Loyola University of Chicago School of Law, JD 2022
In 2020, Commonwealth Edison Company (ComEd) reached a deferred prosecution agreement with the U.S. Attorney’s office as to a federal investigation into the utility company for bribing a high-level elected official. In the agreement, ComEd agreed to pay a fine of $200 million, enhance its compliance programs, and provide annual reports to the government as to its progress in doing so. More recently, in the fall of 2021, Governor Pritzker signed into law a comprehensive and aggressive clean energy bill referred to as the Clean Energy Jobs Act (CEJA). This Act not only sets aggressive goals for Illinois such as a transition to one hundred percent renewable energy by 2050, boosts of energy efficiency standards, and training programs for clean energy jobs, but also implements important regulatory reforms to increase accountability and transparency for utilities in the wake of the ComEd scandal.
ComEd and the bribery scandal
ComEd, the largest utility company in the state of Illinois, was charged for attempting to bribe long-standing Speaker of the Illinois House of Representatives and chairman of the Democratic Party of Illinois, Mike Madigan. In the deferred prosecution agreement ComEd entered into with the U.S. Attorney’s office in July 2020, the company admitted to arranging jobs, contracts, and payments for associates of Madigan between 2011 and 2019 in exchange for Madigan supporting and pushing legislation that was favorable to ComEd. The utility also admitted to appointing a certain board member, retaining a certain law firm, and hiring interns from Madigan’s ward at Madigan’s direction during that time. As Speaker of the House, Madigan had substantial political influence and controlled which measures were called to a vote. He used that political clout to pass legislations beneficial to ComEd, including legislation concerning the process regulating the determination of the rates ComEd charges consumers, including implementing formula rate increases in 2011. Madigan is facing twenty-two counts for racketeering and bribery, which could result to up to twenty years in prison for the eighty-year-old man. Under the deferred prosecution agreement, the one-count bribery charge against ComEd will be dropped after three years if it pays its fine and complies with its obligations under the agreement. That, however, was the beginning of overhaul of Illinois utility regulation.
Regulatory reform for utilities under CEJA
A week after the $200 million fine for ComEd was announced, Illinois State Representative Anne Williams announced her intention to draft an amendment to CEJA to reform the regulation of utilities to increase accountability and create a more consumer-friendly rate determination system. The amendment implements a new regulatory system for utilities in Illinois known as Integrated Grid Planning (IGP). Under this system, utilities will be required to file “Multi-Year Integrated Grid Plans” with the Illinois Commerce Commission (ICC), outlining past and planned grid spending, grid performance, capacity for increases in rooftop solar, benefits to low income and environmental justice communities, and potential solutions to avoid unnecessary spending. The ICC has the authority to approve, deny, or modify theses Grid Plans, and utilities are required to demonstrate that their investments are consistent with their Grid Plan.
The amendment also calls for the end of the formula rate increase system, which is a system put into place in 2011 (when the bribery scandal began) focused on guaranteeing profits for utilities and with little consumer protections as states are limited in their ability to regulate rate increases. Under the amendment, rate determination will have more consumer protections such as mandating that state regulators only approve rates which are cost-effective. The act also includes other regulatory reforms, including creating an independent monitor to ensure ethics compliance by all public utilities, prohibiting the use of customer funds to pay expenses related to federal investigations or ethics, and increasing public participation in utility performance goal setting.
Ultimately, while the bribery scandal earned ComEd and other utilities a near decade of favorable policy and eased regulation, the repercussions resulting from the Illinois Legislature’s strong response to that scandal has ended with a stronger and more consumer and environmentally friendly regulatory system.