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 Illinoisans who think the
Commonwealth Edison bribery scandal and the state policies hiking energy bills
are unrelated should ask themselves, “Who is linked to both?”
Hint: it’s the embattled former Illinois House speaker who was recently indicted
for corruption over his dealings with ComEd.
Mike Madigan is responsible more than anyone else for forging the state’s
complex and costly energy policy during his 36 years in power. Energy bills are
one of the focal points of the corruption probe into Madigan’s tenure.
Over 70% of Illinois receives its electricity from Commonwealth Edison. Rates
have been increasing annually for some time, despite state government regulating
the rates the utility company can charge its customers and the rate of return
from its business operations. In theory, state government is supposed to keep
the utility in line and work to ensure power costs remain low.
 So, what happened?
Under standard operating procedure, public utilities in Illinois are governed by
the Public Utilities Act and the Illinois Commerce Commission. Generally, rate
increases are limited through ratemaking, which is carried out by means of a
“rate case” typically before the ICC.
These cases take time: the ICC has 11 months from a filing to make a decision,
so proposed rate increases tend to progress slowly and must meet requirements to
increase rates. For years, this has acted as a stopper for large rate increases
in every utility governed by the commission, which is crucial considering the
near monopoly public utility companies have on their industries.
The ICC is both responsible for electric rate increases, as well as preventing
them. With electric producers besides ComEd supplying power to the state, the
system has helped keep electric bills lower statewide compared to Illinois’
neighbors and to the national average.
In 2011, ComEd was able to circumvent these safeguards via passage of the Energy
Infrastructure and Modernization Act, otherwise known as the “Smart Grid” law.
The bill was framed by ComEd as a $2.6 billion smart grid investment plan that
included a 4.2-million-unit smart meter rollout, intended to give customers
access to real-time data and services to more efficiently use energy. It also
created a new regulatory framework structure for consumers to pay for those
upgrades.
While these infrastructure improvements are viable methods of reducing energy
waste, the new framework has effectively allowed for ComEd to bypass the rate
increase safeguards. Since the law passed, revenues from the company’s delivery
rates have jumped from a little over $2 billion in 2012 to nearly $2.7 billion
in 2019, an increase around 2-1/2 times the roughly 12% rate of inflation during
the same period.
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The Smart Grid law was expanded in 2016 by passing
the Future Energy Jobs Act, which provided even greater benefits to
the utility company, and effectively served as a bailout for ComEd’s
two remaining nuclear power facilities. According to NPR, records
show the legislation yielded more than $935 million in the first
four years after it passed. Both of these increases were primarily
through deliver-side increases, or the amount that a resident has to
pay to have electricity delivered to a home.
Effectively, these two laws resulted in billions going into the
utilities’ pockets that had no real business being there. While
several of the programs that have been implemented will save energy
and help to refurbish Illinois’ energy infrastructure, these
programs effectively serve to cover up the new ability of ComEd to
bypass existing safeguards to see larger profits. These laws,
especially the Smart Grid law, have only served to harm Illinoisans:
netting billions for ComEd, while ratepayers are left another burden
alongside high taxes and untenable public pension payouts.
The passage of these laws can be laid squarely at the feet of
Madigan, who, in both cases, served as the political power to get
ComEd legislation through the Statehouse, often building support in
exchange for favors from the company. Madigan has been indicted on
corruption charges related to helping ComEd pass these laws, and
preventing pro-consumer legislation from surfacing. In particular,
he has been accused of receiving bribes from ComEd, specifically
that ComEd executives arranged jobs for Madigan's political allies
where they "performed little or no work" in exchange for Madigan's
influence in passing legislation favorable to the utility or
defeating legislation that would harm its business, or held
internships for applicants from his home district. He even went so
far as to kill pro-consumer legislation backed by his own daughter,
former Illinois Attorney General Lisa Madigan, to get two political
allies jobs with ComEd.
These charges have resulted in radical shifts both in the Statehouse
and for ComEd. The company was charged with bribery for steering
jobs and other benefits to Madigan and his allies, and agreed to
paid out a $200 million fine in exchange for deferred prosecution of
the charges. The company has apparently worked to walk back its
admission of liability, despite federal prosecutors unveiling a
22-count indictment against Madigan, charging him with racketeering,
bribery, conspiracy, wire fraud and extortion.
The good news is Gov. J.B. Pritzker and other state lawmakers have
turned against ComEd’s efforts to extend the EIMA’s formula rates
past 2024, in no small part because of the allegations of corruption
the utility now faces. For the short term, Illinoisians are likely
to see their utility bills increase as ComEd tries to leverage the
system it created with Madigan before it evaporates.
The Madigan-style corruption that drove up energy rates is still
possible in Illinois. While rules and reformswon’t stop it, they
will signal state lawmakers are rejecting the old ways and remember
who they really work for. |
