The massive energy bill passed by Illinois legislators this week shows that a Springfield bribery scandal hasn’t diminished the political clout of electricity giant Exelon and its Commonwealth Edison subsidiary. Lawmakers approved another enormous bailout for Exelon nuclear plants, even after ComEd admitted paying off minions of former Illinois House Speaker Michael Madigan to secure
The massive energy bill passed by Illinois legislators this week shows that a Springfield bribery scandal hasn’t diminished the political clout of electricity giant Exelon and its Commonwealth Edison subsidiary.
Lawmakers approved another enormous bailout for Exelon nuclear plants, even after ComEd admitted paying off minions of former Illinois House Speaker Michael Madigan to secure passage of an earlier subsidy package and other profit-swelling legislation. In a deal with federal prosecutors, ComEd agreed to pay $200 million to the U.S. Treasury.
Fallout from the federal probe forced the once-omnipotent Madigan to step down. He denied wrongdoing and hasn’t been charged with any.
Commonwealth Edison customers—most people in northern Illinois who use electricity—got nothing from the “deferred prosecution agreement” with Chicago U.S. Attorney John Lausch. What they will get is another $700 million tacked onto their monthly bills over the next five years, courtesy of Illinois lawmakers.
Look no further than this legislation for an explanation of why people mistrust government so much. You’d have thought that exposure of flagrant corruption at the state’s largest utility might have scuttled the company’s legislative agenda. I’ll admit to entertaining that naive notion myself for a while.
Yet ComEd and Exelon hardly missed a beat. They dove right into the sausage-making process alongside an array of special interests—unions, environmentalists, renewable power companies and others. In the end, each of these “stakeholders” got something they wanted. And the biggest stakeholders of all? Electricity customers got what they usually get: the bill.
As my colleague Steve Daniels reported, the legislation Gov. J.B. Pritzker promises to sign as soon as it hits his desk will cost consumers more than any prior energy bill to come out of Springfield in a quarter-century. Daniels reports that the average monthly bill will rise 9% by 2024. A study by AARP Illinois pegs the increase at $15 per month over 10 years.
In a statement, ComEd says, “The overwhelming support of the governor, legislative leaders and legislators for the legislation shows that they recognize the importance of preserving and expanding clean energy, the existential threat of the climate crisis and the need for smart grid investment to ensure reliable energy, and perhaps it’s time for Crain’s to recognize the same.”
Even ostensibly pro-consumer aspects of the bill appear likely to benefit ComEd. For example, the legislation would end a controversial “formula rate” system that limits utility regulators’ power over electric rates. But it includes profit guarantees that could be more lucrative to ComEd than formula rates. Consumer advocates at Illinois PIRG estimate the new system will boost company profits by $664 million to $893 million over four years.
Illinois PIRG Executive Director Abe Scarr told legislators that the bill creates “a new formula ratemaking scheme that is likely more profitable to them—and costly to consumers—than current formula rates.”
Ripple effects of the law go beyond higher electric bills for consumers. In pushing up energy costs, legislators risk squandering an economic advantage. In recent years, Illinois has been able to offer businesses relatively affordable and reliable electricity. But business organizations representing Illinois manufacturers and retailers predict the bill will boost their members’ costs by 8% to 12%.
Illinois Manufacturers’ Association CEO Mark Denzler warned the higher costs “will have a devastating impact on the state’s manufacturing sector, which consumes large amounts of energy to produce the goods, medicines and food that we all rely on.”
Just what we need—another reason for businesses to leave Illinois.
For Exelon and ComEd, however, it’s a big win—in more ways than one. Not only does the bill bestow billions in additional revenue on the companies, but it also shows they still can get what they want in Springfield.
The companies’ victory is all the more striking when you consider how gloomy their chances looked a year ago. When ComEd admitted to bribery, it seemed a business model built around legislative influence might be in jeopardy. Efforts to push through the nuclear bailout stalled as legislators fearing prosecutorial scrutiny backed away.
ComEd and Exelon never wavered, however. In fact, they didn’t even change the legislative playbook much, reprising tactics that worked so well the last time it won massive nuclear subsidies. Threats to close three nuclear power plants and eliminate jobs won union support and brought legislators on board. Exelon also emphasized the importance of clean-burning nuclear power in helping achieve the goal of eliminating fossil fuels from Illinois’ power sector by 2045.
“Policymakers spent years of transparent debate and negotiations to address a complex and urgent issue for all Illinois residents,” Exelon says in a statement. “The result is a nation-leading climate bill that protects consumers, advances equity and builds on the clean energy foundation of the state’s nuclear fleet, which provides 90 percent of the clean energy produced in Illinois.”
Wall Street clearly sees Exelon as a winner. Exelon stock climbed as the legislation steamed ahead, rising 7% since June and outpacing both the broader market and an index of utility stocks. By shoring up nuclear plants Exelon had threatened to shutter, the new subsidies also bolster the company’s plan to spin off its power generating business next year.
In a telling move, lawmakers rejected calls to end ComEd’s power to charge ratepayers for its “charitable contributions,” which averaged more than $7 million between 2015 and 2019, according to Illinois PIRG. The significance is more than symbolic: Charitable contributions help ComEd build support for its legislative aims among do-gooder groups.
The energy bill confirms the companies’ clout in Illinois government is deep-rooted enough to survive a scandal that led to indictments of former senior ComEd executives and ended the career of the most powerful state politician in modern memory. Madigan may be gone, but a new generation of political leaders—Pritzker, House Speaker Emanuel Welch and Senate President Don Harmon—are happy to carry Exelon and ComEd to victory.
Expect the companies to call on them again.