Chicago Mayor Lori Lightfoot is demanding Commonwealth Edison stop using so-called formula rates if it wants to sign a new deal with the city.
The pressure comes as ComEd continues to deal with fallout from its involvement in a years-long bribery scheme and as the company also faces pressure from Gov. J.B. Pritzker to agree to traditional rate-setting.
The formula rates have been hugely profitable for ComEd since they were passed in 2011. State law now allows the company to bypass state utility regulators when implementing rate hikes to cover losses, and essentially guaranteed ComEd would always turn a profit. That provision sunsets in 2022, but the company has actively pushed for an extension.
Lightfoot’s demand to require ComEd go through state regulators when seeking rate hikes is one of several listed in a letter the mayor sent to ComEd CEO Joseph Dominguez on Monday.
The mayor wants the company to sign a formal “Energy and Equity Agreement” as part of a new franchise agreement. The city’s current deal with ComEd has been in place for 30 years and expires at the end of 2020.
Among the mayor’s other demands: create community solar sites in Chicago, support for CTA bus electrification, end late fees and provide relief to low-income customers.
“With recent reports that your company may continue customer disconnections amidst a pandemic and financial crisis, I also find that the rhetoric … contradicts your actions,” Lightfoot wrote in bold and underlined.
ComEd announced today the company will suspend disconnections through the winter, said spokeswoman Shannon Breymaier. She said the company is also doing aggressive outreach to encourage customers to take advantage of financial assistance they offer. Breymaier did not comment on the mayor’s demand to end formula rates.
“We readily agree with the mayor that the city’s agenda is ambitious, and we welcome the chance to discuss it in detail with the city as we look to build on our progress and discuss the pillars of a new franchise agreement,” Breymaier said.
Lightfoot’s letter came just before a subject matter hearing about a city-commissioned study to look at how feasible it would be to cut out ComEd and have the city run its own electric utility. That study pegged the cost of the process known as municipalization at $8.8 billion and recommended against the city embarking on the lengthy and costly process.
Several activists with the Democratize ComEd campaign argue the city should still consider municipalization because it would give Chicagoans more control over rates and move the city toward renewable energy more quickly.
“So long as ComEd is accountable primarily to its investors, its primary goal will be to maximize profit. And it will use every tool at its disposal to do so, distorting any policy goals we set as a city for their benefit,” said Patrick Chestnut, a Chicago resident who spoke during public comment.
But both the chairman of the Committee on Energy and Environmental Protection, Ald. George Cardenas, and the Commissioner of Assets and Information Management, David Reynolds, repeated multiple times during the meeting that the city will continue to negotiate a new deal with ComEd.
Editor’s note: In the interest of full disclosure, ComEd is a WBEZ underwriter.
Becky Vevea covers City Hall for WBEZ. Follow her @beckyvevea.