn.”
The total impact on customers’ bills from the entire proposal has yet to be determined, Zolnierek said.
For its part, ComEd says it has participated in discussions led by Pritzker’s office, and “of course provided necessary input” to the union coalition and other groups advocating for energy legislation.
“However, we have not proposed any legislation currently being considered in the General Assembly, and the content of those bills was determined by the parties that have proposed them,” spokeswoman Shannon Breymaier said in a written statement.
ComEd has “concerns about some of the specifics of every bill,” Breymaier said.
For people who have faced off with ComEd in the past, those assurances strain credulity.
Quinn, who vetoed the 2011 smart grid legislation at the center of the bribery scandal, said the new bill is a thinly veiled way to allow the company to continue raising rates less than a year removed from its admissions in federal court.
The House and Senate voted in bipartisan fashion to override the veto from Quinn. When lawmakers overrode his veto, he said he was outmuscled by ComEd’s powerful, deep-pocketed lobbyists.
Though lawmakers tout the latest bill as a way to help organized labor, Quinn said ComEd and the unions that represent its workforce have a long history of working together on political issues.
“It’s concerning,” said Quinn, who also clashed with unions while in office. “My own experience has been they work arm-in-arm, hand-in-hand, totally connected. The company uses the unions to front for them. It’s sad to see.”
In a settlement with the U.S. Department of Justice, prosecutors said the company made “in excess of $150 million” on the smart grid legislation. However, a recent report from Illinois PIRG said the legislation allowed ComEd to glean $4.7 billion more between 2013 and 2019 than it would have earned under the previous rate structure.
Several lawsuits have been filed in an attempt to claw back some of that money for customers. Quinn, who is also a lawyer, is representing the Citizens Utility Board in a couple of those cases.
The ratepayer lawsuits are in mediation, though a settlement seems unlikely before the legislative session adjourns at the end of May. Since the federal prosecutors announced the bribery case last summer, ComEd has argued that even though the legislative process was tainted, consumers still benefited from its passage and no harm has been done to ratepayers.
“It is a preposterous position,” Quinn said. “It’s OK to use bribery to ‘pass’ good laws? You can’t allow that. You ruin democracy that way.”
Exelon reported $9.5 billion in earnings last year, leaving many to question the severity of their financial plight.
Blandin, the attorney suing the utility, said legislators shouldn’t have fallen for ComEd’s threats in 2016, and they shouldn’t fall for them now.
“They’ve run this play before,” Blandin said. “They’re doing it again, and the worst part is, they’re about to get away with it.”
In its deal with prosecutors, ComEd agreed to cooperate in the ongoing investigation, in addition to paying the record fine. If the agreement is fulfilled, the charges against the company would be dropped in 2023.
The U.S. Department of Justice did not require ComEd to reimburse customers for any additional money received because of the scheme — an omission that several civil cases filed last year aim to address.
According to deal, ComEd cannot use rate hikes to pay its fine. However, the money could conceivably be raised through the profits generated by subsidies such as the ones reflected in the proposed legislation.
State Rep. Ann Williams, a Chicago Democrat, is sponsoring a competing plan — the Clean Energy Jobs Act — that has the backing of a coalition of environmental and consumer groups, and focuses on building up renewable energy in the state. The bill would require ComEd to pay restitution for its admitted misconduct, with the money coming from company profits rather than customer payments.
The proposal also would codify the terms of ComEd’s agreement with federal prosecutors and extend those requirements to all electric and gas utilities regulated by the state.
“ComEd needs to get comfortable with the fact that they’re no longer going to be able to come in and get everything that they want in a clean energy package and then everyone else is left to divvy up the scraps,” said Williams, who has received more than $4,000 in campaign contributions connected to Exelon over the years.
The plan would end ComEd’s formula rates and make utility profits contingent on meeting goals established by the state, supporters say. The bill does not include any subsidies for Exelon’s nuclear plants.
But for other lawmakers, preserving energy jobs and ensuring the reliability of the state’s energy supply are the key considerations in a proposal that comes before the legislature.
“In order to get to 100% clean energy, we have to have the nuclear,” said state Sen. Sue Rezin, a Morris Republican and co-sponsor of the union-backed energy bill.
Rezin’s district is home to Dresden and two other Exelon nuclear plants, but she said she hasn’t had any discussions with the company about the legislation. Rezin has received $55,750 in contributions tied to ComEd and Exelon in the past, although the company has paused campaign contribution to state officials and candidates following the bribery scandal.
The audit produced for Pritzker’s office by Synapse Energy Economics makes a case for smaller subsidies for the Dresden and Bryon plants than were given for the Clinton and Quad Cities facilities, topping out at $150 million per year over five years, according to a redacted copy provided to the Chicago Tribune. The report also recommends requiring Exelon to open its books as a condition of the support, which it says is necessary for the plants to compete in the current energy market.
The union bill, meanwhile, would create subsidies for all four nuclear plants that weren’t included in the 2016 bill, at an estimated cost of more than $600 million per year, according to the ICC.
Regulators estimate customers using 10,000 kilowatt-hours per year would pay an additional $5.95 or more per month under the plan. The average ComEd customer, using the bundled electric service, consumes about 6,961 kWh annually, according to the ICC.
Deputy Gov. Christian Mitchell, who’s leading energy talks for Pritzker’s office, said that when it comes to further assistance for Exelon, the focus must be on keeping the nuclear plants “viable at the lowest cost” on customers’ bill.
“The ratepayers of Illinois will be able to have confidence that whatever we do to move forward has been thoroughly vetted by somebody whose first responsibility was to them,” Mitchell said.
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April 16, 2021 at 09:39PM