Exelon: Public Subsidy for Private Enterprise

Exelon CEO Chris Crane

Don’t let the yesterday’s Crain’s headline (Rauner wants to seize utility funds for the poor to help balance budget) lead you to believe that the state government is the only one looking to pick ratepayers’ pockets.

There’s a reason that Exelon is running full-page ads in the Chicago Tribune (e.g., 1/28/2015, pg 8) proclaiming all the great things their nuclear plants do for Illinois. If electricity prices continue to fall, expect baseball and apple pie to make their way onto that list. Exelon does make electricity, of course, but what Chris Crane, Exelon’s CEO, hopes to achieve through this public relations blitzkrieg is that you’ll confuse Exelon Generation, owner of the nukes and a private enterprise, with Commonwealth Edison, its affiliate and a regulated public utility.  If he can convince Illinois that Exelon Generation is almost, but not quite, a public utility, then he’ll have a better chance of getting money from ratepayers to plug the alleged hole in the budgets of the Byron, Clinton and Quad Cities nuclear stations.

Mr. Crane’s game becomes easier to understand if you put the shoe on the other foot. If his Byron, Clinton and Quad Cities nuclear plants were going gangbusters on profits, all those profits would be upstreamed to Exelon Corp. and either paid out as dividends, spent on stock buybacks, paid out in rich officers’ salaries and bonuses or put back into the business. Mr. Crane wouldn’t need to run full page ads in the Tribune burnishing Exelon Generation’s reputation as a corporate citizen, nor would he consider Exelon Generation obligated to rebate a penny of those profits to ComEd ratepayers.

In fact, if Byron, Clinton and Quad Cities were making fat profits, that would mean electricity prices would be higher. If ratepayers dared to complain, Mr. Crane could tell them that that’s just the result of a free, competitive market in electricity, and that’s what Illinois signed on for back in 1997 with the Electric Service Customer Choice and Rate Relief Act (220 ILCS 5/16-101 et seq.). That’s capitalism, and if the public doesn’t like it, then the public be damned.

Exelon executive in easy chair, ca. 2015

But that’s not how things worked out. Electricity prices are down. When Exelon Generation loses money, in Mr. Crane’s world it’s the responsibility of the ratepayers to make up the difference. And that would include those low-income ratepayers who might otherwise have benefited from the LIHEAP funds Governor Rauner would like to apply to the state’s budget deficit.

Mr. Crane’s first tack was to blame renewable energy, and wind energy in particular, for compelling his nuke plants to take low or even negative prices. That argument didn’t hold water for very long. His next tack was to blame “flawed markets,” which was also unconvincing given that Exelon is the biggest dog in the PJM regional transmission organization, and was the principal architect of the wholesale market about which it was complaining. Mr. Crane’s current ploy is to emphasize nuclear power’s freedom from carbon emissions, and to complain that the electricity market doesn’t appreciate that.

Yes, Exelon is complaining that they’re just not appreciated. Perhaps help other than the monetary kind would be more appropriate:

Unappreciated Exelon Generation executive at right.

These days Mr. Crane’s lobbyists are oozing all over Springfield, prodigating Exelon’s cash into the pockets of quisling legislators who will enact an Exelon-drafted bill that will ensure a pipeline of dollars from ratepayer wallets to Exelon shareholders. That’s crony capitalism. Or maybe it’s “Craney capitalism.”

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Illinois Appellate Court Rules Against Smart Meter Class Action Plaintiffs

In April 2013 I brought against Commonwealth Edison (Hawkins et al. v. ComEd). The proposed class consists of all ratepayers of ComEd, and the gist of the case is that ComEd willfully violated an order of the Illinois Commerce Commission to start installing smart meters back in September 2012.

ComEd to this day attempts to justify elevating itself above its statutorily-appointed regulator by claiming that the ICC’s 2012 decision in a different docket, one dealing with its formula rate (Ill C C Dkt No 11-0721), deprived it of $100,000,000 in revenues annually. This is a complete canard. On October 23, 2012, ComEd itself pulled from the ICC record all evidence of any alleged revenue shortfall supposedly attributable to the ICC’s formula rate order. Thus, there is not one iota of evidence supporting ComEd’s claimed revenue loss.

A month or so before I filed the suit, ComEd paid roughly $192,000 in “campaign contributions” to sponsors of its bill amending the Illinois Public Utilities Act and stripping the Illinois Commerce Commission of all power to even investigate, much less penalize, ComEd for its unlawful acts. That sum is a bit more than one tenth of one percent of the $182,000,000 in actual damages that ComEd’s violation inflicted on ratepayers.

Then-Governor Quinn vetoed ComEd’s legislation. A well-paid General Assembly then overrode his veto.
A few days after I filed the action, ComEd’s lawyers wrote to me and threatened to sue me and my clients for damages and attorneys’ fees if I did not immediately withdraw it because, they claimed, ComEd’s amendments to the Illinois Public Utilities Act “eviscerated” the entire basis for the action. I wrote back, telling them that the ComEd amendment to the PUA was perhaps the most brazenly unconstitutional enactment in the history of our state.

In November 2013 the Cook County Circuit Court granted ComEd’s motion to dismiss the action on jurisdictional grounds. The court did not reach any of the constitutional claims. We filed our appeal of that decision later that month. On February 17, 2015, the appellate court affirmed the circuit court’s decision.

While the appellate court did not rule in our favor, for several reasons this is not a loss. Among these is the appellate court’s response to our argument that, because of ComEd’s amendments to the Public Utilities Act, a ruling against the plaintiffs leaves them without a forum in which to bring their claim. The appellate court stated:

It is repugnant to our understanding of due process of law and justice that a wronged party be required to proceed exclusively in a forum that lacks the authority to investigate and take action against the wrong-doing entity. This clearly allows the wrongdoer to act with impunity and makes a mockery of the established principle that there should be a remedy for every wrong….Any changes to address plaintiffs’ concerns must be made by the legislature or by our supreme court.

Appellate courts don’t usually resort to terms like “repugnant” and “mockery” to characterize an act of the legislative branch. But both ComEd and the Illinois General Assembly have set their faces against a bedrock principle of Anglo-American jurisprudence, namely, if you’ve suffered a wrong, there is always at least one tribunal that will hear your claim.

What the appellate court is saying is that its hands are tied by language the Illinois Supreme Court used in another case, Sheffler v ComEd, and it’s up to them to refine it. This is about as close as an appellate court can get to a direction to take this up the Illinois Supreme Court.

Fix bayonets. This battle’s far from over.

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