A referendum gorws in the 47th Ward: boosting the current against Com Ed rate hikes | Neighborhood News | Chicago Reader

News & Politics » Neighborhood News

A referendum gorws in the 47th Ward: boosting the current against Com Ed rate hikes

by

comment

By the time the press arrives, the young professionals and the senior citizens have grabbed the best seats, and the meeting has kicked into gear.

"How many of you feel that Commonwealth Edison is a greedy corporation without a heart that charges too much for electricity?" asks Josh Hoyt, convener of the night's program, a meeting of the Citizens Utility Board (CUB) for the 11th District.

A rumble of groans and giggles rolls across the audience of about 75, and roughly 30 arms rise into the air.

"Well, I think I've come to the right place," says Hoyt with a snicker. "I think I'm in the right room."

He's absolutely right about that. For Hoyt stands in the meeting room of the Sulzer Regional Library, smack dab in the heart of the 47th Ward, a community in the midst of a rather remarkable political transformation. Home turf to former Park District boss Ed Kelly, this near-northwest-side ward has been resettled by scores of political activists who have used it as a base to launch an aggressive campaign against rising electric utility rates.

Their latest salvo will appear in the form of a question on the March 15 ballot in the 47th Ward: "Should the city of Chicago actively pursue all options which would give residents and businesses cheaper electric rates, including the possibility of ending the Commonwealth Edison monopoly?" The question is linked to the debate over whether to end Edison's 40-year monopoly when the company's contract with the city expires next year.

"On the referendum, people are asked to vote yes or no," says Hoyt, who is cochair of the Coalition for Lower Electric Rates, the ad hoc organization that collected the signatures needed to put the referendum on the ballot. "It's an advisory referendum. The result will advise the city and our alderman."

Edison, of course, has a different point of view. "The referendum is a waste of taxpayer money and time," says John Hogan, Edison's director of communications. "It's the type of thing that nobody can vote no on. Who's opposed to cheaper electric rates? It's like asking whether you favor war or peace. If I lived in the ward, I'd be inclined to vote yes."

That's exactly the point. The simplicity of the referendum is its genius, as well as its potential undoing. An overwhelming yes vote may force city politicians to more aggressively negotiate a new charter with Edison. But unless the coalition members can create a momentum that spills out of their ward, city politicians will have no incentive to negotiate a hard deal.

"This referendum is like the New Hampshire primary of lower utility rates," says Jerry Jaecks, a cochair of the coalition. "If we get a big turnout here, politicians will have to listen."

"We have no illusions about politicians; we're not naive," adds Hoyt. "Politicians understand money and votes. Com Ed's got the money. We have to prove that we have the votes. We have to let the politicians understand that there's a political price for getting in bed with Com Ed."

So far, few of the state's leading politicians seem intimidated. The late Mayor Washington was perhaps the only prominent official who vigorously opposed Edison's last rate-hike proposal. Only spirited lobbying efforts led by CUB, a not-for-profit watchdog group, forced state legislators and city aldermen to amend proposals that favored Edison. Two of the state's most powerful politicians--Governor James Thompson and U.S. Representative Dan Rostenkowski--continue to advance Edison initiatives, even in the face of grass-roots opposition.

"Commonwealth Edison delivers," one Chicago alderman explains. "They can get your boys jobs as meter readers, and they can give you campaign contributions. What are the not-for-profits gonna do? They'll generate a bunch of fireworks once in a while, but they don't deliver votes."

The heated rate debates began nearly 15 years ago. In the early 1970s, Edison began an ambitious $7 billion expansion program under which three nuclear power plants were constructed. The idea, Edison officials say, was to meet a demand for electricity they thought would never stop expanding. "We made plans based on much higher [electricity demand] load growths," John Bukovsky, Edison's assistant vice president for generation planning, told Alfredo Lanier, who wrote on Com Ed in a recent issue of Chicago Enterprise.

Edison planned badly. By the mid 70s, the Arab oil embargo had led to conservation efforts; at the same time industries were abandoning Chicago for the Sunbelt. Demand for electricity plummeted, and Edison was up to its neck in construction bills--which it then attempted to pass on to its consumers in the form of higher rates.

"Rate payers don't begin paying for the plants until they start generating electricity," says Hogan. "That's what the law provides for. When they do, the plants are moved under the rate base. This is not some new departure that we came up with. It's always been done that way in this state."

CUB argued that consumers should not be burdened--ever--with rate increases brought on by cost overruns or unneeded expansion. "The fact of the matter is that any investor, whether big or little, knows there is a risk to investment," says Susan Stewart, executive director of CUB. "If management makes a stupid investment, that's the risk their investors must pay for."

Working with other organizations, as well as lawyers from the Business and Professional People for the Public Interest (BPI), CUB filed a series of lawsuits that put Edison on the defensive. "Edison has suffered a series of setbacks for a few years," says Howard Learner, a lawyer for BPI and former president of CUB's 22-member board of directors. "In October 1985, the Illinois Commerce Commission granted Edison a $495 million increase. We appealed that decision and won a reversal of the rate hike. The key point in the judge's decision was that an independent audit of construction projects was necessary so consumers would not pay for cost overruns.

"For example, if there's an increase of $100 million because Edison used poor steel in the construction of a nuke, that cost cannot pass on to the consumer. The judge said Edison has to prove that their construction costs are justified before they can pass them on with higher rates. Edison appealed, but the Supreme Court upheld. Now, they face the specter of independent audits that might show their construction projects were riddled with waste."

As reports of Edison's legal setbacks circulated in the financial community, the company responded with an ingeniously crafted proposal that promised a five-year freeze on rate hikes in exchange for a one-time hike of 10 percent. "The agreement we're announcing today is a sensible, realistic solution to a problem that has caused a sustained outcry from consumers and brought many of the participants in the process to the courtroom," Governor Thompson announced at the 1986 press conference in which the deal was unveiled.

Later, Learner and his colleague Doug Cassel unearthed evidence that revealed, among other things, that neither Thompson nor his top aides had carefully studied the plan before endorsing it; that "independent reports," intended to document why the rate plan was a good deal for consumers, had, in fact, been authored by well-paid Edison consultants; and that Thompson, Attorney General Neil Hartigan, and State's Attorney Richard Daley had been convinced to support the proposal after a series of private back-room sessions with Edison officials. All three of these politicians emerged with egg on their faces when CUB and other groups launched an aggressive campaign that exposed the deal's flaws.

"The Edison proposal was a slickly engineered public relations deal," says Cassel. "The primary criticism was that they were asking us to pay far more money than could be justified for power plants that we don't need. They wanted us to pay that money for plants that had not been independently audited for cost overruns. And they wanted to slip the plants out from under the regulatory eye of the Illinois Commerce Commission and place them under the purview of a federal regulatory commission, which has been well known for giving utilities what they want. Hartigan, Thompson, and Daley really dug a hole for themselves when they supported it."

The Illinois Commerce Commission voted against the proposal last year, ruling that Edison had not justified its need for a rate hike. The utility responded angrily with a request for a 27 percent hike, and the stage was set for the next big battle: rewriting Edison's charter with the city.

"We see this as a once-in-a-lifetime opportunity for businesses and residents to get cheaper electricity," says Hoyt. "We have a number of options. You could continue to buy your electricity from Com Ed, but on better terms. There's the possibility of setting up a purchase power authority, where the city could buy bulk electricity for its economic development needs. There's the option of the city buying Com Ed's distribution network, and then buying cheaper electricity from other companies on the open market."

At the very least, Mayor Washington proposed to spend $500,000 on a study of the city's options. But in the turmoil that followed Washington's death, Mayor Eugene Sawyer moved to cut funding for the study to $400,000.

"The move to cut the funding came right after Sawyer became mayor," recalls Alderman Edwin Eisendrath (43rd), who backs the study. "We were doing the community development budget at the time, so there was a lot of deal cutting on the floor."

Aldermanic backers of Edison, led by Edward Burke (14th), maintained that the proposed study was the first step toward a city takeover of Edison's facilities. If we can't trust the city to collect parking tickets, Burke argued, how in the world can it be entrusted with nuclear power plants?

It was an effective argument, though a misleading one, since no official proposed that the city run all of Edison's services itself. All but lost in the hullabaloo, meanwhile, was a series of back-room maneuvers in which another $100,000 was shaved from the study, and transferred to a council committee headed by Alderman Bernard Hansen (44th).

"We went on the offensive the day before the council was to vote on whether to fund the study," says Hoyt. "We released a report called "The Best Friend That Money Can Buy.' It was a list of the 42 aldermen, committeemen, and ward organizations that had received campaign contributions from Com Ed over the past three years. We suggested that citizens use it as a scorecard to see whether Edison's investment paid off.

"Then on the day of the vote, activists in the 44th Ward passed out fliers that said: 'Tired of high electric rates, tell Bernie Hansen about it.' The flier explained what Hansen had done, and how he had taken contributions from Edison. It listed his phone number, and told people to give him a call."

Not surprisingly, the aldermen backed off a bit, and voted to spend $400,000 on the study, which will be commissioned by the city's Department of Planning.

It was then that Hoyt, Jaecks, and their allies Molly Bougearel, Allin Walker, Samia Dean, Cynthia Bowman, and Jack Weinberg pushed ahead with plans for the referendum. "Edison thinks there's some kind of conspiracy here, and they're right," says Hoyt with a laugh. "We have so many utility activists moving into this area. Sue Stewart, Doug Cassel, Bob Ginsburg from the Citizens for a Better Environment--they all live in this ward."

In addition, there is a strong contingent of senior citizens, such as Jean Trudan and Olga Eugene, who have long been active in utility issues. The coalition also won the backing of 47th Ward Alderman Eugene Schulter.

"Have we always been on the same side of the issue as Schulter? Obviously not," says Hoyt, who last year came close to challenging State Representative Bruce Farley, a close ally of both Schulter and Kelly. "But if you want to turn your ideals into reality, you have to work with politicians of different stripes. I'm really glad that Schulter backs us. He's been very encouraging. He's a very astute politician who recognizes that his ward is changing and that he is going to have to deal with a diverse group of Democrats. That's an encouraging point of view. I don't want to say we forced him to take it. I only wish more politicians would reach the same conclusion."

Art accompanying story in printed newspaper (not available in this archive): photo/Kathy Richland.

Add a comment