Say you’re a private business, such as an airline, that wants to keep up the appearance of low ticket prices with customers. So instead of raising ticket prices to cover additional costs, you tack on fees instead, using the excuse that if you don’t, you will lose business to competitors who do.
That’s not an excuse for utilities, which do not have competitors in their markets.
Yet a study by the Citizens Utility Board released Thursday reports Illinois utility customers are forced to pay, via add-on fees, for such things as utility memberships in trade associations, insurance policies to protect shareholders, goodwill advertising that enhances utilities’ images and charitable donations. The costs add up to tens of millions of dollars, CUB says. The Legislature should rein in the more egregious categories of that spending.
Critics say the utility trade associations work to help create policies in state after state that are beneficial for the utilities — and not so much for customers. CUB also notes customers even pay for lawyers and expert witnesses to argue that customers’ bills should go up, though utilities say that’s part of the cost of requiring utilities to go through a regulatory process.
As for charitable donations, a 2019 nationwide study by the Energy and Policy Institute of 10 leading investor-owned electric utilities found the utilities used the donations as part of their political operations to generate support for utility priorities. Similarly, a 2021 analysis by WBEZ and one by the Chicago Tribune in 2015 found some of ComEd’s charitable contributions were paid to groups that supported the utility’s interests. ComEd was not included in the EPI study.
“People don’t realize they are paying to increase the political power and influence of the utilities,” Bryan McDaniel, CUB director of governmental affairs, told us.
Utilities, of course, have many legitimate expenses. But costs that are not directly tied to providing services should be covered by company profits, not billed to customers. Charitable giving for worthy causes is good, of course, but it is not something that should come out of ratepayers’ pockets. It’s not exactly altruism to force someone to give you money so you can donate it to someone else for your own benefit.
There is no reason utilities can’t keep donating to community groups, for example, but they shouldn’t use customers’ money to do so.
“Illinois is unusual in that the utilities can pass on 100% of their charitable contributions to their customers,” said Abe Scarr, state director of Illinois PIRG (Public Interest Research Group).
The Legislature should make Illinois the fourth state to require utilities to pay discretionary costs out of profits, joining Colorado, Connecticut and Maine. Arizona, California, Maryland, New York, Virginia and Ohio are considering taking action as well. Bills to do so in the Illinois House and Senate — HB 5061 and SB 2885 — are backed by CUB and AARP Illinois.
Some of the proposed reforms were included in the original version of the Climate and Equitable Jobs Act, landmark legislation that Gov. J.B. Pritzker signed in 2021 to put the state on a path to clean energy, but they were dropped during negotiations after push-back from the utilities.
By enacting legislation, the Legislature could send another signal that the days are over for utilities, which have a habit of seeking large rate increases, to get overly favorable treatment from lawmakers and regulators. Utilities around the country have been beset by scandals — think ComEd, FirstEnergy and Florida Power & Light — but the answer is for utilities to clean up their acts, not to charge customers for ad campaigns to burnish utilities’ images.
Many customers struggle to pay utility bills or can’t pay them at all. As of January, 438,815 ComEd customers were 30 days or more behind on their bills, as were 144,510 people for Peoples Gas and 206,022 for Nicor, according to CUB. They shouldn’t be forced to pay expenses the utilities should be shouldering on their own, especially if the purpose of those expenditures is partly to drive up bills people already are struggling to pay.
The Legislature has a chance to inject some common sense into utility bills. It should do so.
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