ComEd would spend up to $120 million in shareholder dollars on clean energy and workforce training in what the utility and other backers call a “ground-breaking” agreement being considered by Chicago’s City Council. 

The agreement was crafted to try to gain approval for renewing ComEd’s larger franchise agreement with the city. There’s been significant opposition from activists and some City Council members to the proposed franchise agreement. The previous 30-year deal expired in 2021, just as a major bribery scandal involving the utility and state officials was unfolding.

A new agreement won’t likely be inked before Mayor Lori Lightfoot’s term expires in May. But Citizens Utility Board Executive Director Dave Kolata said it’s crucial that the proposed Energy and Equity Agreement, and by extension the franchise agreement, pass this year — so that the shareholder funds can be used to leverage incentives contained in the federal Inflation Reduction Act.

Kolata said the Citizens Utility Board neither explicitly supports nor opposes the franchise agreement, but wants to see the process move forward quickly, a potential challenge since a new mayor will be taking office in May.

“Given the direct pay incentives in the IRA, there’s a real opportunity to lever that $100 million and turn it into something like $400 or $500 million and go from there,” Kolata said, referring to the fact that the Inflation Reduction Act allows tax credits to be basically paid out as cash for nonprofits or entities that don’t owe enough taxes to tap credits.

“It will be important for the next mayor, who obviously will have a lot of issues to deal with, including realistically things that may be bigger priorities. But you’ve got a reasonable starting point here,” Kolata said. “We don’t want this to linger multiple years. We think the $100 million is a good start, though we have some questions around the governance of that, it would likely require some tweaks. The big add at the end of the day is the shareholder dollars.”

Some City Council members and community advocates have argued the proposed 15-year franchise agreement is too long and includes too few consumer protections, especially in light of the scandal, which involved the indictment of former state House Speaker Michael Madigan.

Six Chicago council members signed a statement denouncing Lightfoot after a resident who spoke against the franchise agreement at a Feb. 1 community meeting was removed from the meeting despite apparently violating no rules.

Mayoral candidates Brandon Johnson, a progressive former teacher, and Paul Vallas, former head of Chicago’s public schools, have both demanded the franchise agreement not be signed during Lightfoot’s term; indeed the City Council schedule would make that nearly impossible.

What would the deal mean for Chicago’s climate goals?

City and ComEd officials say the Energy and Equity Agreement will help cut carbon emissions in the utility’s northern Illinois service territory. It calls for ComEd to develop a workforce training center on Chicago’s West Side and spend at least $10 million to train up to 10,000 Chicagoans for clean energy jobs.

Under the agreement, a new nonprofit organization similar to a trust would be set up to distribute the funds, run by a stakeholder board. The organization could seek additional funding, including through federal programs, with $100 million coming from ComEd over the 15-year franchise agreement term with an additional $20 million if the agreement is extended for five more years. 

“The Energy and Equity Agreement allows us to work cooperatively with the city and ideate together some things we might want to explore,” said ComEd senior manager of strategic planning Amanda Gomez. “Building something maybe a little stronger, maybe there’s a different need or gap, the agreement gives us the space to come up with those ideas and pursue them.”

“Really no cities have done something similar,” added ComEd general counsel Glenn Rippie. “We are confident that this agreement is groundbreaking; it delivers huge benefits to the people of the city and frankly to our joint goals.”

Rippie said the utility can likely recoup its spending, through energy bills, for the promised workforce training center and training itself. It cannot make a profit on programs that would be considered operating expenses, as it does on capital investments that have a baked-in rate of return.

If ComEd builds and owns an investment, potentially including a training center, it can seek a profit on its investments. Meanwhile, if state regulators deny cost recovery for clean energy training or other clean energy programming, Rippie said, then ComEd would use the $100 million shareholder funding pot. 

Angela Tovar, chief sustainability officer for the city of Chicago, said the equity agreement is years in the making.

“What is unique about this moment is that we back in 2020 communicated to the utility that we would not enter into a new franchise agreement until we aligned on energy and equity priorities,” she said. “For the last few years, we’ve been defining those and laying those out.”

Jared Policicchio, Chicago deputy chief sustainability officer, said the equity agreement was informed by the example of cities including Minneapolis, Boulder and San Diego.

“We feel like what we’ve done here builds on these efforts, on the hard work our peer cities have done to utilize the franchise process to realize equitable transition,” he said.

Agreement seeks synergy with state law

The programs ComEd promises as part of the Energy and Equity Agreement would dovetail with efforts already under way funded by Illinois’ 2021 Climate and Equitable Jobs Act. The law bolstered an existing program called Illinois Solar for All that means people meeting certain equity requirements could basically get solar at no cost, though relatively few homeowners in Chicago have tapped the program.

Tovar said funds created by the ComEd agreement could help publicize and connect Chicagoans with the incentives available through the state program.

“What we intended to do with the Energy and Equity Agreement was … utilizing the city’s staff time, our platform for communication, making sure we are coordinating with stakeholders that the city traditionally works with to ensure people are aware” of opportunities, Tovar said. “It’s about increased collaboration to move these projects forward in a more meaningful way.”

ComEd has in the past argued for state legislation and rate structures that clean energy advocates said would curb the expansion of distributed solar. Those proceedings happen before the Illinois Commerce Commission and in the state legislature, and are not directly related to city franchise agreements, which don’t involve rate negotiations but rather the grid in the city.

The Illinois Power Agency oversees the state’s generation mix and procures energy on behalf of ComEd and utility Ameren. Meanwhile, ComEd plays a key role in connecting customers with solar to the grid and upgrading the grid to handle more solar and electric vehicles.

“We have asked for more transparency around their grid infrastructure investments,” Tovar said. “We expect and are requiring more reporting and more coordination, so the city can work with them more proactively.” ComEd has a role in ensuring the city is prepared for the clean energy transition, Tovar continued, “which is why it was so critical we aligned on policies like ensuring we have the infrastructure to support a transition to electric vehicles.”

She said the program could also help ensure that the ComEd interconnection process for residential solar goes smoothly.

“It can be more difficult than it should be for folks to get approval for putting solar on their roofs,” Kolata said. “How does the city interact with the utility processes that can be streamlined and improved? So far it’s been very difficult for companies to build solar in the city of Chicago. This provides an opportunity to streamline processes.”

The state law also funds the development of workforce training hubs around the state. The center ComEd would fund would be separate from these hubs, Rippie said. He noted the equity and franchise agreements also entail hiring goals, “to hire folks who are newly trained particularly from underserved communities, into entry level positions in the ComEd job ladder — jobs that lead into a lifelong career opportunity should people desire.”

Critics push for municipalization 

The franchise agreement includes a provision that after five years, the city could decide to municipalize its utility service. A coalition called Democratize ComEd has called for a much shorter franchise agreement and provisions making it easier for the city to municipalize, namely by curbing the ability of ComEd to charge high amounts for the city taking over its assets.

Democratize ComEd’s members include a graduate student labor union, environmental groups, and the Democratic Socialists of America, with which some City Council members are aligned. 

Municipalization has been attempted in Boulder, Colorado and other cities. The effort in Boulder ultimately failed, though a 2020 settlement between utility Xcel and the city capped costs at $200 million the city would need to pay the utility if they want to try municipalization in the future. A 2020 study commissioned by the city of Chicago found municipalization would cost about $3.9 billion. 

“The overall availability of municipalization is something that the city takes seriously,” Policicchio said. “We certainly considered it important to have as an option. That being said, we did a pretty careful in-depth preliminary municipalization study, and ultimately the recommendations were it was not the best option for the city at this time. It would be a monumental undertaking.”

ComEd offers $120M for equity programs as part of Chicago electricity deal is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

A new coalition has joined the fray in the debate over a sweeping new energy bill in Illinois, demanding ethics and regulatory reforms and restitution for ComEd ratepayers.

The Environmental Law & Policy Center, the Illinois Public Interest Research Group, and the AARP call their coalition “Take Our Power Back” and allege that ComEd’s undue political influence, as outlined in a recent federal corruption settlement, led to consumers overpaying for electricity, with little oversight of how ComEd spent the resulting funds. 

While the coalition is focused largely on restitution for customers and reforms that restore regulatory oversight and accountability, they also say that a transition to clean energy is dependent on such protections. 

“If we want clean energy then we need to have clean government,” said Howard Learner, executive director of the Environmental Law & Policy Center. “As we’ve seen in Illinois and Ohio, utility political corruption has distorted the legislative policymaking process and the public utility regulatory commission decisions,” inhibiting the adoption of wind, solar and efficiency. 

He cited subsidies for nuclear plants enshrined in law in both states, including through Illinois’s 2017 Future Energy Jobs Act. The Environmental Law & Policy Center is also part of the coalition supporting the proposed Clean Energy Jobs Act in Illinois, which would offer further support for the state’s nuclear plants — owned by Exelon — while also transitioning the state to 100% clean energy and instituting sweeping equity and just transition programs. Learner said that not all backers of the Clean Energy Jobs Act support further nuclear payments. Meanwhile, the proposal also includes ethics reforms and accountability provisions. 

The Take Our Power Back coalition calls for an end to “formula rates,” in which rates are automatically adjusted between general rate cases. It’s also calling for an independent audit of ComEd’s grid and integrated grid planning between ComEd and Ameren. It demands that ComEd lower bills for customers or otherwise compensate them for past high rates, and it calls for more resources and staff for the Illinois Commerce Commission “to effectively carry out its mission.” 

Abe Scarr, executive director of the Illinois Public Interest Research Group, said integrated grid planning and the independent audit are crucial for adding more clean energy in Illinois, both in terms of distributed solar and utility-scale renewables. 

“Right now, we suffer from information asymmetry,” Scarr said. “ComEd and Ameren know everything there is to know about their grids. We know only what they are willing or we can force them to tell us. For integrated grid planning to work, we need a shared baseline understanding of the status of the grid, and ideally an independent analysis, not just the utilities’. If we can do this audit first, then we don’t have to spend a bunch of time in the grid planning process fighting to get information from the utility.”

When it obtained the right to institute formula rates, ComEd argued they were needed to enable $2.6 billion of necessary spending on its services over 10 years. The coalition in a statement says, “Instead, it has already added more than $5 billion to its rate base, off of which it earns a profit.”

“They are spending gobs and gobs of money and we have essentially no idea what on,” Scarr said. “I bring this all back to clean energy because there are lots of clean energy investments that need to be made — whether on the distribution side for integration, or for things like electric vehicles and buildings, or just to build the generation. And there is a limited amount of money that is reasonable to spend at any given time to keep bills from going up too high. Formula rates give the utilities way too much unilateral control over what they spend on, and one presumes but it’s hard to know without knowing what they are actually spending money on, that we could be allocating our resources more efficiently and effectively to reach our clean energy goals.”

Along with the Take Our Power Back coalition and the Clean Jobs Coalition, which backs CEJA, the renewables industry largely backs proposed legislation called Path to 100, and a group of powerful labor unions has its own coalition — Climate Jobs Illinois — which is likely to see its own legislation introduced soon. Ameren, the utility serving downstate Illinois, backs its own bill which passed the state House public utilities committee on March 22. 

Ameren says its bill would facilitate increased utility-scale solar built by union labor, and jumpstart electric vehicle adoption, while avoiding rate increases that it says would happen under other proposed bills. Critics note that its renewable targets are much lower than the transition to 100% clean energy proposed by the Clean Energy Jobs Act and Path to 100, and worry about provisions that would let Ameren build and own its own solar and energy storage, seemingly contradicting protections against such moves under Illinois deregulation. 

Gov. J.B. Pritzker has emphasized his commitment to legislation that furthers clean energy and creates more oversight and accountability for utilities.

“Our assumption is that if there is to be energy legislation this spring, it will be a big negotiated package,” with backers of the Clean Energy Jobs Act, Path to 100 and others contributing, Scarr said. “We see the role of this coalition to have a laser focus on utility accountability and reform, and ensure any final package has meaningful policy in that regard.”

Anti-corruption measures are crucial to clean energy, Illinois coalition says is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

Community advocates have differing opinions about ComEd and its approach in Bronzeville, but there is consensus around the benefits of continuing a utility-community partnership.

On a plot adjacent to vacant lots located just south of 38th Street on Chicago’s South Side, a new mural celebrates some of the most prominent Black figures of Chicago’s history — and of the nation.

Behind that mural, a utility-scale battery storage facility represents what many see as the city’s energy future.

Both were installed by ComEd as part of the utility’s Bronzeville Microgrid pilot, along with other neighborhood amenities in a project the utility calls Community of the Future. Both established in 2018, they have each had a number of notable successes so far.

But as the combined battery storage and mural installation illustrates, community and business goals can be a challenge to bring into alignment. Nonetheless, community members working with ComEd still see the partnership as key in advancing their own vision for Bronzeville’s future.

Mural illustrates past and imagines future

Next door to Chicago’s historic South Side Community Art Center on Michigan Avenue, the Bronzeville Renaissance Mural features prominent Black luminaries — such as civil rights icon Ida B. Wells, light bulb innovator Lewis Latimer, and NASA mathematician Katharine Johnson — as well as local icons including Harold Washington, who served as Chicago’s first African American mayor, and even the South Side Community Art Center itself. The mural also features future-focused STEM-oriented illustrations (representing science, technology, engineering and math), in keeping with its incorporation into ComEd’s larger Community of the Future program.

The battery location was strategically important to ComEd. But given the location’s cultural importance, the project underwent an extensive community engagement process, according to Aleksi Paaso, ComEd’s director of distribution planning, smart grid and innovation.

“The battery energy storage system location selection process included socialization with the local alderman and constituent outreach through the alderman’s office as well as city council approval,” Paaso said. “Additional location selection factors included benefits of cost and zoning requirements, as well as strategic location research to support the larger resiliency and sustainability needs.

“Once deployed, ComEd then partnered with community stakeholders, including Gallery Guichard, Little Black Pearl, and Alderman [Pat] Dowell, creating a Renaissance Mural that depicted how technologies like this battery are part of a long history of community leadership and innovation that will help Bronzeville and the region meet the climate crisis.” 

Local artists Shawn Warren and Rahmaan “Statik” Barnes created the mural during the summer of 2020, which also featured submissions from Little Black Pearl art students.

The 40-yard-long mural celebrates the rich history of Bronzeville — a major destination during the Great Migration of African Americans from the Jim Crow South during the early 20th century — as it obscures the hardware inside. It also reflects the importance of culture in the community, according to Gallery Guichard co-owner Frances Guichard, who was quoted in a Chicago Sun-Times article shortly after the mural was dedicated.

“This project allows us to be seen as a community that still engages with art and sees it as something important. It allows our many community artists to be properly represented for generations to come,” Guichard told the Sun-Times.

This sentiment was echoed by Jeremi Bryant, a resident of Bronzeville who also serves as regional community liaison for Elevate Energy in Chicago, which is not involved with any aspect of the microgrid or Community of the Future projects.

“I know that the community liked [the mural] because it fits in with the theme of that corridor” on Michigan Avenue, Bryant said. “It is next door to the South Side arts museum, and also across the street from Margaret T. Burrows’ house who was a fan of the arts and also the founder of the DuSable Museum. So, in that area where you had this somewhat of a cultural frame, to put the mural there was a great idea. 

“There were thorough talks with the community and the art community in Bronzeville about what they wanted, what [ComEd] planned to do [with] that battery station, because they did not want it to be an eyesore … they did not want it to just be, you know, brick walls around infrastructure.” 

Not everyone is enthusiastic, however.

Bruce Montgomery, CEO of Bronzeville-based Entrepreneur Success Program and a member of the advisory council for the Community of the Future, feels the project represents a missed opportunity for the neighborhood.

“That lot in most communities probably would have ended up being invested in as more quality residential,” Montgomery said. “But now you’ve taken it up with this box car. … You’ve got big things sitting out in the middle of a vacant lot a couple of doors down from one of the most historic locations in Bronzeville. … It’s about 50 feet from the South Side Community Art Center. So, then they said, ‘Well, maybe you guys could recommend how we could fix it up so it didn’t look so weird.’” 

Engagement with the community

The Community of the Future advisory council is composed of approximately two dozen individuals and organization leaders from a broad range of organizations, conducting formal sessions quarterly, along with more frequent informal meetings, according to Paaso. And while the atmosphere between ComEd and its advisory group is largely constructive, there are areas of divergence between ComEd’s goals and those of the community, according to Montgomery, who has served on the advisory council since its inception.

“The committee at one time had bloated to a size of maybe 25 or thereabouts, but now we’re down to what I would call a committed dozen,” Montgomery said. “For those of us that are still at the table, we’re not going anywhere. We have a vision for our sustainable future, and we’re going to continue to espouse this vision with or without [ComEd]. ComEd clearly knows where I’m coming from, and I think they respectfully appreciate that.” 

Projects like the Community of the Future require extensive outreach to community stakeholders on the part of companies like ComEd to overcome potential areas of mistrust, according to Bryant.

“I do think that utility companies in general need to be very careful about who they say they’ve talked to in the community,” Bryant said. “Talking to a group that has the community name on it is not necessarily talking to, or speaking with, the community per se. And I know you can’t knock on every door and you’re never going to get an entire population’s opinion to go in your favor; however, the more transparent and the more you share and the deeper you get into the community, the better.” 

Engaging with people face-to-face as much as possible is essential, although the pandemic has made doing so less feasible, according to Yami Newell, associate director of community projects for Elevate Energy.

“I would say the way that information travels is more by word of mouth. It’s neighbor to neighbor, friend to friend, family member to family member,” Newell said. “And that requires a lot of different kinds of engagement. Sometimes it requires a lot of informal engagement. If you talk to folks on my staff, they’ll tell you how after they might attend a community meeting there, they stick around for lunch … not now, obviously” amid the pandemic.

The microgrid and Community of the Future in action

Along with the microgrid, ComEd has sponsored or announced a number of community-related activities, including off-grid and solar-powered streetlights, free Wi-Fi throughout the service area, and freestanding digital kiosks providing community-related news and energy-related information. 

Billy Davis, general manager of JitneyEV, a venture of the Bronzeville Community Development Partnership, which is working in collaboration with ComEd to develop an electric vehicle-based shared-ride service, commented on the need to engage communities of color in the green economy.

“We’re trying to demonstrate that, particularly in our community, beneficial electrification comes in many forms, not just the electrification of transportation … so that folks in Black and Brown communities, people who are ratepayers, see the benefits of energy efficiency and beneficial electrification and how it impacts on our health,” Davis said. “Our community is just becoming aware of the workforce development opportunities and green energy as an economic development platform.”

ComEd also hosted an Ideathon in 2018 and again in 2019 for Bronzeville-area high school students to design smart city and smart grid projects using STEM skills. An updated version of the Ideathon has been reimagined to accommodate the needs for social distancing, according to Liuxi (Calvin) Zhang, senior manager for distribution engineering and design for ComEd.

The virtual format of the reimagined Ideathon allows students across the state to participate, according to Paaso. ComEd had also suggested that students from the entire Chicago Public School system be allowed to compete in the initial Ideathon. However, advisory council members insisted that the competition should highlight the talents of students within the Bronzeville smart community area, according to Montgomery.

“Long story short, the interest from Bronzeville area schools was off the chain. King High School, the military high school, Phillips High School, Dyett, all the schools in the Bronzeville community had teams. Some of them had more than one team,” Montgomery said. “They all produced brilliant ideas from these young minds. They had faculty advisors and it was a phenomenal success when the ideas were presented at the Ideathon.

“It didn’t blow the community away because [we know] how smart these young kids are. … But it was a surprise [to ComEd] because their original thought was, they didn’t think there were that many STEM-oriented students and mentors in [our] community. But we proved them wrong.” 

Successes and future plans

Like many programs, the Bronzeville Community Microgrid and Community of the Future initiative have been adversely impacted by the coronavirus pandemic.  Nonetheless, each program has achieved significant successes. In April 2019, the microgrid successfully concluded a “simulated islanding test” that mimicked a number of stressors that the system might encounter, including a major weather event, an act of terrorism or a cybersecurity attack.

Also in 2019, ComEd partnered with ARIS Wind to introduce a pilot of 12 integrated solar and battery energy storage systems at Chicago Public School system facilities and the Chicago Housing Authority Dearborn Homes development in conjunction with the microgrid. The project was partially funded by a $4 million grant from the U.S. Department of Energy, with VLV Development also providing funding. The Dearborn Homes solar facility will generate 750 kilowatts to provide power to the property’s 17 buildings, including 660 residential units.

Three “smart kiosks” have been installed that connect to ComEd fiber, providing real-time weather updates, emergency alerts, transportation route tracking, pedestrian wayfinding, local business promotion and neighborhood events, and 1 GB of free high-speed Wi-Fi, Zhang said.

In total, 9,268 customers had interacted with the existing kiosks as of February 2021, with an average dwell time of 8.6 minutes. The photo booth, get around, eat and drink, events and shopping functions are the most popular. Promotions for Bronzeville-area small businesses are in the works for the kiosks, according to Paaso.

ComEd launched the DASH EV Pilot program in 2017 in collaboration with Innova EV and the Bronzeville Community Development Partnership to provide residents of a senior housing facility with low-cost rides to the grocery store, pharmacy, public transit stations and other destinations. The DASH mobility project has cut down on transportation costs while supporting the microgrid through charging infrastructure, Zhang said.

In the next phase of the microgrid, ComEd contracted with Houston-based Enchanted Rock to provide 5.5 MW in dispatchable natural gas-fired generation to support the Bronzeville Community Microgrid. The projected completion date is the first quarter of 2022, according to Paaso.

Shaping their own vision

Community stakeholders must take an ownership role in directing the program and the microgrid, in the course of promoting their own objectives, according to Paula Robinson, president of Bronzeville Community Development Partnership.

“I think the level of engagement from an advisory perspective has been very good, providing input and reacting to ComEd’s plans for the Community of the Future visions,” Robinson said. “I think the community has been challenged on how to present a community-driven strategy or invited to innovate around its own priorities. ComEd has educated, engaged and employed. I think the community has to empower itself.” 

Montgomery expressed a desire to promote community development through partnering with ComEd, rather than serving as a means for the utility to accomplish its own ends.

“I want to see Bronzeville area businesses be a part of the new green economy,” Montgomery said. “ComEd spends quite a lot of ratepayers’ money on energy efficiency programs. Not only Bronzeville area businesses, but Black suppliers in general have been on the outside looking in, in terms of playing key roles in the implementation of these programs. So, as it relates to Bronzeville and the broader Black community, I want to see more of an equitable participation in the reinvestment of ratepayer money in ways that create jobs and economic opportunity for the very communities that are served by this.

“This money doesn’t come from heaven. Everybody that has paid a bill for all of their adult lives and all of their parents’ adult life and all their grandparents’ adult life — they deserve the chance to participate in the multi-decade, multi-generation investment.” 

As an advocate for Bronzeville and its continued development, Robinson expressed a strong desire to maintain a partnership with ComEd, while shaping the collaboration to produce a mutual gain.

“We all want smart cities. But in order to have smart cities you need smart communities,” Robinson said. “ComEd is a public utility but the community is a viable business partner with several key roles as ratepayer/customer [investor], as client/developer [infrastructure], and as owner/entrepreneurs [innovator].

“The community has skin in the game, when you compare the morbidity rate of Bronzeville versus Streeterville we also have a real self-interest for clean energy. Renewable energy [and] the green economy represents huge new opportunities, but first the community has to envision itself as both stakeholders and shareholders and continue to build capacity.” 

Chicago microgrid project attempts to balance corporate, community needs is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

The public advocacy group Illinois PIRG says ComEd has dragged its feet on offering tools or programs to help customers unlock savings from smart meters.

ComEd customers have paid higher bills for energy delivery and seen few benefits from multibillion-dollar smart grid investments because of laws the utility pushed through the Illinois Legislature that gutted regulatory protections and guaranteed profits, a new report by a public advocacy group alleges. 

The report from Illinois PIRG says ComEd and its parent company Exelon saw profits skyrocket thanks to 2011 state legislation authorizing $2.6 billion in smart grid-related investments and changing how ComEd rates are set.

ComEd declined an interview request but in a statement disputed the claim that customers have not benefited from its smart meters, which it says have improved reliability and reduced response times for outages, among other benefits.

The law, passed despite then-Gov. Pat Quinn’s veto, is at the heart of a recent settlement with the federal government and wide-ranging allegations of bribery and misconduct involving the utility, lobbyists and elected officials. 

The settlement agreement states, and ComEd officials have argued, that customers were not harmed by the alleged misconduct. But Illinois PIRG’s 111-page report released Dec. 1 argues otherwise. 

It says customers were charged unnecessary amounts — that yielded massive profits for the companies — while ComEd and Exelon have done little to help customers access the savings and other benefits promised from the smart grid and smart meters, and have stalled on even allowing third parties to help customers benefit from smart meters.

ComEd did so, Illinois PIRG argues, because the customer benefits of smart meters and smart grid improvements — lower energy use and lower bills — would hurt the bottom line of Exelon, which owns the state’s six nuclear plants. This represents a conflict of interest that has persisted despite deregulation in the late 1990s meant to sever generation from distribution, Illinois PIRG argues. 

Big changes

In 2011, ComEd convinced the state legislature to pass the Energy Infrastructure Modernization Act to fund the overhaul of the utility’s grid, increasing reliability and instituting an interactive smart grid able to distribute energy more efficiently through two-way communication, “self-healing” and other attributes. The smart grid is also supposed to be more conducive to rooftop solar and other distributed generation. 

ComEd’s modernization program also involved the installation of 4.2 million advanced smart meters, theoretically allowing customers to reduce their energy use and bills, since granular data on energy use could allow them to access innovative pricing plans and change their behavior. 

The Energy Infrastructure Modernization Act fundamentally changed how ComEd recoups its costs and makes profits from ratepayers: from the typical model where all investments must be justified and funds are not recouped until after the benefits have accrued to customers, to a “formula rate” model where ComEd is essentially guaranteed profits based on their predicted investments. 

The Illinois PIRG report explains that the change shifted the burden of proof from ComEd having to prove the necessity and prudence of its planned investments to the Illinois Commerce Commission, to the commission and stakeholders having to prove after the fact that any investments were unjustified or imprudent. This essentially gutted the commission’s power and turned it into a “rubber stamp” for the utility, Illinois PIRG says. 

ComEd had argued it needed the change to provide financial stability and predictability necessary for massive investments in the smart grid and smart meters. But the report argues that ComEd continues reaping profits long after smart meters are installed and smart grid investments are made, with the regulatory changes meaning that customers don’t even see the financial benefits from the increased efficiency of the grid. 

The change to formula rates under the law “built ComEd and Exelon a profit machine entirely out of proportion to the law’s specified investments,” the report says, garnering $4.7 billion more for ComEd between 2013 and 2019 than they would have earned under the previous rate structure. 

Ratepayers meanwhile paid $1.6 billion more in delivery charges during those years than they would have under the previous system, Illinois PIRG found. 

ComEd has pointed out that customer bills overall have remained stable or dropped in that time. Illinois PIRG counters that this is because power prices as a whole have dropped; customers would have seen much greater savings without the formula rate change and “inefficient or unnecessary spending” by the utility.

Broken promises 

The report says that ComEd “promised customers a fundamental shift in how they interact with their utility: robust data at their fingertips and a market full of innovative smart meter-enabled products and services to choose from.”

But ComEd made sure the legislation committed it only to “enabling” those products and services, not ensuring their delivery, the report points out. The legislation largely left it to third-party providers to help customers access savings, and yet ComEd has stalled on making the data from its smart meters available to facilitate such arrangements. The company has invoked privacy concerns and the need to develop protocols as justification for years-long delay in the ability to implement programs using the smart meters, the report alleges. 

Meanwhile ComEd has stalled on offering its own pricing programs taking advantage of the smart meters. Time-of-use pricing, a relatively common and straightforward arrangement that charges customers less for using energy at times of low demand, won’t be available until at least 2024, with a small pilot currently underway. 

The 2011 law called for ComEd to fund outreach and education efforts to help people take advantage of smart meters, and established the utility-funded Illinois Science and Energy Innovation Foundation to work with community groups and other stakeholders. (The foundation has awarded grants to the Energy News Network for smart grid coverage). Nonetheless, most Chicagoans seem unaware of how to utilize the smart meters’ data. 

Illinois PIRG alleges that after withholding programs and benefits promised in the 2011 law, ComEd and Exelon exerted continuing political leverage by offering to implement such programs in the future. This strategy, as Illinois PIRG and others see it, helped secure $2.35 billion worth of supports for two of Exelon’s nuclear plants in the 2016 Future Energy Jobs Act.

The Energy Infrastructure Modernization Act “was carefully drafted so that ComEd could easily avoid delivering on all of its promises, and has notably failed to deliver the promised customer benefits most threatening to Exelon. Instead, ComEd withheld these promised benefits, providing leverage to win even further windfalls for itself and Exelon,” the report says. 

The fact that ComEd installed smart meters territory-wide in six rather than the promised 10 years shows it didn’t need the regulatory reforms to proceed, the report argues. It says ComEd spent more than necessary on the smart meters and other infrastructure, allowing it to inflate its rate base — the amount it recoups from customers, plus a designated profit — in order to “make money by spending money.”

Even after the smart grid upgrades have been made and the smart meters installed, ComEd has continued to increase its spending on the grid, and hence its profits, offering only vague explanations and justifications, the Illinois PIRG report says. 

Meanwhile even as smart grids are meant to facilitate the deployment of rooftop solar and other distributed generation, ComEd has pushed for policies — like an end to net metering — that make it harder for customers to install solar, the report notes. 

Examining ComEd and Exelon’s influence and broken promises in the past are especially important as Illinois debates another major energy bill, said Illinois PIRG director Abe Scarr, who authored the report along with  Jeff Orcutt of Chapman Energy Strategies.

“There was this promise with the formula rate bill, all this happy talk of a new greener future, but that didn’t really arrive through the formula rate law,” Scarr said. “It’s only through FEJA [the Future Energy Jobs Act] that some of those advances came, but they were able to use that promise again to extract further concessions — the nuke bailout. And already four years later, we’re facing another funding crisis that will require further legislative intervention” — since funding for renewable supports created by FEJA is already nearly depleted. 

ComEd and Exelon declined to answer questions or respond to points from the report, and provided a statement: 

“The bipartisan legislation that was passed – EIMA and FEJA – resulted in substantial benefits for ComEd’s customers, including reliability that has improved more than 70% since 2012 to record levels. ComEd’s energy efficiency programs, which grew significantly under the legislation, have enabled customers to save more than $5 billion on their bills since 2008.”

The statement goes on to say the 4.2 million smart meters installed by ComEd give customers more control over their energy use, enable quicker response times during outages, and provide access to money-saving programs. The average residential bill is lower than it was nearly a decade ago, the company said, and it has requested delivery rate decreases in five of the last 10 years.

Recommendations 

While indictments and subpoenas have been issued regarding alleged criminal bribery and corruption around ComEd, the Illinois PIRG report argues that “corruption” is more deeply seated in structures that are legal but harm customers and delay a shift to cleaner energy, in order to benefit Exelon and ComEd. (The Energy Infrastructure Modernization Act also applies to downstate utility Ameren, but is considered driven by and primarily benefiting ComEd). 

Illinois PIRG makes recommendations it says will restore protections for customers, oversight power for the Illinois Commerce Commission and accountability for companies. 

It argues that the Illinois state legislature should ban political contributions by investor-owned utilities and prohibit utilities from using ratepayer money to make charitable contributions, which can often be used for influence. (Shareholder money could still be used for such contributions; Exelon holds almost all of ComEd’s shares). 

“We need to be ending the practice, which is pretty unique to Illinois, where utilities get to use customers’ money to make charitable contributions — getting all the credit and public goodwill that generates,” Scarr said. “It’s  not actually charitable — they’re not giving away their money, they’re giving away our money.” 

Illinois PIRG recommends beefed-up transparency and accountability, including “making ethics rules in the deferred prosecution agreement permanent and applicable to all Illinois investor-owned utilities.” It calls for a return to traditional rate-making, rather than the formula rates. 

“We shouldn’t leave it to federal prosecutors — the Illinois General Assembly needs to take action in restoring basic oversight of utilities that we had for decades but was undone by the formula rate law,” Scarr said. “We need to be taking a look under the hood at how ComEd has spent its money over the last decade, and make sure we are not overpaying in the future and getting some money back now.”

And it says Exelon should be forced to divest from ComEd and/or from its generation subsidiary, Exelon Generation. 

Illinois PIRG demands a comprehensive audit of ComEd’s grid investments and an Integrated Grid Planning process going forward that involves the commission and stakeholders, “maximizing the use of distributed energy resources [like residential rooftop solar and energy storage] to offset expensive grid investments.”

To ensure customers and the environment can actually benefit from smart grid investments, it says time-of-use rates should be immediately instituted, and the government should investigate and facilitate the ability of third-party providers to offer energy conservation programs like Green Button Connect using smart meter data. 

“We’ve accepted ComEd and Exelon’s power as ‘just the way things are,’” the Illinois PIRG report says. “We’ve accepted Exelon’s complete control of ComEd and its obvious conflicts with ComEd’s service obligations. ComEd’s admission to a long-running criminal scheme to unduly control Illinois energy policy should create opportunities for meaningful reform unimaginable months ago. These reforms are possible, but in no way inevitable. ComEd amassed its power and influence over many years, mostly through legal means. While current problems diminish its power, that power remains formidable.”

Report: Illinois utility fails to deliver on smart meter benefits is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

Disagreement between clean energy advocates and renewable energy companies hangs on a proposal criticized in Gov. Pritzker’s new plan.

A newly announced energy policy by Illinois Gov. J.B. Pritzker could put an end to a dispute between clean energy advocates and renewable energy companies over capacity payments to the state’s power plants, a schism that has seen them backing competing clean energy bills.

Pritzker’s Aug. 20 announcement came in the wake of revelations about alleged widespread bribery and corruption by utility ComEd, and the first point of Pritzker’s eight-point plan demands ethics reform and strengthening utility company transparency. 

The governor’s plan would likely take a proposal for a state-run capacity market off the table. That concept, part of the Clean Energy Jobs Act and backed by both the Clean Jobs Coalition and ComEd’s parent company Exelon, would prioritize  zero emissions sources in capacity, essentially creating new subsidies for nuclear plants while limiting payments to fossil fuel plants. Theoretically renewables could also benefit from capacity payments, but renewable company leaders said the proposal as drafted would not help them. 

The coalition says that a fixed resource requirement, or FRR, that changes how capacity is procured in northern Illinois is key to funding increased residential and community solar and clean energy equity programs, since — they say — it would mean savings on unnecessary capacity payments that could be funneled into the state’s incentive program for solar. 

Some clean energy advocates also support Exelon’s requests for more money for its nuclear plants; they worry that if the nuclear plants close, they’ll be replaced by natural gas. 

Critics say the fixed resource requirement as drafted would not really save money, and that Exelon’s nuclear plants don’t really need more support in order to keep operating. And solar and wind companies say the proposed requirement would not help them, in part because it would only apply to PJM territory in northern Illinois, not the MISO market downstate. While renewables could technically participate in a state-run capacity market, just as they can in PJM’s capacity market, they say the proposed terms are unworkable. 

“We’d love to” participate in a capacity market, said Sarah Wochos, Midwest director of policy and business development for Borrego Solar. “But to do so you have to mitigate the risks.” 

The renewables industry backs a bill — called Path to 100 — that does not include capacity reform. It would fund renewable development by raising the cap on what ratepayers can be charged for renewable investments. The Clean Energy Jobs Act would also raise this cap, though initial versions of the bill did not include that provision. 

Pritzker’s policy calls for getting Illinois to 100% renewable energy by 2050, and both the Clean Energy Jobs Act and Path to 100 similarly call for transitioning to an all-renewable energy mix. Pritzker also emphasized the need for equity in clean energy, and both bills include equity provisions, with the Clean Energy Jobs Act’s equity proposals being more ambitious and elaborate. 

A longtime energy industry consultant who has closely followed the negotiations, and asked his name not be used so he could speak candidly, said the “biggest impediment” to the renewable industry and the Clean Jobs Coalition working together has been the coalition’s “insistence that it’s FRR or bust.” 

“If those folks get over the FRR and can sit down and talk about these other principles, there’s a deal to be made here,” he said. “They just have to walk away completely from the ComEd-Exelon construct, but they are yet to do so.” 

FRR off the table? 

Pritzker criticized the fixed resource requirement proposal, citing support Exelon’s plants already receive in the form of Zero Emissions Credits created by the Future Energy Jobs Act of 2017.

“The proposed FRR has been the centerpiece of current energy discussions, but the first step in that FRR is to annually pay each of Exelon’s nuclear plants an amount equal to three times the current taxpayer subsidy that two Exelon plants already receive without any strings attached and without Exelon showing us their math as to why this is necessary,” Pritzker’s plan says. “They are asking us to take their word for it without providing the relevant financial statements for each plant.” 

Instead of an FRR, Pritzker called for exploring market-based options that take into account the social cost of carbon, “including long-term damage from CO2.” His plan suggests a carbon tax or a cap-and-trade system similar to the Regional Greenhouse Gas Initiative in the Northeast, and says that “Illinois can lead the Midwest by pricing the dirty energy that we plan to phase out.”

Renewable industry companies lauded the governor’s announcement, including his position on the FRR. 

“The FRR issue is a big sticking point for the industry; it’s the main sticking point frankly — we align on almost every other aspect,” said Shannon Fulton, vice president of development for StraightUp Solar, which develops residential and community solar in Illinois. “It’s really hard to be able to provide any kind of certainty to the renewable energy industry in Illinois based on an FRR. To a company like ours, it’s rather nebulous and it’s not something we could necessarily wrap our arms around and understand what impact it will truly have on the market and on consumers.”

Natural Resources Defense Council Illinois clean energy advocate J.C. Kibbey, a member of the Clean Jobs Coalition, said capacity market reform remains central to the coalition’s goals, but they would consider backing legislation that does not include it. 

“We’re paying fossil fuel generators a lot of money for power we really don’t need. We need to make sure that Illinois consumers’ money is going towards a clean energy future,” Kibbey said. “The FRR is one way to accomplish that. We’ve always been looking for a solution that prioritizes climate, equitable recovery, and good jobs. The FRR seemed like the best one, but we’ve always been not ideologically wedded to one solution.” 

Parties on all sides hope that legislation can be passed in the state’s brief legislative veto session in November, or a lame duck session in January, in order to refresh funding for residential and community solar development that has been nearly depleted after a nascent solar boom. 

Freedom from influence? 

While the corruption scandal seemingly chills the political power that ComEd and Exelon might have had to help pass clean energy legislation, some clean energy advocates described it as a refreshing chance to push legislation without major corporate backing. 

“It’s always been a reluctant partnership to get this work done. … We’ve been told whenever we need to pass an energy bill that the only route to passage was working with utilities and certain energy companies,” said Jen Walling, executive director of the Illinois Environmental Council, a Clean Jobs Coalition member. “That was the reality we had to work under, but there was never any group that relished or wanted to do so. [Now] we are excited about getting the chance to pass a bill that’s not written by utilities, that has the best policy for consumers and equity.”

Walling added that “political corruption has plagued the energy sector for decades in Illinois.”

She described the existing PJM capacity market as shaped by undue influence from the fossil fuel industry on the federal level, hence the Clean Jobs Coalition’s calls for capacity market reform. But given Pritzker’s announcement, she said the coalition might back legislation without a fixed resource requirement.

“We do need to address the capacity market but we may do it in a different way,” she said. “If we’re going to achieve our clean energy future, those [nuclear] plants need to stay open. I certainly don’t want to bail them out, but I don’t want them to close either. We’re going to have to look at solutions that allow them to stay open, even if they’re not raking cash in for their shareholders. They have to stay open or they will be replaced by coal or natural gas.”

David Kolata, executive director of the Citizens Utility Board of Illinois, said that he didn’t interpret Pritzker’s plan “as excluding the FRR entirely.”

“Obviously they want to take a hard look at other options, including carbon pricing,” he said. “From CUB’s perspective, we’re looking to achieve the cheapest way to 100% clean energy the fastest. We think the FRR as we designed it did that, but we’re open to other proposals too.” 

Kolata said the group is interested in exploring carbon pricing and even a proposal made by the AARP to re-regulate Illinois, so that utilities would build generation including renewables rather than energy being purchased on the market. 

“We want to weigh the options and costs and benefits,” Kolata said. “From a consumer point of view, we have to just make sure we’re not hitting consumers with higher bills and higher rates. [Low energy prices are] a competitive advantage we’ve had as a state. We think it’s really important to build on that.” 

Equity and urgency 

Pritzker’s eight points also call for expanding consumer affordability provisions, including through greater contributions from Exelon and utilities ComEd and Ameren; electrifying Illinois’s transportation sector; supporting communities transitioning to clean energy; and enhancing energy efficiency, all with a focus on equity. 

Stakeholders will spend coming weeks in working groups mulling the specifics of renewable funding mechanisms, carbon emissions reductions and other details of possible legislation. Kibbey said he’s hopeful that a revised bill can be hashed out before the veto session, given the conversations that groups and experts have been having for more than a year already — though it won’t be easy. 

“The governor’s approach centers pricing a bit more as a way to reduce emissions,” Kibbey said. “The coalition has some questions about whether that can be done equitably. We’ll be asking those questions in the working groups.”

Pritzker’s announcement addresses this, noting: “Some advocates have concerns that a market-based approach to carbon pricing will result in more-polluting plants being able to operate longer because they will be able to pay their way out, and will allow them to continue polluting communities that are already disproportionately experiencing the impacts of climate change. However, we know that there are ways to structure a carbon pricing program to make sure that this does not happen, and we are committed to achieving that principle in any program that we design and implement.”

The energy consultant said he believes renewable companies would likely support market-based systems like cap-and-trade or a carbon tax, but there has to be a revenue stream for projects that starts right away since it’s going to take a while for a carbon stream to get up and running. “How does a cap-and-trade system provide funds for renewables?” he said. “The devil is in the details.” 

Fulton hopes that a narrower bill relying on the raised rate cap for renewables funding could be passed before a more ambitious market-based plan is worked out. 

“It is an urgent need to pass something focused like Path to 100,” to address the so-called funding cliff for solar, she said. She didn’t interpret the governor’s call for market-based structures as “something that will be implemented immediately. I read it as something that will be phased in over time.” 

She said StraightUp Solar has been “holding the line” with 80 employees in Illinois since the pandemic and the draw-down of funds — particularly for community solar — under the solar program created by the Future Energy Jobs Act.

“Our company is fortunate to do about half of our business on the residential side — the REC [renewable energy credit] funding for residential is still there, but it’s quickly depleting as well,” she said. “We’re very much worried about what impact that will have.” 

If funding disappears for Illinois’s residential solar credit program, she said, “we will have lost both of our oars” — with funding already gone for community solar credits. “And it will certainly be a challenge to continue in this industry.” 

Wochos said Pritzker’s announcement leaves her hopeful. 

“He recognizes the crisis we’re facing, and that renewables are the future,” she said. “I’m very optimistic.” 

Illinois governor’s energy plan shakes up debate over nuclear and renewables is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.