Study suggests city-run electric utility too costly

As the city negotiates a new deal for electricity service, one option appears to be off the table — establishing its own utility for residents and businesses.

A just-released feasibility study suggests splitting off from ComEd could cost the city about $3.9 billion, driven mostly by transmission and substation equipment costs. In the first year year of operation, the average electricity delivery rate would be about 43% higher than the average current rate, according to the study.

“This study is an important step in the city’s negotiations towards a new franchise agreement. 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,” Mayor Lori Lightfoot said in a statement. “As negotiations move forward, the city will continue to seek sustainable and equitable solutions to the environmental and energy challenges we face.”

The city’s agreement with ComEd to provide electricity expires at the end of 2020. That offers the mayor with a rare opportunity to extract concessions from ComEd. But even before the study’s release, severing ties with ComEd seemed like a long shot — especially now, with the city dealing with the financial burdens of the coronavirus.

But last month, in a strongly worded letter to ComEd CEO Joseph Dominguez, Lightfoot demanded ethics reforms and other policy changes before the city would extend its agreement with the utility. ComEd has confessed to paying $1.3 million in bribes to associates of Illinois House Speaker Michael Madigan. ComEd’s owner, Exelon, has agreed to pay $200 million to settle federal corruption charges and has agreed to cooperate in the Madigan-focused probe.

In her emailed letter to Dominguez, Lightfoot wrote, in part: “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.”

ComEd, in a statement Friday said, “....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.”

City Hall hired NewGen Strategies and Solutions, the authors of the feasibility study, in the fall of 2019