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Suit charges ComEd with consumer fraud

Suit charges ComEd with consumer fraud

Bribery scheme netted utility at least $150 million, lawyers argue

By PETER HANCOCK
Capitol News Illinois
phancock@capitolnewsillinois.com

SPRINGFIELD – A class action lawsuit filed this week against utility giant Commonwealth Edison seeks to recover potentially hundreds of millions of dollars for consumers who were charged rates under legislation that the company has admitted was aided by a bribery scheme involving Illinois House Speaker Michael Madigan.

The suit, filed Monday in Cook County Circuit Court, accuses ComEd of violating the state’s Consumer Fraud and Deceptive Businesses Practices Act, which is designed to protect consumers against unfair business practices.

It comes on the heels of an announcement July 17 that ComEd had agreed to pay a $200 million fine after admitting to federal prosecutors that it doled out jobs and payments to close associates of Madigan in an effort to influence him and secure passage of legislation that benefitted the company.

Madigan has not been charged in the case and he has denied any wrongdoing.

“Even though ComEd has already paid a $200 million fine. I think it's important to keep in mind that not a penny of that is going to the ComEd ratepayers,” Adam Levitt, one of the attorneys involved in the case, said during a video news conference Tuesday. “That money is simply a fine …that will ultimately be remitted to the US government.”

ComEd serves roughly 4 million residential, commercial and industrial customers in northern Illinois.

Between 2011 and 2019, according to documents filed in federal court, ComEd engaged in a systematic practice of awarding jobs and subcontracts to Madigan’s associates with the intent of gaining the powerful House speaker’s support for legislation that the utility company wanted.

Those included the Energy Infrastructure Modernization Act of 2011, which established a formula for automatically adjusting utility rates instead of having to submit rate requests to the Illinois Commerce Commission, and the Future Energy Jobs Act of 2016, which provided its parent company Exelon with additional revenue to rescue its economically troubled nuclear power plants.

In a document known as a “deferred prosecution agreement,” ComEd admitted that the “reasonably foreseeable anticipated benefits” of those laws exceeded $150 million.

However, the Citizens Utility Board, an agency that represents consumers in rate cases before the Illinois Commerce Commission, estimates that the formula-based rate adjustments will yield about $700 million for ComEd over 10 years while the Future Energy Jobs Act could yield up to $2.35 billion over 10 years.

“This lawsuit is to determine the full extent because we all know that Commonwealth Edison did not admit to $150 million, that this goes much deeper than that,” said Stephan Blandin, another attorney in the case. “And we're going to have a full accounting from Commonwealth Edison to determine how extensive the fraud was so that the 4 million ratepayers in the state of Illinois will get their money back as a result of this bribery scheme that took place.”

Class action lawsuits are different from traditional civil actions because they involve only a handful of plaintiffs who represent an entire class of individuals who might be victims of the same offense. They are used in instances in which there are so many potential plaintiffs that it would not be feasible for each individual plaintiff to pursue legal action on their own.

In this case, three residential customers and three businesses are the named plaintiffs who represent the entire class of ComEd’s 4 million customers. They include Randall Kuhn, of Lake Forest; Robert Nieman, of Glencoe; Erica Lieschke, of Chicago; Windward Roofing & Construction Inc.; In Demand Electronic Court Reporting Inc.; and Standard Equipment Company.

Although ComEd has admitted to engaging in bribery, the plaintiffs in the lawsuit will need to show they were the victims of fraud, which is a different offense. The Consumer Fraud and Deceptive Practices Act typically involves cases such as pyramid schemes or the sale of some product or service in which the seller intentionally withholds material information.

Blandin, however, said he believes the actions of ComEd fall within the scope of the consumer protection law.

“One of the things to keep in mind is that Commonwealth Edison and Exelon (its parent company) have been given a state-authorized monopoly in the state,” he said. “They provide 70 percent of Illinois' population with electricity in exchange for a guaranteed profit. In this particular case, one of the things that we're going to be delving into are the two nuclear power plants that were underperforming that ratepayers bailed out as a result of this legislation that was influenced by the admitted bribery.”

Officials at ComEd did not immediately respond to a request for comment.

Levitt and Blandin said they do not anticipate calling Madigan for a deposition in the case, but they do plan to depose ComEd’s lobbyists and top executives.

 

Capitol News Illinois is a nonprofit, nonpartisan news service covering state government and distributed to more than 400 newspapers statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.

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