ComEd offers $500 million to state (IL) in return for profit guarantee [View All]

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Source: Chicago Trib

SPRINGFIELD --- ComEd is offering cash-strapped state government leaders $500 million upfront in exchange for a profit guarantee in future years centered around electrical rates.

State lawmakers greeted the idea with skepticism today amid concerns the utility was trying to take advantage of the state’s growing budget deficit to lock in profits when the future cost of electricity to consumers is expected to decline.

The proposal is a last-minute addition to a legislature looking for an easy way for free money to help avoid deep cuts to a variety of social services. Yet lawmakers, who have ruled out a politically unpalatable election-year income-tax hike, said they saw little difference in voting for an electrical rate increase for Chicago-area customers when rates should decrease because of the economy.

Edison and its parent company, Exelon, offered the plan to Gov. Pat Quinn’s office, are offering $500 million to the state and a promise to commit $1 billion over 10 years to develop a more efficient “smart grid” for electrical transmission and other projects that would create 2,000 “green” jobs lasting between 2 and 10 years. A number of sources had earlier said Edison offer reached up to $1 billion, but other sources said later that they were confused by the company's offer to also invest $1 billion in infrastructure in exchange for the $500 million to the state.

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The executive director of the Citizens Utility Board, David Kolata, said the trade off is bad for consumers.

“You’re talking about locking in higher rates than we would normally pay,” Kolata said, adding that the changes in utility rate policy overturn decades of precedent. “This is a big shift when you’re guaranteeing profit rates for a utility and making it a floor, not just a ceiling.”

Read more: http://newsblogs.chicagotribune.com/clout_st/2010/05/comed-offers-1-billion-to-state-in-return-for-profit-guarantee.html