Committee on Environmental Protection and Energy.

September 22, 2020

CITY OF CHICAGO – PRELIMINARY MUNICIPAL

UTILITY FEASIBILITY STUDY
 STUDY BACKGROUND
• NewGen developed a preliminary investigation into establishing a
municipal electric utility for the City of Chicago
̶ Should the City establish a locally controlled municipal electric utility?
• Steps:
̶ Developed a financial feasibility analysis
̶ Reviewed City’s energy-related public policy objectives
̶ Conducted analysis of estimated costs of electric delivery service compared to
the current provider, Commonwealth Edison Company (ComEd)

NEWGEN STRATEGIES AND SOLUTIONS, LLC 2

 STUDY METHODOLOGY
• Estimated asset acquisition cost of $4.9 billion
̶ Section 5 of Franchise Agreement
̶ Average between ComEd’s gross and net plant value
̶ Distribution and communication assets within the City
̶ Utilized FERC filed data and ComEd Annual Reports to City
• Estimated severance cost of $3.9 billion
̶ Reviewed / adjusted data provided by ComEd
̶ Not subject to detailed engineering assessment in Phase I Study
̶ Primary driver of Study results
• Assumed City will issue debt to be recovered in delivery rates

NEWGEN STRATEGIES AND SOLUTIONS, LLC 3

 STUDY FINDINGS
• For a City utility, the average annual electricity delivery rate would be
greater than the average ComEd rate over the Study period (2020-2039)

• The difference is primarily due to the severance costs in separating the City
electric distribution system from the ComEd system

• The City’s strategic energy-related goals and objectives could be achieved

with or without a municipally-owned utility
̶ Would likely take years to establish
̶ Alternatives strategies exist

NEWGEN STRATEGIES AND SOLUTIONS, LLC 4

 STUDY RECOMMENDATIONS
• The City should not pursue municipalization of the ComEd system at this time
̶ Higher annual average retail delivery rates for City service
̶ Many energy-related policy objectives can be achieved without acquiring the ComEd system

• If the City moves forward with municipalization, additional analyses regarding

potential severance costs is recommended

• The City should review energy-related public policy objectives to ensure

consistency with current and future policies

• The City should consider inclusion of specific public policy and energy-related
goals and objectives in negotiations with ComEd regarding possible renewal of its
Franchise Agreement

NEWGEN STRATEGIES AND SOLUTIONS, LLC 5