Governor Rod Blagojevich finally started showing a little of that "New Way" of doing business last week that he has promised for so many years but so often failed to deliver.

 

Since Day One, Gov. Blagojevich has been deep in the pockets of the state's utility industry. He has supported just about every major utility initiative of the past three years, including hugely controversial proposals by phone giant SBC and electric utility Commonwealth Edison.

 

Blagojevich openly worried in 2001 that if an SBC-backed measure wasn't approved by the General Assembly the company would leave the state - completely swallowing the company's most outrageous talking point and shattering his own credibility.

 

A few months later he supported a deal that would have allowed ComEd to swallow up Illinois Power, which consumer activists and House Speaker Michael Madigan sharply criticized for containing a "secret" consumer rate increase.

 

Mostly out of public view, the governor has appointed three members of the Illinois Commerce Commission who have been more than just friendly with utility interests.

 

Commerce Commission Chairman Ed Hurley, elevated to the chairmanship by the governor, has always been a reliable vote for the utility interests. He was also recently excoriated by Illinois Attorney General Lisa Madigan for possibly violating state ethics laws by allowing a utility company to pick up the tab for a secret birthday luncheon in Chicago. Hurley repaid his share, but Madigan wasn't impressed.

 

Madigan has since launched a full-scale corruption investigation of the Commerce Commission's relationship with utilities, particularly Peoples Energy - the gas company for most of Chicagoland. Commissioner Erin O'Connell-Diaz has been criticized in print for accepting favors from Peoples.

 

O'Connell-Diaz was elevated from a Commerce Commission administrative law judge to ICC commissioner by Blagojevich shortly after she ruled in favor of Peoples by stopping an investigation into its relationship with the infamous Enron company. A different ICC judge ruled last week that Peoples owed customers more than $100 million in refunds for the alleged shenanigans with Enron.

 

The governor boasts about being a progressive populist, but his slavish deference to utility monopolies was about to be seriously undermined by Lisa Madigan's investigation.

 

The chickens were about to come home to roost with ComEd as well. The electric utility was mostly deregulated in the late 1990s, but its consumer rates were frozen for ten years. That rate freeze is set to expire in 2007, and ComEd wants to use a controversial power auction system that it admits could hike rates by 20 percent.

 

When Blagojevich realized what that could mean to his re-election campaign next year, he demanded that the ICC reject ComEd's auction plan and come up with something else, threatening to fire every commissioner if they didn't heel to his command.

 

ComEd retaliated by cutting off talks for a massive wind-generation project - a project which the governor holds near and dear to his heart.

 

So, the governor upped the ante.

 

Chairman Hurley was forced to resign on Wednesday. Numerous sources say Commissioner O'Connell-Diaz has been ordered to quit or be fired, but as of this writing she has reportedly signaled her intention to fight the governor's edict. The third pro-utility commissioner, Lula Ford, has been given a pass, probably because she is an ally of powerful Senate President Emil Jones.

 

Chairman Hurley was replaced with Marty Cohen, the longtime director of the pro-consumer Citizens Utility Board. ComEd's stock dropped over 4 percent the day Cohen's appointment was announced.

 

The governor's move against the ICC drew the ire of utilities, organizations that represent big business and the Chicago Tribune editorial page as an unprecedented assault on an "independent" body.

 

The truth is that the ICC hasn't been "independent" for years, particularly since this governor took office. The commission has been a blatant tool of the industries it's supposed to regulate. Chairman Hurley was heard by several witnesses one evening loudly threatening to eliminate the Citizens Utility Board from the face of the earth. His replacement by CUB's former director must have been a bitter pill.

 

The bottom line here is that the governor has finally fought an opponent that mattered. ComEd, SBC and Peoples are not straw men created to provide a convenient shadow-boxing enemy - the governor's usual approach to bolstering his poll numbers. Yes, he may have overstepped his bounds, but he did so to correct a grievous error he made almost three years ago when he signed on to the utilities' agendas.

 

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Rich Miller also publishes Capitol Fax, a daily political newsletter. He can be reached at capitolfax.blogspot.com.rtf (RTF /ăIC╚) (000FC2CD)