“Our whole goal is to keep any adjustments under the rate of inflation,” Butler said during a Jan. 10 investor presentation on Exelon’s future. “That rate of inflation … (is) around a 2% to 2.5% bandwidth, and we are consistently below that.”
The investor presentation revealed a $10.2 million capital spending budget for ComEd over four years. This is 8% more than even the highest-spending years in the smart-grid period and 20% more than the previous four years. The smart-grid law in 2011—one of ComEd’s legislative triumphs during the period it admitted to currying favor with then-House Speaker Michael Madigan by providing no-work lobbying contracts to his political allies and friends—was pitched at the time as an accelerated burst of grid investments that would subside after the program was done.
Higher capital spending can directly lead to rate hikes for utilities, as their revenues grow.
ComEd in an emailed statement clarified Butler’s comment to emphasize that the 2.5% goal is one the utility has used “historically.” “We’ll continue our careful focus on keeping customers’ bills as low as possible,”According to the utility.
It’s “highly unlikely” that rate hikes won’t exceed 2.5% annually if state regulators approve ComEd’s spending plans, says Abe Scarr, executive director of consumer advocate Illinois PIRG. In an analysis last year, when ComEd planned a smaller rise in spending, Crain’s estimated household electric bills would rise about 10%—nearly $8 a month—on average by 2024. That analysis didn’t take into account subsequent increases in wholesale energy prices that will boost bills even more if they persist.
“We’ve seen for a while that utilities kind of gin up this need for investment,”Scarr
Indeed, Exelon’s promise to investors that its earnings will rise 6% to 8% annually over the next four years depends primarily on gaining approval for $29 billion in capital investment across all its utilities, which include companies serving Philadelphia, Baltimore and Washington, D.C., in addition to ComEd in Chicago.
ComEd will be responsible for around a third of Exelon’s earnings once it is freed from Constellation, its large power-generation system, based in Baltimore.
ComEd’s ability to hike rates “is definitely going to be an important factor when you’re looking at the outcome for Exelon,”Andrew Bischof is a utilities analyst at Morningstar in Chicago.
For his part, Quiniones says he doesn’t feel pressure to deliver on his parent’s behalf. “We need to keep our bills … competitive relative to the states we compete with,”He said. ComEd also needs to do its part to achieve the goals set forth in the recently enacted Climate & Equitable Jobs Act, which mandates that fossil fuels be eliminated from Illinois’ power industry in a little over two decades,He said.
“What comes out in terms of rate-base growth and earnings growth, that to me is just an output,” he says. “I’m worried about all the input.”
That’s not exactly the view of top executives at ComEd’s parent. Joe Nigro, Chief Financial Officer at Exelon, told analysts on January 10 that “We’re still very confident in that 6% to 8% (earnings) growth rate over the period under a number of different outcomes in Illinois,”He said.
Those outcomes hinge largely on how the Illinois Commerce Commission treats ComEd’s capital spending plans. Since 2011, when ComEd convinced lawmakers to allow it to adjust rates annually using a formula, the ICC has been effectively ignored as a regulator. The commission, whose members are now perceived as more consumer-friendly that their predecessors, was established in 2023. Bruce Rauner, will once again decide which investments to allow and set ComEd’s returns.
And, unlike in the formula-rate era when ComEd could rely on Springfield to overturn unfavorable ICC decisions, it’s unlikely to enjoy the same recourse in a Legislature still stung by the bribery scandal that ended Madigan’s career last year.
How toxic has ComEd turned out to be in the state capital! 24 legislators refused $12,640 to allow the company to resume its political campaign contributions after the July 2020 bombshell admissions. State records show this.
ComEd continues to collect employee donations to its political-action committee. The PAC had more than $423,000 in cash as of 2021, which is well above its average for recent years.
“We’ve put in place significant new policies, oversight and rigorous employee training programs to make sure that the prior conduct by former executives can’t happen again and are committed to earning back the trust of our customers, communities and public officials by maintaining the highest standards of integrity and ethical behavior for our business, our leaders and every employee,”ComEd has sent an email statement.