Commonwealth Ed. calls buyout plans by Chicago ‘loser’

By Joelle McGinnis

A study commissioned by the City of Chicago proposing a buyout of Commonwealth Edison’s Chicago system, which includes the DeKalb area, would be a “loser” for all involved, an Edison spokesman said.

The proposal, released Wednesday by Chicago Mayor Harold Washington, was said to be just one more option for the city to study in an attempt to reduce spending costs and re-examine Chicago’s relationship with the state-regulated monopoly, Commonwealth Edison Company spokesman John Hogan said.

“The city would be remiss if it were not looking for ways to reduce spending,” he said.

The $124,000 Electric Supply Options Study, conducted by Seattle-based R. W. Beck and Associates, if implemented, would end up “costing the people outside the city more money than those within,” Hogan said.

The Chicago system’s utility rates are among the nation’s highest, ranking seventh in the nation with an average of 8.4 cents per kilowatt hour in a Citizens Utility Board survey of 1986 rates.

Edison evaluations of the Beck plan made by Howard Axelrod, Albany, N.Y., state the plan “inadvertently proves that customers would realize greater savings under Edison’s rejected Rate Freeze Alternative Proposal than under municipally owned-and-operated utility.”

The first of Beck’s two-part buyout plan of Edison would institute a mass conservation effort costing the private sector $750 million, or about $700 per customer.

This would require customers to reduce electricity purchases by 32 to 37 percent, in a system in which demand rose by nearly 4 percent in 1987 after 1986’s record 14 percent demand increase, Edison reports state.

The second part calls for Chicago industrial firms to voluntarily invest on the average $1 million each to finance the $500 million needed to support co-generation facilities.

These facilities would be used as a secondary source to supply electricity generated by steam from companies, such as baking or steel, that use high temperatures in production, Hogan said.

e said, “The Beck plan banks on Chicago firms to generate new power, and we (Edison) don’t see that happening.”

Chicago is working on other options like the Beck plan buyout to pursue after Edison’s city franchise expires on Dec. 31, 1990.

Under a June 10, 1984, deal, Chicago receives a franchise fee from Edison equal to 4 percent of the utility’s city revenue.

“They (the city) think that by throwing it out as a bargaining tool they will be cutting themselves a better deal,” Hogan said.