August 20, 2020

The Honorable Lori Lightfoot

Mayor
City of Chicago
121 North LaSalle Street
Chicago, Illinois 60602

Dear Mayor Lightfoot,

Thank you for your letter of July 27, 2020. I agree with you that the conduct by ComEd
that resulted in the DPA is deeply disturbing. There are no excuses, and I apologize for
it. The conduct should never have occurred, and nothing like it can ever happen again.
We recognize the importance and challenge of rebuilding your trust and the public’s
trust in ComEd.
As you noted, ComEd has a long relationship with Chicago spanning more than 100
years. We take enormous pride in serving 1.3 million Chicago customers, who make up
more than one third of our customer base, and we are equally proud of our deep
commitment to Chicago’s communities and schools. The conduct described in the DPA
does not reflect the company we want to be, nor does it reflect the commitment of our
6,000 women and men to power the lives of millions of families and businesses who
contribute to our communities.
Your letter sets two expectations of ComEd for the City to contemplate a new franchise
agreement: (1) comprehensive and meaningful ethics reform that rebuilds trust; and (2)
support for the City’s priorities concerning energy and sustainability, equitable economic
development, utility affordability, and transparency. We are committed to meeting those
expectations.
Ethics Reforms
We have already moved aggressively to implement comprehensive ethics reforms. Four
new policies, effective earlier this summer, substantially strengthen oversight, controls,
and guidance with respect to ComEd’s interactions with public officials. They were
designed with the assistance of the outside counsel who conducted our extensive
internal investigation, Jenner & Block, and incorporate best practices from a review of
numerous other corporate and governmental ethics policies. We have not found any
organization or jurisdiction with more stringent or thorough policies and controls. That is
exactly where we need and want to be, and we hope the measures we have taken will
become a model for ethics reforms at other companies in Chicago and elsewhere.
Exelon also has taken broader steps to strengthen its compliance program, including by
creating a new position of Executive Vice President for Compliance and Audit, reporting
directly to the Exelon CEO and the Audit Committee of the Board of Directors. To fill
that role, we hired David Glockner in March 2020. He has served in senior positions in

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the U.S. Attorney’s Office and the Securities and Exchange Commission and as Chief
Compliance Officer for Citadel. His assignment includes a top-to-bottom reassessment
and, as necessary, rebuild, of our compliance program to ensure that it is world-class.
Additionally, the DPA requires ComEd to provide annual reports to the U.S. Attorney’s
Office regarding our remediation efforts and the implementation of our enhanced
compliance program. We understand that these safeguards alone are not sufficient
from the City’s perspective and that additional reporting and oversight is required. We
are ready to provide necessary reports and certifications to meet the City’s needs for
complete transparency. Mr. Glockner and other staff are available immediately to meet
to discuss the appropriate approach.
Shared Policy Priorities
With respect to your expectations regarding ComEd’s support for your Administration’s
policy priorities regarding energy and sustainability, equitable economic development,
utility affordability, and transparency, we share those priorities. ComEd has made
substantial and long-term commitments in each of these areas.
ComEd supports the City’s objective to promote clean energy, cleaner air and a healthy
environment for our customers and communities by enabling and investing in renewable
energy and beneficial electrification of transportation. Last year, 92 percent of the
power we delivered to Chicago and the rest of our customers came from sources that
do not produce air pollution. Just this week, we announced that we will be electrifying 50
percent of our vehicle fleet by 2030, which has the potential to eliminate 29,000 metric
tons of greenhouse gas emissions. Through our smart grid investments, including smart
meters, last year we avoided 536,000 truck rolls accounting for more than 4,000 metric
tons of carbon emissions in addition to associated tailpipe emissions. Our energy
efficiency programs enabled ComEd customers to reduce their energy usage by an
estimated 1.7 million net MWh, saving over $167 million in annual energy costs. In
Chicago, more than 22,300 single-family homes have received a home energy
assessment offering free and discounted energy saving products, and more than 51,800
tenants of multi-unit buildings in Chicago have received free energy saving products.
With continued smart grid investments to integrate more renewable energy sources
while improving reliability, we can achieve cleaner air and healthier communities.
Like you, we believe that everyone – regardless of their background or status – has an
equal right to clean, affordable and reliable energy as well as new energy technologies.
That's why we invest to improve the reliability and quality of service for all customers in
all areas – from Albany Park to Woodlawn to Hegewisch. Last year, ComEd spent more
than $525 million on capital investments in Chicago, which included investments in
Smart Grid technology, cable replacement programs, system communication and
voltage enhancements, and New Business attachment additions.
We also share the City’s noble goal of eradicating poverty, which is why we are leaning
in with enhanced programs and outreach to help customers pay their electric bills while

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also delivering on our commitment to create jobs and build the workforce of the future
by increasing access to quality employment opportunities through education, training
and foundational infrastructure. Since 2012, ComEd has contributed $10 million per
year in shareholder dollars to provide assistance to our most vulnerable customers
through our CARE program. This has included assisting more than 75,000 customers
with $35 million in assistance in Chicago alone. ComEd is also proud to create
economic opportunity by supporting diverse suppliers that hire locally and help
communities thrive. In 2019, two out of every five dollars ComEd spent, or $738 million,
went to diversity-certified suppliers.

Our commitment to the City of Chicago goes far beyond keeping the lights on. We give
back to the communities where we live and work, in all 77 neighborhoods and all 50
wards, and not just by providing customer assistance dollars. This is our home too, and
we celebrate and invest in our city by supporting it with our time and resources. Last
year, ComEd employees volunteered 26,569 hours - the equivalent of more than three
years - and raised over $1,290,328 for 500 different non-profits. And this year, in
response to the need created by the COVID-19 pandemic, ComEd and Exelon have
been proud to contribute more than $2.5M to the Chicago Community COVID-19
Response Fund to support efforts to provide essential services during the pandemic.
And we continue to support local faith-based and community organizations in their
efforts to provide accelerated payments in targeted communities.
As much as we already do in these areas, however, we recognize the need to do more
and are prepared to discuss with your staff ways of increasing our efforts in these
important areas. To that end, we embrace your bold vision to reduce the cost of living;
boost economic development; accelerate the deployment of clean energy and
electrification; and improve health and public safety. Commissioner Reynolds and
others in your administration have made clear that ComEd must reflect these priorities
in any future franchise agreement. Rest assured that there is nothing more important in
my view than advancing these objectives, and I believe that the energy sector can make
an enormous difference.
The derecho that hit our service territory last week is just the latest example of the
climate crisis. Consider that, in the span of about 18 months, we have witnessed a polar
vortex with record breaking low temperatures, epic flooding in and around Lake
Michigan that caused massive damage to the city, and now a storm that featured
hurricane-force 100 mile per hour winds across the entirety of northern Illinois and
spawned more than a dozen tornados. The climate science tells us that these storms
will become more intense in the years to come. Whereas today Chicago sees an
average of six to eight days with temperatures above 95 degrees, in the coming
decades, we will experience an average of 44 or more days with temperatures above 95
degrees. Just as day follows night, atmospheric heat yields storm intensity, and we
know that the most vulnerable members of our society are the least able to deal with the
terrifying and resultant damage. We must act now to create a system resilient enough to

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withstand these challenges, because the inconvenient truth is that we are already too
late to stop some of the climate impacts that we will face. We must continue to reinforce
the electric grid because it is often the last line of defense for our society. A well-
designed franchise agreement will enable efficient improvements for our customers and
also ensure that we are enabling new, clean energy.
But carbon pollution and climate change are only a part of the story. Before the
pandemic, United Way and others shared analytics illustrating huge gulfs in health
equity in Chicago characterized by life expectancy gaps of 20 or more years in
neighborhoods that lie only a handful of miles apart. While there are undoubtedly many
reasons for this inequity, localized air pollution caused by power plants, fossil fuel
powered vehicles and stationary sources are a prime culprit. The correlation between
air pollution and illness in poor neighborhoods is simply indisputable, with kids in many
of our neighborhoods breathing air that just came out of a tailpipe. If this strikes you as
hyperbole, consider that Chicago often ranks as one of America’s top cities in new
respiratory illnesses, or that just last September, the Journal of American Medicine
published a study that concluded that just breathing the air in some Chicago
neighborhoods is like smoking a pack of cigarettes a day. The economic cost on our
challenged health care systems is staggering. The American Lung Association
concluded that the emissions from each gallon of gas or diesel burned causes about
$0.74 in adjacent health care costs in heavily congested areas. The toll in Illinois
measures hundreds of millions of dollars annually, and the toll on the quality of life of
families is immeasurable. Against this backdrop, it is not surprising that COVID has
ravaged low-income communities where air pollution and poor health are so intimately
linked.
The City has an aggressive electrification plan for its buses, but the cost is significant.
ComEd can partner with the City to help with the infrastructure, and our collaboration
should be reflected in any new agreement. The good news here is that unlike the
climate crisis, where so much damage has been done that it is hard to quickly effect
change and where many nations must collaborate to make a difference, local air
pollution is a problem we have the tools and technology to solve now.
Lastly, significant work needs to be done to improve support for our most vulnerable
customers. As I testified at the Council’s hearing on the DPA, the programmatic support
that exists today can be optimized, but the more pressing problem is that we as a state
do not devote enough resources to our poor families. So we can work to solve program
inefficiencies, and we are doing that now with your administration. But at the end of the
day, this conversation must involve Springfield.
There is a lot more to say about internet access, economic development, and jobs and
how ComEd can partner on these issues, but I don’t want to add to an already long
letter. Suffice to say that we share the same priorities and I commit to you ComEd’s full
and unwavering commitment to improve and power lives in Chicago.

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Smart Grid Benefits
Given the many areas of alignment, I do not want to end on a topic of disagreement.
But I would be remiss if I did not address the concern that the DPA concludes that
ComEd’s customers were somehow harmed by the investments made as part of the
Energy Infrastructure Modernization Act (EIMA), which was adopted in 2011 with strong
bipartisan support. They were not. The legislation’s significance was two-fold. It
authorized certain categories of much-needed infrastructure investment, and created a
formula rate structure (like that used by FERC for transmission ratemaking across the
country). This requires ComEd to present all of its costs for review every single year, for
rates to be trued up each year to actual expenses, and pre-determined the rate of return
on equity ComEd would receive by tying it to the yield of 30-year Treasury notes rather
than requiring that rate to be among the issues litigated in the annual rate cases
adjudicated by the ICC. All individual infrastructure investments, including those
specifically pre-authorized by EIMA and the millions in additional investments in the
system made by ComEd each year, continue to require rigorous review by the ICC
through a process including input from consumer advocacy groups, the Attorney
General, and others. Together these provisions created the economic predictability
necessary to make infrastructure investments to improve reliability and install smart
meters to improve customer service and facilitate energy efficiency.
The formula created by EIMA did not increase customer rates, and in fact has resulted
in rate decreases in five of the ten years since passage of the law, including for three
straight years now -- the last two years and in the pending request – all while ComEd
has substantially improved reliability, customer service, and energy efficiency. As a
direct result of EIMA, ComEd’s customers now benefit from the highest reliability and
lowest average electric bill of any major metropolitan area, while ComEd has one of the
lowest authorized returns on equity of any major utility. The DPA’s reference to $150
million in ComEd profits simply reflects ComEd’s authorized earnings on investments
made as a result of the legislation. These investments were badly needed, individually
reviewed and approved by the ICC, and they benefitted customers.
The test of these investments was on full display this past week. The derecho that
slammed communities across all of northern Illinois on Monday, August 10, 2020, was a
rare and highly destructive storm. It pummeled our entire 11,000-square-mile territory
with hurricane force winds, including gusts of more than 90 miles per hour. It was
equivalent to the whole ComEd region being hit by a tornado. It spun off 15 confirmed
tornadoes in the region, 13 of them in communities we serve, including the strongest
tornado in the city of Chicago since 1976, which had estimated wind speeds of 110
miles per hour. It produced nearly 4,300 lightning strokes and golf ball-sized hail in
some communities. The storm brought a sweeping wave of destruction, all at once,
causing severe and widespread damage. Despite the extensive damage, ComEd again
outperformed for customers. Of the approximately 871,000 customers who lost power,
we safely restored power to 540,000 families and businesses within a day – the fastest

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restoration of half a million customers in the company’s history. Eighty percent of
customers were restored in less than two days. This record restoration was the result of
ComEd’s preparation, strong execution, and ability to marshal resources on an
unmatched scale, in the face of competing demands for workers because of storm
activity across half the country in the last couple of weeks, and in the face of a
pandemic. But this result is also a clear illustration of not just the heroic work of
ComEd’s women and men in these past few days, but of their work over the last
decade. If not for the infrastructure and smart grid investments we have made since
2012, the derecho would have caused hundreds of thousands of more outages and
millions of more dollars in costs for families and businesses. Taking just one clear-cut
example, advanced distribution automation devices deployed on the system under
EIMA sectionalize the grid and automatically reroute power around areas impacted by
storm damage. Our analysis shows, in the City of Chicago alone, that one set of
investments avoided 60,000 customer outages that otherwise would have occurred –
meaning outages would have been more than 35% higher than we experienced. Smart
meters and other smart grid investments authorized by EIMA collectively account for
thousands more avoided outages.
None of this, of course, remotely justifies ComEd’s inappropriate efforts to influence a
public official in connection with the legislation. The law is clear that the ends do not
justify the means.
ComEd broke the public trust and we are committed to doing what it takes to rebuild
that credibility with you and with our other stakeholders, and to continue our long and
productive engagement with the City of Chicago, including through negotiation of a new
franchise agreement. We look forward to discussions about effective ways to
accomplish these goals.
Sincerely,

Joe Dominguez
CEO