With city takeover off the table, ComEd hearing reduced to political theater

The City Council’s chance to publicly flog Commonwealth Edison for a $1.3 million bribery scandal was quickly reduced to political theater Thursday after a top mayoral aide took Chicago’s trump card off the table right off the bat.

Mayor Lori Lightfoot had asked a consultant to study the feasibility of a municipal takeover of Chicago’s electric service. The final report is expected to be released in August.

But Assets and Information Services Commissioner David Reynolds delivered the bottom line progressive aldermen didn’t want to hear during a virtual hearing before the City Council’s Committee on Energy and Environmental Protection.

“It appears municipalizing ComEd is not financially feasible for this city, given the cost of both purchasing ComEd’s distribution infrastructure and severing the portion of the system that serves Chicago from the portion that would serve ComEd’s revised service territory if the city were to municipalize the portion that serves Chicago,” he said.

Instead of preparing for a municipal takeover, the city and ComEd have been “meeting at least weekly for more than a year to negotiate the terms of the new franchise agreement,” Reynolds said.

“We’ve made progress on modernizing the agreement and making it more reflective of how the city and ComEd currently work together,” the commissioner said.

With the nuclear option off the table, ComEd CEO Joe Dominguez issued the latest in a series of mea culpas for the scandal that saw the company pay $1.3 million in bribes to associates of Illinois House Speaker Michael Madigan in hopes of landing the speaker’s support for legislation benefitting the utility to the tune of $150 million.

That resulted in a “deferred prosecution agreement” requiring the utility to pay a $200 million fine and cooperate with the continuing investigation that is clearly targeting Madigan.

“We are deeply sorry for the conduct that is outlined. ... It represents a breach of trust to the city, to our customers” and employees, Dominguez said.

“There are no excuses for the conduct. And neither I nor will anyone at ComEd offer any excuses. … It’s my job ... that what happened never happens again.”

But, Dominguez stressed that the deferred prosecution agreement does not suggest the smart grid law approved by the General Assembly during the bribery scandal was bad policy or harmed customers.

“I’m not going to tell you that the end justifies the means. I’m simply making the point that the investments that have been made in the system ... did not harm customers,” he said.

“We have earned a profit on those investments. But those investments have produced enormous value.”

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Dominguez “no-harm-to-customers” claim did not sit well with Ald. Michele Smith (43^rd), a former federal prosecutor. Smith noted ComEd’s stock price has not been damaged by the allegations and the utility continues to declare its regular dividend.

“Maybe what we’re talking about is an old-fashioned reference in Chicago: A little corruption is OK as long as the city works. That is not a position I’ve ever held,” Smith said.

“It is outrageous to think that we can have something functioning better and yet have to endure corruption to get it.”

Ald. Brendan Reilly (42^nd), a former top aide to Madigan, lowered the boom on Dominguez.

“Your company stepped in it. … Illinois ratepayers and consumers didn’t benefit from that bad behavior. Your executives and your shareholders did,” Reilly said.

“Commonwealth Edison has let us down before. But this time ComEd let down consumers in a spectacular fashion. And as far as I’m concerned, ComEd admitting guilt and misconduct and paying a $200 million fine is getting off easy.”

Reilly said the Illinois Commerce Commission — chaired by the daughter-in-law of former Ald. Mike Zalewski (23^rd), one of the beneficiaries of the bribery scheme — “may choose not to hold” ComEd accountable, “but the city of Chicago will” — by negotiating a franchise agreement that is shorter and benefits consumers.

“We have very ambitious climate and consumer protection goals. … It’s my hope that this franchise agreement will reflect facts that show ComEd will be a good partner and that they will put this sordid past behind them and help us achieve our goals as a city,” Reilly said.

With a municipal takeover off the table, Reynolds was asked how the shorter franchise agreement might change, particularly when it comes to clean energy.

He specifically mentioned “electrification of the CTA’s fleet.”

“It’s on the table. Buses can charge overnight and that’s when Exelon tends to have an excess of power because we’re all asleep,” Reynolds said.

Ald. Ray Lopez (15th) argued the municipal code prohibits the city from “pursuing this franchise agreement in any form” with a company that has admitted paying bribes.

“All of this is a smoke screen,” Lopez said. “The actions of a few have made you a criminal enterprise.”