To keep franchise, ComEd must reform, Lightfoot warns

The mayor delivers an ultimatum to the utility’s CEO, but her leverage may be limited.

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ComEd Training Center, 3536 S. Iron St. in Chicago

Chicago Mayor Lori Lightfoot delivered a shape-up-or-else ultimatum to ComEd CEO Joseph Dominguez. The agreement that allows ComEd to provide electricity within Chicago expires at the end of 2020, but how much leverage the city has in the situation is debatable.

Sun-Times file

ComEd, which confessed to paying $1.3 million in bribes to associates of Illinois House Speaker Michael Madigan, must enact ethics reform and other policy changes before the city will extend the utility’s franchise agreement, Mayor Lori Lightfoot said Monday.

Lightfoot delivered a shape-up-or-else ultimatum in a letter she emailed to ComEd CEO Joseph Dominguez. The agreement that allows ComEd to provide electricity within Chicago expires at the end of 2020, but how much leverage the city has in the situation is debatable.

ComEd’s owner, Exelon, will pay $200 million to settle federal corruption charges and agreed to continue cooperating in the Madigan-focused probe. A copy of Lightfoot’s letter was given to the Sun-Times.

Saying she is “deeply disturbed” by the company’s admission, the mayor told Dominguez she finds “the company’s response thus far to this clearly unethical behavior to be inadequate. Good governance and transparency have been guiding principles for my administration, and I expect the same principled approach from any company that does business with the City of Chicago.”

She added: “The City will not make rash decisions about such an important and essential service as electricity.” Lightfoot said to renew the franchise, “the City expects the company to implement (1) a comprehensive ethics reform plan that rebuilds trust with the City, its residents and its businesses, and (2) my administration’s policy priorities around energy and sustainability, equitable economic development, utility affordability and transparency.”

Top executives at Chicago-based Exelon, in apologizing for the misconduct, said they have removed individuals involved in the bribery, which they said was designed to curry favor from Madigan on important legislation. ComEd admitted to federal charges that it derived at least $150 million in benefits from the scheme over an eight-year period ending in 2019. Madigan has not been charged.

Responding to the mayor, ComEd spokesman Paul Elsberg said: “We have a lot of work to do to rebuild trust, and our commitment to working collaboratively with the City is stronger than ever — to build on the enormous customer benefits we’ve delivered, including 70 percent improved reliability since 2012, best-ever customer satisfaction and billions of dollars in savings to customers, at the same time that residential customers’ bills are less than they were nearly a decade ago and as ComEd requests a third delivery rate decrease in a row, the fifth in 10 years.”

Elsberg said ComEd has established “four new mandatory policies that govern how employees interact with public officials.”

The end of the franchise agreement — in this case, a 20-year deal — provides any Chicago mayor with a rare opportunity to extract concessions from ComEd. But it’s highly doubtful the city could take the extreme position and take over electric service itself.

That step would require City Hall to pay billions of dollars for ComEd’s assets here, an unlikely prospect at any time but especially now, with the municipal budget ripped apart by COVID-19. Lightfoot may be limited to demanding action from ComEd that in some cases might come anyway as part of its settlement with the U.S. Attorney’s office.

In the past, Lightfoot has said she would insist on an end to utility shutoffs as part of a new franchise deal. Her letter did not contain that specific demand. For residents and small businesses, ComEd has suspended shutoffs at least August.

In her letter to Dominguez, Lightfoot said ComEd’s $200 million fine must be measured against its 2019 revenue of $5.75 billion and its 2019 profit of $688 million. She wrote, “Put simply, ComEd touches every Chicagoan’s daily life; I can only imagine the significant impact a $200 million investment of money in the city (versus a fine) would have had improving our neighborhoods, assisting low-income consumers, or achieving clean energy goals.”

Lightfoot demanded “a significant commitment from the company to right historic wrongs.”

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