Business

Nearly 4.5 Years After 28-Year City Contract With ComEd Expired, No New Deal in Sight

The last time Chicago and Commonwealth Edison negotiated a new deal to keep energy flowing to the city’s homes and businesses, President Bill Clinton was in the White House, flannel shirts were considered high fashion and Mayor Brandon Johnson had just celebrated his 16th birthday.

That deal, inked in 1992 by former Mayor Richard M. Daley, expired in December 2020, months after the firm admitted that ComEd officials arranged jobs, contracts and payoffs for associates of now-convicted former Illinois House Speaker Michael Madigan, in return for his support for rate hikes.

ComEd’s now nearly 33-year-old contract with the city to operate and manage the electric distribution system that serves residents and businesses in Chicago, known as a franchise agreement, remains in place due to automatic extensions baked into the deal, ensuring the lights stay on across Chicago.

Since the city inked its first deal with ComEd in 1947, Chicagoans have paid a monthly “franchise fee” of approximately 4% of what they pay ComEd to deliver electricity to their homes. Most Chicagoans pay about $3.30 per month to the city, records show.

The lack of a contract between the city and ComEd inked in the 21st century has tied the city’s hands in the fight against climate change and halted efforts to transition the city to clean energy, reducing the use of fossil fuels.

During the 2023 campaign for mayor, Johnson promised to explore whether the city should run its own electric utility while vowing to craft a “green new deal” for Chicago.

In the two years since he took office, Johnson has taken no public steps to negotiate a new deal with ComEd or start working to “municipalize” the utility, a move supported by the Chicago chapter of the Democratic Socialists of America, which also backed Johnson for mayor.

A spokesperson for Johnson did not respond to a request for comment about the city’s more than three decade old contract with ComEd.

ComEd officials are scheduled to appear at 10 a.m. Friday before the City Council’s Environmental Protection and Energy Committee for the firm’s annual hearing on their preparations to handle the strain hot weather will place on the city’s electric grid and whether the utility has met city benchmarks for reliability.

That requirement dates to the 1990s, when blackouts swept parts of the city during the summer months.

Alderpeople could pepper ComEd representatives about the lack of a new agreement and the scandal that has plagued the utility giant since it agreed nearly five years ago to pay a $200 million fine to resolve federal corruption charges and avoid prosecution.

ComEd officials are also likely to be asked about the rising cost of electricity in Chicago this summer, which will see the average residential customer pay about $10.60 per month more, according to a company statement.

Utility officials announced Thursday they would set aside $10 million to offer grants of up to $500 for low- to moderate-income rate payers, and $1,000 for nonprofit organizations to offset that increase.

ComEd customers can apply online for assistance beginning July 7, officials said.

ComEd officials have said the increase is the result of two recent capacity auctions, used by grid operators to set future energy prices. With increasing demand from data centers and few new sources of renewable energy coming online, prices are rising as the supply of energy drops, officials said.

A push to pass a package of energy bills through the Illinois House and Senate failed last month, leaving the issue at the top of the agenda for state lawmakers when they return to Springfield for veto session in the fall.

“We share the city’s commitment to an equitable clean energy transition and look forward to an opportunity to discuss the franchise agreement with the Johnson administration,” said Lauren Huffman, a spokesperson from ComEd.

That hearing is scheduled to take place the same day that Madigan, convicted of 10 charges of bribery, conspiracy and wire fraud, is set to be sentenced.

Four former ComEd officials convicted of conspiring to bribe Madigan are scheduled to be sentenced in July. The so-called “ComEd Four” — former CEO Anne Pramaggiore, Madigan’s longtime confidant Michael McClain and ex-ComEd lobbyists John Hooker and Jay Doherty — were convicted in May 2023.

After the scandal broke, then-Mayor Lori Lightfoot halted negotiations over a new deal with the utility giant and demanded the firm agree to implement “a comprehensive ethics reform plan that rebuilds trust with the city, its residents and its businesses” while also implementing programs designed to reduce climate change.

When that effort failed, Lightfoot invited other companies to indicate whether they were interested in bidding for the lucrative city contract, in an attempt to ratchet up the pressure on ComEd.

But the city never issued a formal request for proposals for the city’s electric franchise agreement, and city officials told alderpeople finding a replacement for ComEd was unlikely.

An August 2020 study found it would cost the city $9 billion to create its own utility.

“It is not like we are buying copy machines, and can go to another copy machine service,” David Reynolds, the former commissioner of the Department of Assets, Information and Services, said in July 2020. “ComEd is the only place we can buy electricity.”

In January 2023 — a month before Chicago voters rejected her bid for a second term in office — Lightfoot reached an agreement with ComEd to extend its contract for 15 years in return for at least $100 million to be used in the city’s fight against climate change.

The City Council never voted on the deal, which included promises from ComEd to spend at least $520 million for “hundreds of energy & equity community benefit projects to advance the 2022 Climate Action Plan,” which promises to reduce carbon emissions in Chicago by 62% by 2040.

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

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