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ComEd Offers State $500M In Exchange For Rate Hike

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A bizarre case of corporate quid pro quo came to light in Springfield late Tuesday, as Commonwealth Edison offered a sort of reverse bailout to the state of Illinois.

ComEd, the power utility, was said to offer $500 million to the state -- which is facing a massive $13 billion budget shortfall -- in exchange for a locked-in rate for four years.

The rate they're hoping to lock in, however, is significantly higher than what most customers are currently paying.

Ordinarily, a rate hike has to go through the Illinois Commerce Commission, which requires extensive documentation to prove that costs have risen enough to merit such an increase. But the bill proposed by the utility would be an end-run around that regulation, enabling an 8% jump to stay in place until June 2014, and ultimately nearly phasing the ICC out of the rate-changing process.

Consumer advocates were skeptical of the proposal.

From Crain's Chicago Business, which first obtained details of the deal:

"We have serious concerns with the bill we've seen and the speed at which it appears to be moving," said David Kolata, executive director of Chicago-based consumer advocate group Citizens Utility Board. "This is a huge regulatory change, and there's lots of money at stake for ComEd and Exelon. As it stands now, this is a very bad bill for consumers."

Crain's seems to agree with Kolata's assessment, writing, "The benefits Exelon and ComEd would get would dwarf what they're offering."

But a ComEd spokeswoman told the Sun-Times that the deal would be "mutually beneficial" to the company and the state.

In addition to helping plug Illinois' budget hole, the utility says it would spend $1 billion on "smart grid" technologies. While it didn't offer specifics, such technology could allow consumers to use appliances at off-peak hours, saving money and reducing power consumption.

Still, the idea of a corporation paying the state for special privileges and less regulation smacks of pay-to-play impropriety. And Gov. Pat Quinn was lukewarm to the idea, as the Sun-Times reports:

"I'm not going to sign onto something where I don't know what's in the bill," Quinn told reporters in Chicago. "You don't jump into the swimming pool unless there's water there. You have to make sure you're paying attention."