High utility rates prompt some US cities to reassess electric service
Chicago — In Chicago, even city lights are political. The city is in the midst of trying to figure out who should run local electric service. Will it be the current utility, Commonwealth Edison? Will it be a combination of companies? Or will it be Chicago itself?
Everyone - from consumer advocates to local politicians - has voiced ideas. One Chicago Tribune reader got so steamed about the buyout proposal that he wrote in the paper: ``If Chicago buys out Com Ed, I'm leaving.''
The agitation in Chicago is not isolated. Prompted by high rates, the changing nature of the utility industry, and peculiar local circumstances, several cities around the United States are taking a hard look at who should supply their power.
``It's a very lively topic in New Orleans,'' says Clinton Vince, the city's special counsel on utility matters. New Orleans is negotiating to buy out its local utility from Middle South Utilities Company and then possibly selling it to one or more private companies.
San Diego is considering a further step called municipalization. The county water authority is on the verge of studying the feasibility of a public takeover of a local gas and electric utility.
Nationwide, there are about 2,200 such publicly owned systems, mostly in small and midsized communities. That compares with the more than 200 private utilities, many of which are quite large.
``There's...wider interest in going public at the moment,'' says Paul R. Fry, deputy executive director of the American Public Power Association.
``Obviously, there will be a lot of activity on this issue,'' says Susan K. Roth, spokeswoman for Edison Electric Institute. Some 800 communities will be faced with the choice of going public over the next decade as their long-term contracts with private utilities expire.
Some cities are considering going the other way. Kansas City, Kan., is weighing the idea of selling its publicly run utility to a private concern and then using the proceeds to pay off public debt and eliminate local property taxes for the next 30 years.
But either way, a change in utility service is a difficult challenge. The Chicago situation is a good example.
The debate started several years ago, when consumer advocates began complaining about Commonwealth Edison, whose rates are among the highest in the nation. The city's 43-year contract with the company expires at the end of 1990, so the late Mayor Harold Washington began looking at alternatives. The city and other groups commissioned studies showing that a buyout of the utility would save residents money.
``Harold Washington...made it very clear he would do everything within his power to lower electric rates in Chicago,'' says Martin Cohen, administrative director of the Citizens Utility Board, a local consumer group. But with the mayor's sudden passing a year ago, the momentum seemed lost. Two city contracts to follow up on the earlier studies were not let. ``We don't really know what the city's intentions are,'' Mr. Cohen says.
In recent days, the city has begun to move on the issue. Mayor Eugene Sawyer met with the chairman of Commonwealth Edison this week. He has transferred responsibility for negotiations to an aide who has worked extensively with the business community.
``We have been painted as single-minded in our pursuit of municipalization,'' says the aide, Rob Mier. ``But we are taking a much broader perspective.''
``I feel confident in the mid-1990s we will be supplying the city of Chicago,'' says Don Petkus, vice-president for the utility.