• Joe Cahill On Business
  • Joe Cahill On Business

    Unplug ComEd's rate hike machine

    It's time legislators stopped looking out for ComEd and started protecting the public.

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    79彩票注册网址If you're wondering how Illinois' culture of pay-to-play politics affects average people, keep an eye on your electric bill.

    Chances are, you'll see another big jump in the amount you pay Commonwealth Edison to deliver power to your home, thanks to a multibillion-dollar spending spree the utility plans for the next four years. Delivery charges already have surged since Illinois legislators passed a law that makes it easier for ComEd to raise rates. The "formula rate" system enacted nine years ago puts electric rates on something akin to autopilot, guaranteeing ComEd a specified return on all its infrastructure investments and reducing utility regulators' authority over rates.

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    It's one of the most generous utility regulation setups in the country and a testament to ComEd's well-oiled Springfield lobbying operation, which is now under federal scrutiny. While investigators probe its relationships with various political power brokers, the company is coming back for more rate hikes, and the formula rate system all but guarantees it will get them.

    As my colleague Steve Daniels reported in Crain's Feb. 24 issue, ComEd wants customers to bankroll some $9.53 billion in capital spending between 2020 and 2023. That's even more than the utility spent during the 2015-18 peak of its massive smart-grid infrastructure modernization program, which is looking less like a one-time burst of higher investment in new technologies and more like a new business model for ComEd. The latest spending plan would finance replacement of 2,000 miles of underground cable, 15,000 to 18,000 utility poles, equipment that limits electricity leakage from wires and other work.

    Annual capital spending by ComEd has doubled since formula rates took effect. Electricity delivery charges have surged, too, climbing 35 percent since 2011. Customers can expect another big increase under ComEd's latest spending plan.

    79彩票注册网址ComEd spokesman Paul Elsburg says the company "expects any impact of these needed grid investments on customers' bills will be at or below the rate of inflation," adding that residential rates here are "19 percent lower than the top 10 U.S. cities." Under formula rates, he says, regulators still "must review and approve every dollar invested to make sure it is in customers' interest." He also notes that ComEd has cut distribution rates three times in the last five years and says the utility has "one of the lowest rates of return in the country."

    79彩票注册网址Formula rates enable ComEd's Chicago-based parent to promise big things to Wall Street. Exelon recently told analysts that budgeted spending through 2023 will increase the rate base at all its utilities by $13 billion. ComEd accounts for $5 billion of that increase, an amount equal to the size of downstate utility Ameren Illinois or Northern Indiana Public Service Co.

    Clearly, federal investigations haven't deterred ComEd from taking full advantage of its powers under the formula rate system. Only the lawmakers who gave ComEd those powers can take them away.

    79彩票注册网址The formula rate system comes up for renewal in 2022. Before the lobbying scandal broke, ComEd was pushing a bill to extend it for another decade. The company seems to have backed off that high-profile effort, but it hasn't given up on renewal. ComEd CEO Joe Dominguez told Daniels the company will likely try to fold formula rate renewal into a comprehensive energy bill Gov. J.B. Pritzker wants lawmakers to pass in the current legislative session.

    Any effort by ComEd to renew the formula rate system would present a great opportunity for state legislators to break with the corrupt traditions of Illinois politics. Rejecting renewal would show their independence from one of the most prolific practitioners of those dark arts, which put the interests of a moneyed few above the needs of everyday Illinoisans.

    Residents of ComEd's northern Illinois service territory have no choice but to get their electricity delivered by ComEd. They depend on elected officials to protect them from abuses of the monopolist's power. Formula rates increased customers' vulnerability to such abuses, a weakness ComEd continues to exploit.

    It's time legislators stopped looking out for ComEd and started protecting the public. They should allow the formula rate system to expire as scheduled and replace it with a new approach that gives utility regulators more power over electric rates.

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