During a closed Capitol Hill committee meeting in late November 1987, Dan Rostenkowski, Chicago’s most powerful congressman, surreptitiously slipped into a federal budget bill an undebated provision that directly affected the pocketbook of everybody in his hometown.
Commonwealth Edison’s franchise to sell electricity in Chicago, last renewed in 1948, expires in little more than a year. Several knowledgeable attorneys and the Mayor’s Energy Task Force, after a year’s study, argue that the city needs to act decisively before the end of this year to give appropriate legal notice to Com Ed and preserve its best options for getting electric power at the lowest cost.
In most cases the regulation was weak. Guaranteed a profit on their “rate base,” utility owners had a stake in expanding that base by promoting electricity use and building new power plants. Insull even hawked new electric appliances at a discount to expand electricity sales. For a long time, expansion led to economies of scale and lower prices, followed in turn by more use. But by the 70s that formula no longer worked. Demand stopped growing as fast as it had been. At the same time, nuclear power plants turned out to be far, far more expensive to build than initially planned, and there arose problems of nuclear safety and waste disposal that still haven’t been resolved.
What can the city do now? To some extent it is boxed in. Com Ed has built the plants, and Governor Thompson’s appointments to the Illinois Commerce Commission, which oversees rates, have treated the company generously. (The commission did, however, reject a deeply flawed 1986 rate hike and “freeze” that would have exempted Com Ed from much regulation and all pending consumer lawsuits. This plan had the support of Thompson, current Democratic gubernatorial contender Neil Hartigan, and Richard Daley, then state’s attorney; Mayor Washington and consumer groups opposed it.) And thanks to a behind-the-scenes power play no less outrageous than the Rostenkowski affair described at the beginning of this article–this one involving Com Ed lobbyists and state House leader Michael Madigan–when the state public utility law was revised in 1985, Com Ed was able narrowly to defeat a provision exempting customers from paying for excessive reserve capacity.
Best of Chicago voting is live now. Vote for your favorites »
But the city’s hands are not hopelessly tied. First of all, the city can decide whether it wants to continue business as usual or it wants a new strategy that emphasizes efficiency and “least cost” provision of the services we all want–light, heat, cooling, transportation, industrial power. It’s the functions, not the electricity itself, that we want, and in many cases there are cheaper alternatives to using more electricity.
The “municipal acquisition” clause, originally proposed by Insull himself, reflects the early history of electric power, when private monopolies had to buck the popular trend toward municipalization. In 1947 the City Council, taking little time to consider the matter, retained the option in the new franchise but never seriously considered acquisition as an alternative to renewal. Because there was no fallback position from which to bargain, reform aldermen at the time maintained, the franchise was written largely on Com Ed’s terms to last 42 years.
Beck argued that if the city bought the transmission facilities and two coal-fired plants within city limits for $1.35 billion, and then supplemented the output of those plants with energy purchased from Com Ed as well as other, cheaper utilities, city rate-payers would save $10 to $12 billion over 20 years. For $4.9 to $6.5 billion, they said, the city could buy the above plus enough generating capacity to meet all its needs, for a saving of $15.5 to $18 billion in the same period. Or it could simply knock about $1 billion off the city government’s own electric bill (again over 20 years) by establishing a public power authority to buy electricity on a competitive market.
