Nearly 30 years ago, Chicago’s mayor and Commonwealth Edison squared off in a high-stakes battle over how the public utility would operate the city’s power grid.
Then-Mayor Richard M. Daley was under intense pressure to extract concessions from the company, including assistance for the poor and elderly and assurances Chicago wouldn’t suffer major power outages. To try to get his way, the administration even publicly debated the city taking over the utility’s infrastructure.
With ComEd’s franchise agreement set to expire at the end of 2020, the opportunities and expectations facing Mayor Lori Lightfoot are strikingly similar almost three decades later.
So far, Lightfoot has borrowed pages of the former mayor’s playbook, including evaluating whether the city can take over the power grid and demands the utility offer more assistance for poor and senior residents. But Lightfoot also wants assurances on issues that weren’t high priorities in the early 1990s, such as clean energy and conservation.
And she has some added leverage this time around: ComEd is currently wounded by a federal corruption investigation, a development that could make the power company more agreeable to negotiate.
“The city has quite a bit of leverage in the franchise agreement discussions,” said David Kolata, executive director of consumer group Citizens Utility Board. “Everything we’ve heard from Mayor Lightfoot is she wants to use this and get the best deal possible for the city and for the environment. This opportunity doesn’t come around very often. It’s important we get the best outcome possible.”
The importance of the city’s franchise agreement negotiations with ComEd is more than just a political power struggle. The deal is the underpinning that directly affects how much residents pay for their electricity and how reliable it will be for years. At its core, the agreement allows ComEd access to public property for poles, electric wires and other infrastructure.
Because the agreement has up until now been renegotiated only once a generation, its expiration at the end of the year is a rare opportunity for the city to attempt to get as much as it can on behalf of residents.
The sweeping federal investigation has provided a new backdrop for the negotiations.
The Better Government Association and WBEZ last year reported federal investigators have twice subpoenaed ComEd, including once for “records of any communications” the power company had with ex-state Sen. Martin Sandoval, who pleaded guilty earlier this year to bribery and tax charges tied to his former duties as a state lawmaker. Last year, WBEZ also reported the federal probe is exploring whether the utility giant hired politically connected workers and contractors to curry favor with state officials.
Lightfoot has kept a close eye on the investigation, an internal city email shows. After the Chicago Tribune in October reported that Fidel Marquez, ComEd’s senior vice president and a primary negotiator with the city, abruptly retired, the mayor herself forwarded a link of the story to top administration aides with the message: “FYI.”
In December, the mayor publicly announced she planned to coordinate with aldermen to bring company executives to City Hall for public hearings.
“There’s a lot of questions that ComEd is going to have to answer before we are going to get comfortable renewing a franchise,” the mayor said in a radio interview late last year.
ComEd has said the utility is fully cooperating with the federal investigation but has declined to discuss it in any more detail.
Melissa Washington, senior vice president of government and external affairs at ComEd, downplays tensions between the utility and City Hall and dismissed that the political fighting that took place three decades ago is happening again today.
“We’re not in the same place we were 30 years ago,” Washington said. “There has been a lot of advancement.”
Although representatives from Lightfoot’s administration and ComEd have yet to sit down across the negotiating table from each other, Lightfoot’s initial public demands have included requiring ComEd to help the city access renewable power to meet clean energy goals, promote energy efficiency and expand assistance programs for poor and elderly customers who can’t pay their electric bills.
The city also wants to monitor and ensure power reliability in the face of cyber attacks, climate-related severe weather and other threats. City officials also want to work with ComEd to make sure there’s plenty of capacity for economic growth.
And one of the administration’s biggest goals is to ensure the contract isn’t as long as the 29-year deal Daley secured. The city would like a new agreement to be no more than five to 10 years, administration officials have said.
“ComEd has long had the opportunity to provide an essential service that is one of the bedrocks of Chicago’s economic and environmental future,” Lightfoot’s office said in a recent statement to the BGA. Lightfoot’s administration now “has a responsibility to ensure that if ComEd continues to have that opportunity, it does so in a way that improves benefits to the city and residents.”
Washington, the ComEd official, insists that Lightfoot’s demands are the “same priorities we have also. We’re very aligned when we hear the city talk about clean energy.”
While the federal investigation might give Lightfoot some unique leverage, the mayor also is looking to use a feasibility study her administration has commissioned to assess whether the city can take over the power grid. Once the first phase of study is done, which is expected by June, Lightfoot wants to share the findings with the City Council.
The feasibility study “could be a launchpad in a couple of different ways,” Lightfoot’s Fleet and Facility Management Commissioner David Reynolds said. “We might learn things from the study that may inform the franchise agreement.”
For instance, the city may learn about the state of ComEd’s infrastructure and the investments the utility is making to improve it, Reynolds said.
Phase I of the study will estimate a takeover price and a comparison of cash flow from a city-run electric utility against ComEd’s continued ownership.
ComEd has said a city takeover of the power infrastructure would be difficult and expensive — at least $10 billion for the city to purchase. Lightfoot says it’s too soon to talk about the financials. One of the reasons the city commissioned the feasibility study is to generate an independent assessment of the costs.
Chicago aldermen are also waiting to see the results of the study.
“The feasibility study is going to tell us where to go,” said Ald. George Cardenas, 12th, chairman of the City Council Committee on Environmental Protection and Energy.
Cardenas’ committee may hold hearings on the franchise agreement issue, though it is unclear when.
“It’s important to get the data,” said Ald. Andre Vasquez, 40th, one of six Democratic Socialists on the City Council who are pushing for the city to take over the power grid. “Looking at what can be done allows us to look at all the options. So whether it’s full municipalization, or whether it’s a public-private partnership or whether it’s just a better deal for the city that’s what’s currently in place, all of those things are better for the city.”
When the Daley administration in 1991 publicly threatened to take over the city’s power grid both the mayor and the utility “took it very seriously,” Robert Helman, who was Daley’s chief negotiator, said in an interview. “It was not a crazy idea.”
“It would have required a great deal of work to do it, particularly because the city believed the distribution system was inadequate,” added Helman, who is a partner at the law firm Mayer Brown. “It’s a very big responsibility.”
During the negotiations with ComEd, aldermen criticized Daley’s leadership on the issue so much that the mayor at one point declared he wasn’t a “wimp.” Although most aldermen felt at the time that ComEd won, Daley did later force the company into arbitration after severe blackouts and, by 1999, ComEd agreed to spend more than $1 billion to upgrade its infrastructure.
Scott Bernstein, who founded the Center for Neighborhood Technology and supported the city taking over the power grid under Daley, said the current franchise agreement negotiations is a moment of truth for Lightfoot.
“We don’t have forever to reach our goals,” Bernstein said, noting Lightfoot made strong promises on clean energy and climate. “We’re going to run out of time to make a difference on climate change.”