Crain's Spotlights IPA Director Juracek, Discusses Possible Conflict of Interest

Crain's Chicago Business put a spotlight on Illinois Power Agency Director Arlene Juracek this week, focusing on her role in brokering 4.5-year power deals with her former employer Exelon and asking if a conflict of interest exists in a state employee brokering deals with a company in which she owns stock.

The piece makes for fascinating reading in the ongoing saga of Illinois energy politics, but also offers a few nuggets of information useful to the wind industry: 1) Juracek may not be long in the job, as the state's Ethics Commission is currently seeking a new director; and 2) Former IPA Director Mark Pruitt does not want the job back.

From the article:

Arlene Juracek—an Exelon shareholder whose October appointment to head the Illinois Power Agency caused an uproar—is about to solicit bids to provide electricity to utility customers statewide from mid-2013 until the end of 2017. Observers say Chicago-based Exelon may not have much competition due to the contract's duration and credit requirements that could disqualify many other suppliers.

The setup is yet another sign of the dysfunctional nature of state government. It puts a shareholder in the state's biggest power generator in position to strike a long-term deal for the same company despite conflicts of interest that were meant to be eliminated when the state wrested control of power purchasing from utilities four years ago.

Ms. Juracek, an employee of Exelon's Commonwealth Edison Co. for more than three decades until her 2007 retirement, has pledged not to sell her Exelon stock, which she declines to quantify, for at least two years.

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In an interview, she minimizes her role in the upcoming procurement, saying, “I'm the orchestra conductor making sure all the instruments are playing their role in the symphony.”

SMART GRID

The IPA director is required to complete the solicitation by Feb. 23 under the “smart grid” law enacted late last year over Gov. Pat Quinn's veto. The act permits ComEd to raise electricity delivery rates annually for the next decade to finance a $2.6-billion power-grid modernization. The idea behind the long-term power contract was to lock in today's low energy prices to blunt the impact of the law's automatic rate hikes on utility customers, whose electric bills include both the cost of power and its delivery.

After being given oversight of the IPA in November, the Illinois Executive Ethics Commission quickly mounted a search to replace Ms. Juracek. But it won't have anyone in place before March 1, commission Executive Director Chad Fornoff says.

Former IPA Director Mark Pruitt, whom Mr. Quinn replaced with Ms. Juracek after Mr. Pruitt resisted the governor's calls to hand out 20-year sales contracts to Illinois wind farm developers, has rejected entreaties to return to the job.

House Speaker Michael Madigan, a Pruitt supporter, spearheaded the change in law that yanked the IPA from the governor. But his action came too late to protect Mr. Pruitt, who is building a burgeoning consulting practice.

A spokesman for Mr. Madigan says the speaker hasn't taken a position on Ms. Juracek or her management of the procurement. He says the issues are in the hands of the executive branch. “The Legislature's role really has kind of concluded at this point,” he says.

A spokeswoman for Illinois Attorney General Lisa Madigan, who along with Mr. Madigan, her father, championed the IPA's creation and backed Mr. Pruitt, declines to comment. Ms. Madigan's office expressed concerns about Ms. Juracek's potential conflict of interest when she was appointed.

FALLING DEMAND

In Northern Illinois, where demand from utility customers is expected to shrink as suburbs strike money-saving deals with alternative suppliers on behalf of their residents, the IPA is looking to buy just 500 megawatts of power, Ms. Juracek says. That's less than 10% of ComEd's current demand and a quarter of the 2,000 megawatts some in the industry were expecting. Bidders will offer one price, which automatically will increase 2.5% annually over the course of the contract.

She's hired a consultant to produce a “benchmark” representing what a fair price would be over the four years and seven months of the contract. She says she will play only an advisory role in that calculation and that the consultant will make the final call.

Bidders won't know the price target, and any bids above it won't be accepted.

There will be no haggling after the fact, no sitting across the table from execs at her former employer. “I don't negotiate with any of the bidders,” Ms. Juracek says.

Mr. Pruitt, who until October had been the state's first and only IPA director, says the IPA never deferred to a consultant to set a price benchmark before. He points out that the consultant works for the IPA, not the other way around.