Beyond shocking
Thursday, Feb 22, 2007 - Posted by Rich Miller
I’ve been telling subscribers lately that Ameren’s gigantic electric rate increase last month is causing political heartburn all over downstate Illinois.
This is a typical story…
After paying an average bill of $223 a month for the past two years, Huckelberry still is having a hard time believing his latest Ameren electric bill after the rate freeze was lifted was for $870 - a hike of nearly 300 percent.
Yesterday, a group of legislative Republicans held a press conference, but didn’t propose any solutions….
Convinced that Illinois is in the midst of an “electric rate crisis,” a group of Republican state lawmakers on Wednesday said Gov. Rod Blagojevich ought to schedule a summit to help consumers with their dramatically higher power bills.
Some electricity bills - especially for all-electric households - have more than doubled since a 10-year rate freeze expired at the beginning of 2007.
At a state Capitol news conference with more than a dozen fellow Republicans, Rep. Bill Black of Danville accused the Democratic governor of failing to show leadership on the electricity issue.
Black said the proposed “electric rate relief summit” should include Blagojevich, the four legislative leaders and the chairman of the Illinois Commerce Commission, which is the state’s utility regulator.
That’s the usual Springfield game. Punt the hot potato to someone else.
Meanwhile, down in Carbondale, the Southern Illinoisan has been hot and heavy on the rate hike beat, with columnist Jim Muir penning three columns in the past ten days or so about the issue. His latest takes Senate President Emil Jones to task…
A few days after the Nov. 7, 2006, election the Illinois House passed a measure to extend the rate freeze but Senate President Emil Jones refused to call the legislation for a vote. The Senate then passed some bogus legislation calling for a 42 percent rate hike scattered over three years. The legislation passed by the Senate looked like it was written by Ameren and ComEd and it was never called for a vote in the House. In the end, as we all found out when we received our electric bill this month, the General Assembly did nothing and the freeze was lifted.
As I was poring over the various campaign contributions I found it interesting that during a three-week period before Senate President Jones sat on his hands and did nothing to help Illinois residents, Ameren contributed $25,000 to “Citizens for Emil Jones” and another $10,000 to the “Illinois Senate Democrat Fund.”
Am I saying that Jones took a kickback? Certainly not. But, I am saying that those contributions combined with a do-nothing General Assembly created an appearance of impropriety. I challenge anybody, including Sen. Jones, to debate me that it didn’t. In my view this single issue has exposed Illinois politics for what it is - a land where “pay-to-play” has taken precedence over common sense, logic, decency and simply doing the right thing.
[Emphasis added]
One of the hottest spots of opposition to Ameren’s rate hikes is the St. Louis Metro East area. Ameren is beginning to respond to the crisis by hiring a longtime St. Louis TV anchor as its VP for public relations. That won’t be enough, however.
The Citizens Utility Board is doing its level best to fan the fires…
As if being hit with skyrocketing utility prices was not enough, more than 20,000 Illinois residents may also become unemployed due to electric rate hikes by Ameren and ComEd, says a study released Monday by the Citizens Utility Board.
Even municipalities are feeling a pinch…
But individual households aren’t the only ones suffering electric bill sticker shock. Illinois’ 93rd District Rep. Jil Tracy says that a number of communities in her district got big bills.
“Likewise I’ve heard from many municipalities–towns, very small towns, which have very small budgets. And they certainly did not anticipate these kinds of increases,'’ said Tracy. “I mean, some of them are looking at more than 300 percent increases for the streets lights and the like. And it’s an ongoing expense that’s vital to public safety.”
Right now, this is the biggest story in Downstate, and it’s political dynamite for all state legislators.
- Amy - Thursday, Feb 22, 07 @ 9:40 am:
someone please explain why there is such a big
difference on this issue between the House and
the Senate. Emil Jones is completely owned
by Exelon and it is working to the detriment
of citizens. Eventually this will translate
into problems for electeds, and since the House
goes all in every two years, they are completely
vulnerable. I’ve just reviewed the difference
in my bills and it’s a problem.
- Mr. Ethics - Thursday, Feb 22, 07 @ 10:02 am:
Try living without power for a day. You’ll pay anything to get it back. My Comcast bill for tv and internet always exceeds my electric bill. Not defending the power company, but we spend a lot on other over priced things and don’t complain.
- Robbie - Thursday, Feb 22, 07 @ 10:16 am:
I have not had to deal with the increase yet. Apparently Ameren messed my bill up because I paid $0 last month and only have $50 due this month. My normal monthly bill is about $120 and has been as high as $210.
- Anonymous - Thursday, Feb 22, 07 @ 10:22 am:
The GOP shoulda been way ahead of this…like last fall.
- He Makes Ryan look like a saint - Thursday, Feb 22, 07 @ 10:27 am:
Did Emil not pay attention to the George Ryan trial? Fitzgerald will be knocking on his door next. More Pay to Play.
- Fan of the Game - Thursday, Feb 22, 07 @ 10:44 am:
My electric bill increased more than 200% over the same time last year. We were told the increases would be between 30%-50%. However, that was for “regular” customers. Those of us who are “all-electric” saw the incentives to be all-electric go away, and the increases have been astronomical.
BTW, I love to read Jim Muir’s stuff in the Southern Illusion. Much of the time, he’s right on.
- Anon - Thursday, Feb 22, 07 @ 10:48 am:
Research of campaign contributions for Senator Jones from Electrical Utilities in year 2002 was a total of $93,000, Speaker of the House Madigan shows contributions of $90,000 for 2002. This is outrageous. Local businesses are beginning to close, I wonder who will pay the unemployment for all of the people who will be laid off from work. Greed is a horrible thing. Who needs a campaign war chest of over $3 million dollars, such as Senator Jones in 2002. These are taken from government election sites. When will we learn?
- Little Egypt - Thursday, Feb 22, 07 @ 11:28 am:
It’s gotta get worse than this before our yellow-bellied legislators will do something. Unfortunately we will pay high bills for several more months and then when the legislature will do something, it will be woefully inadequate to help the financial situation of their constituents. This has such a backlash effect it’s not even funny. Yes, small businesses will close, unemployment will rise. The hardware stores are raking in the money from the E-efficient light bulbs but that’s about the only ones who are seeing any profit from all of this - EXCEPT THE UTILITY COMPANIES. This state is abysmal. I’m surprised this whole subject has not surfaced at the national level. Why is Illinois not on the national news about this whole utility fiasco? And who is keeping us out of the spotlight? And for the love of Mike, when it is so well known that Emil Jones has his hand in the utility companies pocket, why don’t the voters in the Chicago area care? Why do they keep re-electing someone who cares more about his campaign fund than he does the people who elected him? Same for Madigan. Same for all of them who won’t step up to the plate and help us all out. OK, my ranting is over.
- Truthful James - Thursday, Feb 22, 07 @ 11:33 am:
When the electric utilities were permitted to divide themselves into two pieces — one purchasing and delivering electricity and regulated by each state; the second, unregulated and producing electricity and supplying electricity to their regulated Siamese twin, the Monster was born.
It always has been a polite financial fiction. Only the second has an ICC regulated rate of return against their costs — including the costs of buying energy from their brother entity or anybody else willing to transmit power to them.
The producer can then take what the market will bear. Things are complicated by what are called wheeling costs — the charge placed by the owner of transmission lines to let a second party push electricity through their wires (not that anybody could know whose electrons ae reaching the receiving distribution system.) How those wheeling costs are set is a matter for FERC. In theory, they should be actual costs, but that can be gun decked.
The Price of a share of a utility company can now be seeing as depending on the rate of return permitted by the ICC and the rate of return demanded by the marketplace on the corporation as a whole. The ICC no longer has the right to evaluate the source pricing, nor to regulate its rate of return.
When the Electric companies ten years ago offered to drop prices and freeze rate for ten years, it looked like free lunch for all concerned A political good on which people might get reelected. People always complain about utility rates, so…here is what we have done for you good people. No need to build competing plants and worry the greenies. (It takes ten years toi get a new plant through the thickets and hurdles of regulation.) No need to subsidize and develop alternative sources (hah) — we could be selling electricity from trash, from animal waste, from corn and grasses, from wind. No need for competition in the production of energy. WE will just keep on keeping on.
The voters will never notice. But now Rip Van Legislator and Snow White Consumer have been awakened, not by a kiss from a handsome prince, but by huge increased electric bills.
One would have hoped that when the ICC agreed to the freeae, their economists must have made a projection as to where rates would be at the end of the ten year period. I have seen nothing about that in the press. Perhaps Dick Kay might go back to the testimony on record.
There is no doubt people, especially in all electric houses, are hurting. So too are all the businesses too small to arrange for third party companies to deliver directly. As a small business owner, I am seeing entrepreneurs propose this to my company.
If you believe in the sanctity of contracts, the electric companies have one and the State of Illinosi must devise ways to get assistance to the people who need it or negotiate a new contract. Everybody in a Housing Authority complex, for instance, should have their electricity subsidized.
In the meantime, if you believe that there should be competition in the production of electricity, then lets get to it. That is truly the only way out of this box.
But the answer is not “Let somebody else pay.”
Now comes the day of reckoning, and all the politicians can think to do is postpone it.
- Lied to - Thursday, Feb 22, 07 @ 11:49 am:
Emil Jones has nothing to worry about. Ameren filled his pockets and ComEd rates increased by only 24%. He will not lose a single vote because of this snafu. Chicago politics again wins again! We electric customers kept the money flowing during the winter months after air conditioners were turned off. Their song; “Go all electric, we can make deals on heat pumps and you will save”, so we were told. It will be interesting to see if any elected official will really help us out of thier mess. I wouldn’t bet on it.
- anon - Thursday, Feb 22, 07 @ 12:03 pm:
My electric bill really went up a lot. I am sorry but no way am I voting for Obama as his “mentor” sticks it to us.
- Cassandra - Thursday, Feb 22, 07 @ 12:12 pm:
Emil may well be too close to the utilities but that is probably of minimal significance overall at this point, having more to do with the sleazy nature of Illinois Dem politics overall than the
utilities issue, which is far more complex. And if Illinoisians really wanted to fix pay to play, they would have done so by now.
We now see that perhaps politically inspired utility rate freezes are not such a great idea over the long term. Had prices been allowed to rise gradually, in the absence of a freeze, residents (and institutions) would have managed their budgets around these smaller increases.
While the overall outlay may actually be the same, the rate freeze may have freed up money that private and public consumers used to buy things they didn’t need, or, at least, things less important than utilitiex.
- Anonymous - Thursday, Feb 22, 07 @ 12:22 pm:
I thyink there should be some patience on this issue. Lets see what the companies financial reports look like after the first quarter of the year. If there is a huge profit increase then something needs to be done. I look at this issue from both sides, I am an Ameren customer and stockholder and I have yet to see that stock price go up a large amount! As for the folks with all electric houses I am sympathetic….just as I am sure you were sympathetic when all of us who use natural gas had our bills skyrocket a couple years ago!
- smh - Thursday, Feb 22, 07 @ 12:40 pm:
This problem started ten years ago when the legislature started the freeze which was a really stupid decision. (Wasn’t Enron a player then?) I have rural electric service and never benefited from the freeze, but with generation rates rising, I’m sure I’ll be paying more in the future too.
- Wumpus - Thursday, Feb 22, 07 @ 12:55 pm:
Emil needs a $3mil warchest to pay to help Dem candidates in the burbs.
- Little Egypt - Thursday, Feb 22, 07 @ 1:28 pm:
Anon 12:22. So we are to wait for the quarterly financial reports for the utility companies to come out before we demand something be done? This is the same song, second verse, first song being the price of gasoline, huge profits by oil companies, we wait and see their record quarterly profits, demand something be done, and Congress has yet cough about the price of gasoline. The same thing will happen with electric rates in this state. The legislators don’t care about us. We are paying their salaries, thus we are paying THEIR electric bills as well as ours. It’s only (the taxpayer’s, i.e. our) money.
Truthful James - thanks for the explanation. Too bad our legislators are not as informed as you.
- cermak_rd - Thursday, Feb 22, 07 @ 2:55 pm:
You know, I got my bill and it wasn’t that awful. I’m in ComEd’s area so maybe it’s a different situation than Amaren’s area, but still. A couple less times eating out this month and the increase is paid for.
As for those with all-electric houses. That’s a gamble. You gambled that eletric rates would remain lower than natural gas rates. For now, you’re not coming out ahead, but gas rates also will rise, so you’re not behind forever.
- Squideshi - Thursday, Feb 22, 07 @ 3:15 pm:
We don’t really need these companies to generate electricity–this is part of infrastructure, and I am willing to bet that the State of Illinois could do it much cheaper. Too bad our politicans have such a cash addition.
- cermak_rd - Thursday, Feb 22, 07 @ 3:30 pm:
Squid, now there I agree with you. I would love to see more nuclear power plants built and I would love to see the state either license a competitor to ComEd/Amaren/whoever or run it itself as a wholly owned subsidiary or lease out its management from decade to decade. I don’t see private industry rushing in to build nuke plants though they are clean and efficient, so I do see a place for the state in this.
- Team Sleep - Thursday, Feb 22, 07 @ 3:32 pm:
The normal voter in this state does not look into the future. The rate freeze is public record, which means that anyone who wanted to scope out energy options before buying or building a home could have seen that an end would come to the freeze. As natural gas prices increased, homeowners and landlords did the “smart” thing by choosing electric heating over natural gas. They paid less for years and are now incensed. Why is anyone surprised?! There comes a time to pay the piper, and that time is now. Is that harsh? Perhaps.
If anyone should be under investigation, the ICC is where it’s at. Ameren gobbled up four of their competitors, and they were allowed to pull a veritable bait-and-switch all-electric incentive. Both issues are now causing immense problems for most Ameren customers.
I say we start utilizing our 13 nuclear reactors on a larger basis.
- Arthur Andersen - Thursday, Feb 22, 07 @ 3:35 pm:
“this is part of infrastructure, and I am willing to bet that the State of Illinois could do it much cheaper.”
There’s a scary thought. The CMS Division of Electricity. The power plants could be run by Rezko’s pal and we’d get Baghdad-class reliability. Oh, and do it much cheaper-just like the motor pool and state garage.
- Anonymous - Thursday, Feb 22, 07 @ 3:53 pm:
One sided coverage of this story. Not in defense of Ameren either. Check the Il. State Board of Elections website and see how much Republicans and Republican Oraganizations received from Ameren. Both sides of the political isle are guilty of being in Amerens pocket. Jones is the most guilty, if there is such a thing. But the Republicans are duplicitous.
- Chief Illiniwek - Thursday, Feb 22, 07 @ 5:43 pm:
Jim says:
“Am I saying that Jones took a kickback? Certainly not. But, I am saying that those contributions combined with a do-nothing General Assembly created an appearance of impropriety. I challenge anybody, including Sen. Jones, to debate me that it didn’t. In my view this single issue has exposed Illinois politics for what it is - a land where “pay-to-play†has taken precedence over common sense, logic, decency and simply doing the right thing.
Amen, bro. Oh, and if you think the Exelon contributions are bad, go check how much Ariel and John Rogers ponied up to keep their business at the State Board of Investment.
- DRB - Thursday, Feb 22, 07 @ 7:09 pm:
All you people out the that voted for Democrats, you just received your first “tax increase.” Let’s face the facts, the Dems are government in Illinois and could have influenced what developed with this. I stand by my statement, this is essential a Democrat tax increase.
- NW burbs - Thursday, Feb 22, 07 @ 9:06 pm:
James, aka Pete — Next time you or another conservative run on about “free” markets and deregulation I’ll have to remember to point you back to your explanation of just what the consequences of a “free” market-style deregulation really are.
The “free” marketers profit, regular joes pay.
Welcome to Enron-o-nomics, bought and paid for by conservative deregulation principles.
(And please stop whining about how much money was contributed to Pres. Jones or Speaker Madigan. That’s the “free” market at work again — just as are Merck’s contributions to Women in Government, etc. Conservatives are constantly using whines of “but that inhibits free speech” to gripe about the relatively few campaign finance reforms in place now. It is disingenuine and rank hypocrisy to also whine about the effects of a lack of campaign finance regulations.)
- State Worker w/ MBA - Thursday, Feb 22, 07 @ 9:57 pm:
Why wait for the 1st qtr financials? Ameren made something like 650 million profit in the 4th quarter of 06. What else do you need to know.
At the supposed artificialy low rates they MADE 650 million more than they spent.
Elected officials really messed this up 10 years ago when they deregulated. Now Ameren owned power station makes the electricity and SELLS it to the distributions side of the company at a profit. Then the distribution arm sells it to me at yet another marked up price and guess what - they make money on the same KW twice. And I have no choice in who my power comes from. Under deregulation the big “theory” was that we could pick and choose who we get our power from and the competition would drive down the price. Trouble is in the last 10 years UE in St Louis bought up everyone in sight (CIPS, Illinois Power, CILCO) and no one will come here and build a power plant so there is no competition.
If Gov gets his way and passes the 1% gross receipts tax no business will ever come to Illinois.
- Sahims2 - Friday, Feb 23, 07 @ 7:12 am:
The electric rates should have never been frozen in the first place, that is what has caused this. I paid $484 on level pay for a business that I used to have open, needless to say, if that went up 200-300% as some have, that would take a major bite out of the profits of that store, making me raise prices or reduce operating expenses, i.e. layoffs, to cover it. If most of the small business owners, such as I was, did the same thing, it’s easy to see the enormous impact that would have. Inflation and unemployment.
- Disgusted - Friday, Feb 23, 07 @ 8:18 am:
No matter what side of the aisle you vote on, no matter what style of economics you profess, the fact is is that Illinois politicians are constantly on the take, give themselves pay raises while the people who run the state are backtracking economically, and people who make enough money to withstand increases in power rates, food, etc, don’t give a damn. It’s a sad world we live in here in Illinois.
- Squideshi - Friday, Feb 23, 07 @ 9:25 am:
“Squid, now there I agree with you. I would love to see more nuclear power plants built and I would love to see the state either license a competitor to ComEd/Amaren/whoever or run it itself as a wholly owned subsidiary or lease out its management from decade to decade. I don’t see private industry rushing in to build nuke plants though they are clean and efficient, so I do see a place for the state in this.”
Clean and efficient? I don’t know where you got your research, but tell me again what the half-life of the spent nuclear fuel is? What do you do with it? How do you store it? How do you keep it secure, and who pays for all of that?