City Can’t Afford to Take Over ComEd, Study Finds

(WTTW News)(WTTW News)

It would likely cost the city nearly $9 billion if Chicago wanted to cut ties with Commonwealth Edison and form its own electric utility, according to a city study released Friday.

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The study could doom the push to “municipalize” ComEd, which had been at the top of the agenda for the Chicago chapter of the Democratic Socialists of America, since it helped elect six members to the Chicago City Council in 2019.

The recommendation by NewGen Strategies and Solutions, LLC — and the eye-popping price tag — could mean that Chicago officials have no choice but to extend ComEd’s lucrative city contract, even after the utility giants’ admission that it engaged in a yearslong bribery scheme.

Mayor Lori Lightfoot has been cool to the “municipalization” push from the beginning of the effort, saying the cash-strapped city could simply not afford to run its own electric utility, which could cost at least $6.7 billion and rise to $10.7 billion, according to the study.

It is likely to cost the city $4.9 billion just to purchase the poles and wires and transmission equipment ComEd uses to light up the city’s 1 million homes and businesses, according to the study.

In addition, it could cost $3.9 billion to isolate Chicago’s electric system from the rest of ComEd’s service area, which includes most of Northern Illinois.

That would force Chicagoans to pay 43% more for electricity delivery in the first year of a city-run electric utility, according to the city.

Matthew Cason, the campaign coordinator for Democratize ComEd, said estimates compiled by the group agree with the $4.9 billion price tag to purchase ComEd’s equipment and infrastructure.

However, an additional study is needed to determine whether the initial study’s estimated cost to separate a Chicago electric grid from the rest of ComEd's service area would really cost $3.9 billion, Cason said.

“There is wiggle room there,” Cason said, adding that the city should hold public hearings on the issue.

The city overstated the cost of cutting ties with ComEd to ratepayers, since the debt incurred by the creation of a municipal utility could be paid off over many years, Cason said.

NewGen did not prepare an engineering assessment of the severance cost, since that was not included in the $125,000 cost of the study, according to the report.

“If the city were to continue consideration of municipalizing the ComEd distribution system, it is recommended that the city conduct additional analyses regarding the potential severance costs,” the report states.

NewGen did not recommend that officials order additional studies, according to the report.

In a statement, Lightfoot sought to turn the focus away from the push for a municipal utility to negotiations over a new franchise agreement with ComEd, which has been underway for nearly a year. Lightfoot stopped those negotiations in the wake of the revelation of the bribery scandal and federal criminal charge.

“Now that municipalization by the city appears to not be feasible, we can focus on getting the best deal for our residents and ratepayers through a transparent process as we negotiate the future of our franchise agreement,” Lightfoot said. “As negotiations move forward, the city will continue to seek sustainable and equitable solutions to the environmental and energy challenges we face.”

Lightfoot said a new franchise agreement would require significant ethical reforms by the utility, as well as more ambitious renewable energy goals, which could include more solar generated power and electric municipal vehicles.

“We look forward to forging ahead with the city in support of the mayor’s priorities regarding energy and sustainability, equitable economic development, affordability and transparency as we build on our progress to ensure continued safe, reliable and affordable energy delivery while investing in smart, clean technology that powers the local economy and Chicagoans’ everyday lives,” said ComEd spokesperson Shannon Breymaier.

The City Council has yet to consider a measure introduced by eight aldermen who favor a municipal utility that calls on the city to negotiate a one-year extension to the franchise agreement set to expire on Dec. 31 that allows ComEd to deliver electricity to all city residents. That would allow enough time for additional studies, according to supporters.

The current agreement, inked in 1992, expires Dec. 31, though its terms will continue until a new one is in place or until either party gives notice that it wants out.

Contact Heather Cherone: @HeatherCherone | (773) 569-1863 | [email protected]

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