Lightfoot's pledge to get tough with utilities comes at a cost

Both ComEd and Peoples Gas pass along the cost of nonpaying customers' debt to paying customers. So there's a risk ratepayers will foot the bill for concessions City Hall may squeeze out of utilities with its newfound muscle.

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An ongoing federal investigation into political lobbying and corruption has put Commonwealth Edison in the hot seat—and given Mayor Lori Lightfoot and progressive aldermen unusual leverage to extract concessions from the utility as its decades-long franchise agreement with the city of Chicago nears an end.

But much has changed in the 27 years since then-Mayor Richard M. Daley and ComEd last negotiated the franchise pact, which charges an annual fee and sets the conditions for the power company to access the city's streets and facilities. State laws enacted since then allow the utility to pass on to ratepayers the annual franchise fee the city receives, as well as the cost of unpaid bills.

The risk for Lightfoot and the City Council, then, is that ratepayers will foot the bill for many of the concessions they may squeeze out of ComEd with their newfound muscle.

Asked about what she'd like to see in the negotiations, Lightfoot recently said she supports an end to shut-offs for those delinquent on their electric bills. She said the same for Peoples Gas and its rising heating bills as well. Both utilities pass along to paying customers the cost of customer debt they write off.

79彩票注册网址The city also is conducting a feasibility study on taking over the power grid within its borders from ComEd. But the alderman who chairs the committee that will oversee the franchise-agreement renewal casts doubt on that possibility, at least in the near term.

Says the mayor's office, "We anticipate the findings of this study to serve as a launching pad for public meetings held later in 2020 to gain feedback as we consider a new agreement with ComEd that will result in the best value and service for Chicago's customers going forward."

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Lights out

Commonwealth Edison in 2019 was considerably more aggressive in cutting off service to nonpaying customers than Peoples Gas.

PEOPLES GAS

YTD through Sept. 30, 2019

Total number of household heating customers: 680,080

Number of disconnections of household heating customers: 9,382 (1%)

Cost of written-off bills for household heating customers: $35.4 million

COMED

YTD through Nov. 30, 2019

Total number of customers: 4 million

Number of disconnections: 218,040 (5.5%)

Cost of written-off bills for all customers (2018): $44 million

Sources: Illinois Commerce Commission, Federal Energy Regulatory Commission filings

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79彩票注册网址For ComEd, the cost of unpaid bills has been relatively stable in recent years, while for Peoples it's been rising substantially. In 2018, ComEd recorded $44 million in uncollectible costs, up from $39 million the year before but equal to the $44 million in 2016, according to filings with the Federal Energy Regulatory Commission.

79彩票注册网址The utility says it won't provide how many customers it disconnects for nonpayment. But records it files with the Illinois Commerce Commission, obtained via a Freedom of Information Act request, show that ComEd shut off the power in 2019 to more than 218,000 northern Illinois customers through November. That's over 5 percent of its customer base. At the same time, ComEd reconnected more than 175,000.

By contrast, total disconnections through September at Peoples, which serves only the city of Chicago, covered just 1 percent of its customer base.

Moreover, Peoples eliminates service to only a fraction of the households eligible to be cut off for lack of payment. Through September, Peoples disconnected 9,382 residential heating customers, about 10 percent of the 93,000 households that received at least one disconnection notice at that point, according to filings with the ICC, augmented by the utility.

79彩票注册网址Perhaps it's not surprising then that the cost of unpaid bills at Peoples Gas keeps rising. Through September, it was $41 million for all customers, nearly as much as ComEd records annually for all of northern Illinois. ComEd serves 4 million customers, while Peoples serves just 861,000.

The surcharge on Chicagoans' heating bills in 2019 doubled from the year before to cover the increasing unpaid bills.

79彩票注册网址In a statement, Peoples Gas says, "Disconnection, for a number of reasons, remains the option of last resort and we make every effort to work with our customers to provide options."

"We are always open to working with the mayor as we continue to modernize the natural gas network in the city of Chicago," the utility adds.

ComEd, too, doesn't oppose an end to disconnections. The utility in a statement says it works "closely with our most vulnerable customers every day to give them multiple options to keep from falling behind on their energy bills, including direct financial assistance from ComEd that is paid using shareholder dollars—and we're working to grow those options to continue to support them. Disconnecting service is always our last resort . . . (and) we're open to further discussion of options that can help provide stability for our customers."

Ald. George Cardenas, 12th, chairman of the City Council's Committee on Environmental Protection & Energy, wonders about eliminating shut-offs for nonpayment. He points to Lightfoot's decision to end water shut-offs and how that's already led to to the city.

"I think there's a concern to the sense that it's a message sent to the rest of folks that you don't have to pay the bill, that you're not going to be cut off," Cardenas says in an interview. "I've seen (water bills) for thousands of dollars. . . .There's no incentive to even try to make a dent at the debt."

'PIE IN THE SKY'?

There's a desire among many aldermen to provide cleaner power sources to Chicagoans, as well as lower costs for lower-income residents. Six democratic socialist aldermen managed to convince 16 others to sign on to a call for a feasibility study to "explore alternative options" to ComEd's franchise agreement. The city's Department of Fleet & Facility Management, or 2FM, tapped NewGen Strategies & Solutions to handle the first part of that study, Cardenas' office says, and the report is expected to land this year.

79彩票注册网址While some viewed the push as "pie in the sky" (one staffer quips the city can hardly manage tree trimming, let alone municipalization of a major utility), most view it as an important exercise to keep ComEd on its toes as negotiations heat up. Still, Cardenas' office says 2FM has not signaled it wouldn't declare its intent to renew the franchise agreement.

"It's our responsibility to go through the exercise and say, if anything we learn from it, what it would take to get us there," Cardenas says.

79彩票注册网址While the swirling scandal around ComEd seems concentrated on its Springfield activities, one of the utility's biggest hurdles with aldermen and the administration is its credibility.

79彩票注册网址"When someone acts in an untrustworthy matter, I think we're bound—we should be looking at alternatives to make sure the consumers are treated fairly," says Ald. Michele Smith, 43rd. "I don't know whether (municipalization) is the right solution, but I will say that ComEd has not shown itself to be a good person on the other side."

Short of municipalization, aldermen almost universally want a shorter contract term.

79彩票注册网址"We're an important customer, and given the situation in the state, I think it's a great opportunity for us as a city to ask for ambitious things," says Ald. Maria Hadden, 49th. She says a contract term of three years might even be appropriate.

"Thirty years, that's not gonna happen," Cardenas says.

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