* I told subscribers about this early yesterday and provided them with the details. This has to rank as one of the weirder end of session gambits I’ve ever seen…
With Illinois struggling for cash, ComEd is offering half a billion bucks to lawmakers, but the trade-off could be higher electric bills for customers.
The Chicago-area utility giant offered Tuesday to give the state $500 million. That could help offset education cuts and a plethora of other funding shortfalls in a budget carrying a $13 billion deficit. And it comes as lawmakers scramble for budget Band-Aids with a scheduled May 7 adjournment rapidly approaching.
In return, the power company wants a rate increase locked in for four years by state law. […]
“You don’t jump into a swimming pool unless there’s water there,” Quinn said. “You’ve got to make sure you’re paying attention.”
The fine print…
The benefits Exelon and ComEd would get would dwarf what they’re offering.
Chief among them would be enshrining in law a minimum 10.3% return on equity for the utility and automatically increasing customers’ rates when profits fall short of that mark. […]
Under the proposed law, a rate freeze would remain in effect until June 2014. After that, the ICC would be largely removed from assessing the need for future rate hikes. And rates would likely climb since future investment in infrastructure would necessitate higher revenues to meet return targets. Such increases would not affect residential and small-business bills until after the rate freeze expires.
ComEd rates are expected to rise 8% in June, to about 12.2 cents per kilowatt-hour from 11.3 cents. ComEd wants to lock that price in for the next four years. Absent an unexpected reversal in today’s low power prices, it is significantly above what ratepayers likely would pay through much of that period.
The big downside…
The idea is a last-minute addition as lawmakers look for an easy way to get free money to help close a massive budget deficit and escape Springfield by Friday to begin their re-election campaigns. To some leading lawmakers, ComEd’s proposal is as politically unpalatable as voting for an income tax increase because it would lead to Chicago-area customers paying more for electricity.
If I was ComEd and Exelon, I might try to quietly derail the budget-making process to boost my chances. I’m not saying they’ll do it, I’m just saying.
*** UPDATE 1 *** A rival utility is getting into the act. From a press release…
BlueStar Energy Solutions, an energy solutions company based in Chicago, today announced that it is offering Illinois residential consumers the ability to switch electricity suppliers to their residential service to avoid a proposed ComEd energy tax proposal.
BlueStar Energy is offering consumers a 12-month contract at an estimated 8% discount off ComEd’s current rate. Consumers will have the choice to go green for less too. BlueStar will offer 100% Renewable American Energy at an estimated 3% discount off ComEd’s current rate. […]
BlueStar is entering into the Illinois residential marketplace with a groundbreaking new approach: offering customers not only a choice in who provides their electricity – but also a choice in the type of power they wish to use. “Traditional energy or Renewable American Energy, customers will save with us either way,” said Morgan.
*** UPDATE 2 *** Attorney General Lisa Madigan…
“It is my job to protect utility customers from excessive rates. I will not support any proposal that forces ratepayers to pay more than they should for electricity. That’s why I fought to eliminate the reverse auction that resulted in consumers overpaying for electricity in 2007. This is just another effort to lock in unjustified profits. I strongly oppose allowing ComEd to use the State’s financial crisis to try to increase their profits by asking ratepayers to pick up the tab.”