Illinois regulators launch probe of ComEd in wake of bribery scandal

Dive Brief:

  • Illinois regulators have opened an investigation into whether customers of Commonwealth Edison (ComEd) were charged for any costs associated with a bribery scandal the utility admitted to last year. The Exelon subsidiary agreed to pay a $200 million fine to resolve the case.
  • The Illinois Commerce Commission (ICC) voted 3-0 on Thursday to launch the probe, following a staff report that recommended looking into whether the utility stuck ratepayers for costs “not properly recoverable” and said the scheme involved an “old-fashioned patronage system” of jobs at ComEd.
  • ComEd customer rates did not include money spent on “lobbyist costs or costs of political activity,” Paul Elsberg, ComEd’s vice president of communications, said in a statement. It is not clear what disciplinary action ComEd could face, say experts, though refunds are a potential if the utility is found to have recovered costs improperly.

Dive Insight:

Illinois regulators are seeking assurance that ratepayer funds were not used to benefit former House Speaker Michael Madigan or his “various associates.”

The ICC’s Public Utilities Bureau will oversee the investigation, with no timeline to report back to the ICC, a commission spokesperson said in email.

The staff report submitted to the commission before its vote on Thursday credited ComEd with agreeing to “calculate the costs of compensation” of the various employees and contractors involved in the bribery scandal, but argued there are still sufficient grounds for an investigation.

“Notwithstanding ComEd’s cooperation … Staff believes that the pattern of conduct acknowledged by ComEd in Attachment A raises concerns whether it recovered through rates costs that were not properly recoverable under … the Public Utilities Act,” the report said.

ComEd, in turn, contends that customers were not harmed by the company’s actions.

“The government has never alleged, and the DPA does not admit, that ComEd’s customers were harmed by the conduct described in the deferred prosecution agreement,” Elsberg said.

However, David Kolata, executive director of the Citizens Utility Board in Illinois, disputed ComEd’s assertion the company actions did not harm its customers.

Kolata said he would like to see the Public Utilities Bureau take a wider view of its investigation to look beyond the question of whether the company tried to recoup costs for various patronage hires and contracts through customer rates.

ComEd customers may have wound up paying hundreds of millions more than they would have had to otherwise as a result of the company’s lobbying campaign, which helped push through the Legislature a new “formula” system for setting rates that made it much easier for ComEd to win approval from regulators for customer rate increases, he said.

Kolata said a bill filed in the Illinois Senate has called for ComEd to shell out $200 million in repayments to customers based on the higher rates that resulted from the new system. Separately, ComEd agreed with federal prosecutors to pay a $200 million fine last year, when it signed a three-year deferred prosecution agreement.

“That is one of the things that needs to be investigated,” Kolata said. “We are confident that at a minimum it is at least $200 million, and we think it’s likely more than that.”

Meanwhile, Tyson Slocum, director of Public Citizen’s energy program, argued the ICC should have launched an investigation of ComEd years ago, when the company began ramping up its lobbying activities.

“It’s better late than never … the Illinois Commerce Commission has been asleep at the switch here,” he said.

And Slocum said he is skeptical of ComEd claims that it did not charge customers for the money it spent to curry political favor.

“I am sure we will find an awful lot of ratepayer money used in an outrageous bribery scheme,” he said.

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