ComEd’s ‘smart grid,’ other modernization moves are soaking consumers, group says

The Illinois Public Interest Research Group says electricity customers are paying 37% more in delivery charges at a time when energy prices are low nationwide.

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ComEd workers fix a power outage in Uptown in August. The utility’s “smart grid” work has resulted in fewer outages.

ComEd workers fix a power outage in Uptown in August. The utility’s “smart grid” work has resulted in fewer outages.

Pat Nabong / Sun-Times

ComEd customers are paying the price for legislation the utility corruptly obtained in Springfield, according to a new report from the Illinois Public Interest Research Group.

The report from the private consumer watchdog group says the legislation allowed ComEd to raise profits while falsely pitching its “smart grid” and other modernization moves as good news for consumers.

It says:

  • Because of the modernization legislation and formula rate, ComEd’s authorized profits rose by 47% over eight years.
  • Consumers have seen a 37% rise in the delivery portion of their electric bills and that, given a nationwide drop in energy prices, households could have seen much lower bills if it weren’t for the formula rate.

A ComEd spokeswoman disputed the findings, saying consumers have benefited from the smart grid and other upgrades.

A utility usually is allowed to recover what are called reasonable operating expenses and prudent capital investment, along with a profit, after going through a highly regulated process.

But when the Illinois Legislature passed the Energy Infrastructure Modernization Act in 2011, it allowed ComEd to bypass normal controls and create what PIRG termed “a profit machine” through a formula rate system that was enacted.

In the eight years since the law took effect, the report says ComEd made about $2.5 billion in reliability upgrades and smart grid work as part of $5 billion in total capital spending in that period. And it got approval to pass along to consumers most of that spending, PIRG found, with only $23 million disallowed of the $5 billion it spent.

The utility’s political lobbying has been a key focus of an ongoing federal corruption investigation that’s threatening the power of longtime Illinois House Speaker Michael Madigan.

Last summer, ComEd reached a deferred-prosecution agreement with the U.S. attorney’s office in Chicago in which it agreed to a $200 million fine and admitted that company officials were involved in a scheme to pay $1.3 million to Madigan associates for doing little or no work. In November, Madigan confidant Michael McClain was indicted on charges that accused him of improperly pushing the speaker’s interests with ComEd.

Madigan, who hasn’t been charged, has denied any wrongdoing.

ComEd spokeswoman Shannon Breymaier said the deferred-prosecution agreement “does not contain any allegations that consumers were harmed by legislation passed in Illinois.”

Breymaier said consumers actually reaped “substantial benefits” that have included 70% improved reliability since 2012 — meaning fewer unplanned power outages.

Illinois PIRG is calling for tighter regulation by the Illinois Commerce Commission and a ban on political contributions by investor-owned utilities. It also wants ComEd’s parent company, Exelon, to be forced to divest itself of ComEd, saying there’s an inherent conflict of interest between the power-generating parent and the electricity-delivering ComEd.

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