Chicago and ComEd reach tentative deal on city electric service, council members say

CHICAGO - Mayor Lori Lightfoot’s administration has reached a tentative 15-year deal with Commonwealth Edison that provides significant benefits for consumers and "preserves the city’s ability to municipalize after the first five years," Chicago City Council members were told Monday.

During a series of virtual briefings Monday, Council members were told the administration has actually reached "two companion agreements" with Commonwealth Edison.

The first is a franchise agreement that gives the company "the right to provide electricity and use the public way" which "preserves the city’s ability to municipalize after the first five years" of the 15-year agreement, which has an option for a 5-year extension. The Lightfoot administration billed it as the "strongest municipal utility franchise deal in the country."

The second is a so-called "Energy and Equity Agreement" setting economic impact objectives ComEd and the city will pursue together. That includes a goal of reducing carbon emissions 62% percent by 2040, as proposed in the city’s Climate Action Plan.

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A presentation to Council members outlined the terms. Among them:

• $520 million for hundreds of energy and equity community benefit projects.
• 4,000 new rooftop solar projects for low-income residents, and one new community solar site.
• 400-plus solar education workshops for residents and businesses.
• Thousands of residents to receive affordable broadband from internet service providers (ISPs) using ComEd dark fiber.
• New West Side Clean Energy Training Hub and $3.2 million investment for Chicago Builds, a Chicago Public Schools construction training program.
• 10,000 residents to be trained for careers at ComEd or other companies supporting the clean energy transition.
• At least 1,000 South and West Side residents will be hired for new construction worker/overhead helper and customer service roles.
• At least 100 energy assistance ambassadors will help their neighbors find assistance that’s available for paying their electric bills.

A slide from the presentation described even more benefits of the two agreements, such as creating a "third-party non-profit board" to administer the energy and equity funds and a new advisory panel to shape the program and oversee progress.

There was also talk about creating a "Coordination Council to streamline governance and operations," including those with the city’s infrastructure departments.

The mayor’s office issued a brief statement that neither confirmed nor denied the agreement with ComEd.

"Productive discussions have continued between the City and ComEd to arrive at an agreement that will meet the Mayor’s goal to support reliable and equitable transition to a clean energy future for all of Chicago’s communities," the statement said.

ComEd likewise did not confirm a deal, issuing a statement that the utility "remains closely engaged with the City of Chicago to arrive at an agreement that will expand on our century-long partnership to support and spur a reliable and equitable transition to a clean energy future for all of Chicago’s communities."

After his briefing, Ald. Matt Martin (47th) had "a lot of questions and some pretty serious reservations" about the agreement.

"A 15-to-20-year duration is much, much too long. City Council members and environmental advocates and experts have consistently been asking for a five-year duration for a number of reasons. One is that we’re next year going to get into the ComEd corruption trial and it’s very possible that we’ll learn additional information there that may affect our view of ComEd as being a steward of our electrical grid," Martin said.

Martin pointed to increasing demand as the city moves to electrify its vehicle fleet along with the mayor’s impending plan to de-carbonize large new buildings in Chicago.

"We are poised to see significant changes in environmental protection, sustainability and the demand on our electric grid. Knowing that there’s so much change to happen over such a short period of time, Council is in favor of a shorter agreement," he said.

Martin said the city "lost a lot of leverage" with the scandal-scarred company by releasing a consultant’s report strongly recommending against municipalization.

That makes the five-year out-clause superfluous, he said.

"Unless and until the city articulates what steps it plans to take in order to make that a reality, it’s not something that we can do at the flip of a switch. So, I’m not sure that is especially meaningful at this point," he said.

The non-profit that would be created to receive and disperse ComEd funds is another "real concern," Martin said. Alderpersons were told none of the five city appointees can be city officials or employees.

"The idea that we would give it to unaccountable individuals to distribute as they see fit seems absolutely improper to me. We don’t even have a Department of Environment yet. Why are we rushing to create an unaccountable non-profit when we are still in the process of standing up city entities that will be the lead drivers for us meeting a very, very ambitious Climate Action Plan?" he said.

Far North Side Ald. Maria Hadden (49th) said she needs to see the fine print — not simply the broad outlines — to determine if the proposed agreement includes enough concessions for Chicago ratepayers.

All she knows so far is that there will be a "large, green-energy jobs training facility on the West Side" where, over the life of the agreement, "ComEd would have to train 10,000 workers from Chicago," Hadden said.

Apparently referring to the defensive crouch ComEd has been in since signing a deferred prosecution agreement in the Madigan scandal, Hadden said: "We are in a position to get a lot for our consumers. I don’t have enough information yet from what they’re sharing to know whether they’ve gotten that."

At a time of rising prices, Hadden said what she wants most in a franchise agreement is "consumer protections for ratepayers," including an end to residential disconnections.

"We often don’t feel like we have a lot of control or input. Some kind of balance of power is really what I’ll be looking for. Utility companies are big and powerful, so it’s difficult for us as consumers to feel like we have a real voice. But figuring out some way in this franchise agreement to have those checks and balances — including the corruption piece and what are the ethics reforms — is something that I’ll be looking for," she said.

Lightfoot plans to introduce the agreement at Wednesday’s City Council meeting and push for a final vote in March, Council members said.

Hadden believes that is too speedy a timetable for such a pivotal and complex agreement that will tie the hands of the next mayor and Council.

Even if it is a good deal, the timing could be seen as an election-year plug, she noted.

"It’s a really serious thing. If we’re talking about 15 years, we should take some time. …  If I’m asked to vote on this, I want to be really confident that it’s the best thing that we’re getting for our constituents."

Three years ago, the City Council’s chance to publicly flog Commonwealth Edison for a $1.3 million bribery scandal was quickly reduced to political theater after a top mayoral aide quickly took Chicago’s trump card off the table.

Lightfoot had asked a consultant to study the feasibility of a municipal takeover of Chicago’s electric service. The final report is expected to be released in August.

But that was before then-Assets and Information Services Commissioner David Reynolds delivered the bottom line progressive aldermen didn’t want to hear.

"It appears municipalizing ComEd is not financially feasible for this city, given the cost of both purchasing ComEd’s distribution infrastructure and severing the portion of the system that serves Chicago from the portion that would serve ComEd’s revised service territory if the city were to municipalize the portion that serves Chicago," Reynolds told the Council’s Committee on Energy and Environmental Protection in July 2020.

With that option gone, ComEd’s then-CEO Joe Dominguez issued the latest in a series of mea culpas for the scandal that saw the company pay $1.3 million in bribes to associates of Illinois House Speaker Michael Madigan in hopes of landing the speaker’s support for legislation benefitting the utility to the tune of $150 million.

That resulted in a "deferred prosecution agreement" requiring the utility to pay a $200 million fine and cooperate with the continuing investigation.

"We are deeply sorry for the conduct that is outlined. … It represents a breach of trust to the city, to our customers" and employees, Dominguez said.

"There are no excuses for the conduct. And neither I nor will anyone at ComEd offer any excuses. … It’s my job … that what happened never happens again."

But Dominguez stressed the deferred prosecution agreement does not suggest the smart grid law approved by the General Assembly during the bribery scandal was bad policy or harmed customers.

"I’m not going to tell you that the end justifies the means. I’m simply making the point that the investments that have been made in the system … did not harm customers," he said.

"We have earned a profit on those investments. But those investments have produced enormous value."

Once municipalization was taken off the table, Lightfoot was reduced to making demands of ComEd without the ultimate leverage.

She sent a letter to the company warning that the city would not renew the franchise agreement unless she receives a "substantive" plan from ComEd that details goals for ethics reform, an end to residential disconnections, help with the city’s clean energy goals and other measures.

The mayor’s letter chided the utility for not committing broadly to ending all disconnections during the COVID-19 pandemic and the recession.

It went on to list more than a dozen demands that would need to be met in the energy and equity agreement.

"The city believes it is time to move beyond rhetoric and instead gauge ComEd’s commitment to specific substantive policy goals, including expansive ethics reforms, should the company continue to hold a franchise for electricity distribution in Chicago," Lightfoot said in her letter.

The demands went beyond the existing agreement between the city and ComEd. Lightfoot wanted ComEd to help the city meet its renewable energy and energy efficiency goals and other policies aimed at mitigating climate change. As part of this plan, she wanted the utility to help the city promote solar power and electric vehicles.

The mayor specifically asked ComEd to eliminate late fees and disconnections, improve infrastructure on the city’s South and West Sides and commit to diversity hiring.