In a deferred prosecution agreement with U.S. Attorney John Lausch last year, Chicago-based ComEd admitted to giving jobs and contracts to associates of then-Illinois House Speaker Michael Madigan as part of an effort to win passage of favorable legislation.
The bribes paid off. In 2011, Madigan greenlighted a bill that reduced the power of utility regulators to scrutinize electric rates, establishing a ratemaking formula that has generated more than $700 million in additional revenue for ComEd. Another bill passed in 2016 required utility customers to pay $235 million annually for 10 years to support two financially ailing Exelon nuclear power plants.
When someone obtains a benefit through bribery, fraud or other subterfuge, the appropriate punishment is to require that person to return the benefit to those it was taken from. ComEd and Exelon obtained billions from customers through the utility’s bribery.
Prosecutors indicted three former ComEd executives, a consultant and a lobbyist in the scheme. Four denied wrongdoing, and one former utility official pleaded guilty. Madigan hasn’t been charged and maintains his innocence. ComEd agreed to pay the federal government a $200 million fine in its deal with Lausch.
What ComEd and Exelon haven’t done is reimburse customers for one dime the companies collected under legislation obtained by illegal means. Lausch could have required reimbursement as a condition of the deferred prosecution agreement, but he didn’t.
Pritzker also could have required reimbursement under the legislation he proposed last month. He didn’t, either. A spokeswoman for Pritzker points out that his bill requires restitution of charges related to the bribery campaign itself.
In other words, ComEd must return any customer charges that covered the company’s costs of paying Madigan’s pals. But it gets to keep the far greater sums it collected from customers under the legislation itself.
The spokeswoman also notes that Pritzker’s bill would end the “formula rate” system and restore much of regulators’ power to reject ComEd rate hikes. That’s a win for consumers, but it won’t make them whole. Only refunds of excessive charges under the 2011 and 2016 laws can do that.
A spokeswoman for ComEd says infrastructure investments under the formula rate regime “have provided billions of dollars of proven value that benefits Illinois families and businesses.” An Exelon spokesman argues the subsidies that kept the two nuclear plants open have produced “economic, consumer, public health and environmental benefits” that exceed their costs “by at least eight to one.”
I don’t doubt that formula rates and nuclear subsidies produced some benefits for customers. The question is whether they paid too much for those benefits. If so, they deserve refunds.
If Pritzker really wants to protect ratepayers, he would propose a re-examination of ComEd’s rates over the past decade. Applying the new ratemaking standards in Pritzker’s bill, the Illinois Commerce Commission could determine whether charges under the formula rate system were fair and order refunds of any amounts that don’t pass muster.
A similar approach would recompense customers for any unfair nuke plant subsidy payments. In another favor to Exelon, Pritzker’s bill would subsidize two more plants that the company has threatened to close because it says they’re losing money.
Yet his proposed subsidy for the Dresden and Byron plants is less generous and more rigorous than the ongoing supports for plants in Clinton and the Quad Cities. Dresden and Byron would get $71 million annually, provided an independent audit shows they really need financial help. Why not put Clinton and Quad Cities under the same program going forward and re-examine prior subsidy payments so that regulators can require refunds of any excessive charges?
These two steps would force ComEd to return any ill-gotten gains to customers and show crime doesn’t pay in Springfield.