Illinois’ chief utility watchdog would be subjected to state open-records laws and see an end to millions of dollars in funding from a utility-financed foundation under a far-reaching energy omnibus Gov. JB Pritzker’s administration presented to lawmakers Wednesday.
With one month until the General Assembly’s scheduled adjournment, Pritzker is throwing down a new and potentially contentious legislative marker on how best to respond to the massive federal corruption investigation into Commonwealth Edison’s bribery-tainted lobbying efforts in Springfield and lessen the state’s reliance on fossil fuels.
In a bill expected to be filed Thursday, the governor will call for $200 million in restitution for ratepayers from ill-gotten profits by ComEd and a speeding up of an additional $200 million in refunds ComEd has been ordered to pay ratepayers as a result of its windfall from the 2017 federal Tax Cut and Jobs Act.
He lays out a push to authorize roughly $350 million in increased ratepayer subsidies over five years to allow two nuclear power plants owned by Exelon Generation to avert planned shutdowns. And in a bid to get 1 million electric vehicles on Illinois roads by 2030, Pritzker wants the state to offer $4,000 rebates to anyone who buys one of the energy-efficient vehicles.
Pritzker also is proposing a state-mandated annual audit of ComEd parent company Exelon, expanding annual disclosures for elected officials and lobbyists to include whether they have a family member employed at a utility and a sunset of ComEd’s formula rate structure.
The vast energy outline from the governor comes as legislators are considering what checks and balances should be put in place in the wake of ComEd’s admission that it participated in a decade-long bribery scheme in exchange for favorable legislation, though it’s unclear whether these additional regulations will win legislative approval.
“We think that this is the best way forward. We think it’s the kind of process that can restore trust in our energy system with the ratepayers of Illinois…This is our attempt to drive the conversation forward by putting the best ideas in one place and by starting off by saying the way we’ve done business in the past is no longer acceptable,” Pritzker’s Deputy Governor Christian Mitchell said in an interview with WBEZ.
Pritzker’s legislative splash adds to a series of competing energy bills now pending in the legislature. It’s unclear where the governor’s plan will land in relation to the other bills, but aides have said Pritzker will veto any utility legislation sent to him if strong utility ethics safeguards aren’t included.
One Democratic ally in the Senate lauded the governor’s blueprint Wednesday but said it will have to incorporate elements of some of what lawmakers already have put on the table.
“The governor’s introduced proposal is a good road map as to how we go ahead and craft legislation,” said state Sen. Michael Hastings, D-Frankfort, chairman of the Senate Energy and Environment Committee. “However, I believe the lawmakers in Illinois have their own ideas based on their own experience. I think if we were to take the lawmakers’ inputs and take some of the inputs from the governor, we can merge this into a comprehensive energy bill.”
Pull back on utility watchdog’s funding tied to ComEd
Pritzker’s move against the state Citizens Utility Board comes after reporting by WBEZ outlining how the utility watchdog formed by the legislature in 1983 to police ComEd became the beneficiary of at least $11.55 million in funding that originated from the utility.
The legislature in 2011 established the Illinois Science and Energy Innovation Trust, which was funded by ComEd and Ameren, the downstate power company. Between 2013 and 2018, the trust funneled $4.55 million in consumer-education grants to a non-profit controlled by the Citizens Utility Board and its executive director, David Kolata.
That funding relationship has fueled questions about the Citizens Utility Board’s ability to maintain independence from ComEd, in particular. The watchdog group was a pivotal supporter behind the 2016 push by ComEd’s corporate parent, Exelon, for a multibillion-dollar bailout of two of its nuclear plants — legislation that was cited in last summer’s federal deferred prosecution agreement with ComEd.
“Ending a current situation whereby a group can be called the Citizens Utility Board while accepting contributions either directly or indirectly from public utilities and then not — I think some would say — not advocating as aggressively as possible for the interest of consumers is a situation we think needs to end,” Mitchell said.
But Kolata disputed that its ties with the trust compromised its independence and said the loss of funding from the group could imperil consumer-education work by CUB if another funding source can’t be found.
CUB, despite being a statutorily-created not-for-profit, contends it is not subject to the state Freedom of Information Act, and Pritzker’s plan would change that. Hastings introduced legislation last year to make CUB comply with FOIA, but the measure stalled.
WBEZ has filed multiple open-records requests with CUB that have gone unfulfilled, and the station is awaiting a judgment from Attorney General Kwame Raoul’s public access counselor about whether FOIA applies to CUB.
Kolata said Wednesday his organization shouldn’t be bound by that law; but if it is, the governor and legislature should see that it also applies to utility companies, a concept without precedent in Illinois.
“We’re an independent organization and not a state agency, and we don’t receive government funding. If FOIA is going to apply to us, does it apply to utilities and other big energy companies we’ve battled at the [Illinois Commerce Commission]?” he asked.
“It seems we should treat folks equitably here. If that’s the case, we’d want to see utilities subject to it, as well,” Kolata said.
End to automatic utility rate increases, expansion of lawmaker disclosures
The governor’s plan would also bring an immediate end to a form of utility rate-setting called formula rates. ComEd’s formula rates structure enables the company to automatically get increases to cover any operating losses, which essentially guarantees the company a profit every year.
Formula rates, without doubt, amounted to the biggest financial prize for ComEd derived from the 2011 smart-grid law that passed the legislature over then-Gov. Pat Quinn’s objections. That law also was cited by federal investigators in their deal to defer a bribery charge against ComEd.
Under the favorable rate structure, ComEd’s revenues jumped from a little over $2 billion in 2012 to nearly $2.7 billion last year — an increase about 2-1/2 times the roughly 12% rate of inflation during the same period, according to a WBEZ analysis last year.
Pritzker’s proposal would also add new disclosures for Illinois lobbyists and lawmakers, requiring them to disclose whether close family members are on the payroll of public utilities. Former lawmakers ensnared in the corruption probe, such as former State Sen. Martin Sandoval and former State Rep. Luis Arroyo, had such ties to ComEd.
And the deferred prosecution agreement between ComEd and federal investigators outlined numerous efforts by then-Democratic House Speaker Michael Madigan to secure jobs at ComEd for members of his 13th Ward political organization, though none of those individuals were identified as relatives of the ex-speaker.
“Forcing folks to have to true up in the legislative and executive branch to ways in which their judgment could be compromised relative to independent decision-making around utility-related issues, we think, is important for restoring ratepayer trust,” Mitchell said.
ComEd pushes back on proposed reforms
The unveiling of the first-term Democratic governor’s bill comes as ComEd pushed back against further regulations earlier this week at a House committee.
“We have to talk about what happened and, moving forward, we have to talk about how to make sure it doesn’t happen again,” said State Rep. Ann Williams, D-Chicago, who chairs the House Energy and Environment Committee.
Williams broached the topic of ComEd paying restitution to its customers for its wrongdoing and said the company made a “mockery” of the legislative process for the past decade.
ComEd already agreed to pay a $200 million fine to the federal government for its wrongdoing.
At Tuesday’s legislative hearing, a top company executive made clear ComEd believes it has already paid its debts for the wrongdoing. She also appeared resistant to forking over a similar penalty to its 4 million customers in northern Illinois, arguing that there is no evidence ratepayer dollars weren’t invested properly in ComEd’s electricity-distribution system.
“It is not appropriate to make a conclusion here that some additional punishment is due when the body that was authorized to review those investments has,” said Veronica Gomez, ComEd’s senior vice president for regulatory and energy policy and general counsel. “… When every party that wanted to participate could and did, and the process that resulted in the criminal penalty is one that was the result of due process, a full process under the law where ComEd was heard and determination was made.”
There appears to be strong legislative support for requiring restitution apart from the governor’s own call for a ratepayer rebate because of the corruption scandal.
Told of Gomez’ stance, Mitchell bristled.
“That statement [is] the exact type of arrogance and belief in the idea of ratepayers as an ATM that got ComEd into this mess in the first place,” he said, “and it is a new day in Springfield. It’s a new day in the governor’s office and the governor is not going to go for the same old way that utility bills have passed in the past.”