EXELON SUBSIDIARY ACKNOWLEDGES POLITICAL CORRUPTION, AGREES TO PAY $200 MILLION PENALTY
BG&E, CONSTELLATION, DELMARVA POWER & PEPCO OWNER SNARED BY FEDERAL BRIBERY INVESTIGATION
The U.S. Justice Department recently filed a one-count criminal information for bribery in U.S. District Court in Chicago charging Exelon’s Illinois subsidiary, Commonwealth Edison, “ComEd.”[i] CommEd is owned by Exelon, which in Maryland also owns BG&E, Constellation, Delmarva Power, and Pepco, as well as the Conowingo Dam.
In response to the Justice Department’s criminal charge, the electric utility agreed with its filing, agreed to cooperate with investigators and committed to paying a $200 million penalty to the government. Under a deferred prosecution agreement, if the company abides by all terms of the settlement with prosecutors, charges can be dismissed after three years.
ComEd acknowledged that it sought to influence and reward a senior legislative leader, identified as Democratic Illinois House Speaker Mike Madigan. From 2011 through 2019, the Illinois General Assembly considered bills and passed legislation that substantially impacted ComEd’s profitability.
According to the DOJ, House Speaker Madigan could determine which measures were called for a vote in the Illinois House of Representatives. Additionally, he exerted substantial influence over fellow lawmakers concerning legislation affecting ComEd. The Speaker’s power included control over laws for the regulatory process used to set electric rates.
Exelon became one of the most vocal corporate supporters of climate change cap-and-trade legislation after selling most of its coal plants to focus on power generation from its 23 nuclear reactors at its 14 power plants.[ii] Working with environmental groups, the company has actively lobbied for and benefited from Illinois state “climate change” legislation.[iii] State law give preference to power generated from its nuclear plants. According to an SEC filing, “ComEd acknowledges that the reasonably foreseeable anticipated benefits to ComEd of such legislation exceeded $150,000,000.”[iv]
In 2009 in a high-profile gesture, Exelon announced that it was leaving the U.S Chamber of Commerce because of that organization’s opposition to climate change legislation. At the time the company CEO said: “Inaction on climate change is not an option…the carbon-based free lunch is over.” Yet, to the surprise of activists who had applauded the move, public disclosures revealed that Exelon continued to make large six figure donations to the U.S Chamber.[v]
The company admitted that it arranged for jobs and vendor subcontracts for Speaker Madigan’s political allies and workers. Specifically, ComEd admitted that it funneled more than $1.3 million to consultants connected to the Speaker for little or no work.
As part of its remediation, Exelon implemented four new mandatory policies that apply to employees who interact with public officials. These policies lay out specific rules, procedures, and tracking mechanisms governing 1) interactions with public officials; 2) vetting and monitoring of lobbyists and political consultants; 3) employment referrals or requests from officials; and 4) vendor referrals or requests from public officials. The policies also prohibit subcontracting of third-party lobbyists and political consultants. While the misconduct was limited to ComEd, the new procedures apply across all Exelon subsidiaries and all other jurisdictions where the company operates, including Maryland.[vi]
Commenting on the settlement, Tyson Slocum of the advocacy group Public Citizen said: “Exelon’s agreement to pay $200 million to settle bribery allegations is a paltry sum. The company’s successful lobbying blitz to pass controversial Illinois legislation in 2016 provided massive ratepayer-funded bailouts of its inefficient nuclear power plants – and forced ratepayers to fork over $235 million a year to Exelon for ten years starting in 2017. This settlement is pennies on the dollar for what Exelon will earn off the bailouts.”[vii]
Slocum and Public Citizen had been vocal opponents of Maryland’s regulatory approval of Exelon’s 2016 purchase of PEPCO. [viii]
[i] https://www.justice.gov/usao-ndil/pr/commonwealth-edison-agrees-pay-200-million-resolve-federal-criminal-investigation; https://www.justice.gov/usao-ndil/press-release/file/1295241/download
[ii] https://www.exeloncorp.com/newsroom/Pages/pr_20090928.aspx
[iii] https://www.exeloncorp.com/newsroom/exelon-joins-group-of-supporters-backing-legislation-to-achieve-100-percent-clean-energy-in-northern-illinois#:~:text=Among%20other%20provisions%2C%20the%20legislation,the%20advancement%20of%20renewable%20energy.
[iv] https://www.sec.gov/Archives/edgar/data/22606/000110465920084325/tm2025018d1_ex10-1.htm
[v] https://www.citizen.org/wp-content/uploads/migration/case_documents/exelon_letter.pdf
[vi] https://www.exeloncorp.com/company/Documents/Exelon%20Public%20Official%20Policies.pdf
[vii] https://www.citizen.org/news/exelons-paltry-settlement-for-bribery-allegations-harms-consumers/
[viii] https://www.wusa9.com/article/news/local/former-md-public-service-official-accused-of-conflict-in-utility-merger/203292102; https://www.exeloncorp.com/newsroom/merger-close#:~:text=As%20a%20result%20of%20the,will%20receive%20%2427.25%20per%20share.
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