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* It wasn’t exactly a huge crowd, but a Republican-backed rally did manage to draw some very upset people to the Statehouse yesterday.
Fired up over unexpectedly high power bills, more than 60 people gathered outside Gov. Rod Blagojevich’s State Capitol office Wednesday, which three Republican senators tagged as “Bring Your Electric Bills to the Governor” day. […]
Charles Chandler of Washington said his power bill had been $87 last October. In February, it was $547.
“That is ridiculous,” said Chandler, who was one of several central Illinois residents at the demonstration.
Ron and Rita Willeford of East Peoria also traveled to Springfield for the peaceful protest. The Willefords’ most recent power bill for their 1,800-square-foot retirement home totaled $592, or $200 more than the previous month, Rita Willeford said.
* A southern Illinois man has come up with a different sort of protest…
A southern Illinois man who’s fed up with higher Ameren electricity rates has come up with a way to pay his bill and show his displeasure.
Robert Hancock of Carterville says his monthly power bill jumped nearly 200 percent — $526.62.
So he’s going to send Ameren 52,662 pennies.
Hancock says he’s worked things out with a local bank to get the coins and with the post office to mail the money.
* Senate President Emil Jones said yesterday that a rate freeze is not a solution…
Senate President Emil Jones said Wednesday that he hasn’t recently talked to the governor about the electric rate issue. But he didn’t budge in opposing a new rate freeze.
“A freeze only delays the inevitable,†the Chicago Democrat said. […]
And Jones, who can control legislative priorities, said the issue should be left to the Illinois Commerce Commission, whose members opened an investigation last week.
“The Legislature really wasn’t supposed to be involved in this,†Jones said. “Once the Legislature gets involved, then you have nothing but politics involved.â€
* But one of Jones’ committees moved a temporary freeze to the Senate floor, mostly as a bargaining chip with the utilities and the House…
Following up on the Illinois House’s approval a day earlier of a three-year electricity rate freeze, a Senate committee took action Wednesday morning on a six-month freeze for Ameren customers.
The Environment and Energy Committee unanimously sent to the full Senate a bill that would offer temporary rate relief to Ameren consumers who have been hit hardest since electricity rates were deregulated in January after nine years of frozen rates.
Committee chairman Sen. James Clayborne, D-Belleville, said the bill is a way to ease the burden on businesses and residents while the state negotiates a more permanent solution.
The bill contains a provision that would extend the freeze past six months if no compromise is reached in the Legislature and no competition develops in the market.
* And Jim Monk of the Illinois Energy Association takes umbrage today with a recent State Journal-Register editorial…
The “reverse auction†was deemed by the commission and most stakeholders to provide the best opportunity to achieve the lowest price for reliable power for those nonshopping customers. Rather than being a tool to “gouge†customers as stated by your editorial, in reality it was a tool to try to provide as many of the benefits of the competitive power market as possible for the so-called “default†customers.
The reverse auction was rigged against consumers. Period.
posted by Rich Miller
Thursday, Mar 8, 07 @ 8:43 am
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Previous Post: Morning Shorts
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Where is the governor?
He has plainly said he supports a freeze. Along with Madigan’s support, that would make two out of three of the Democratic leaders supporting such an action. Even little Pat Quinn has supported it.
So, after all that talk, what has happened?
Nothing!
Actions speak louder than words, don’t they? If Mr. Blagojevich wants to cultivate any warm and fuzzy feelings with the public right now in order to gain acceptance of the Largest Tax Increase In History, then why can’t he DO WHAT HE SAYS?
It is his ICC, his governorship, his words - somehow this adds up to NOTHING?
Comment by VanillaMan Thursday, Mar 8, 07 @ 8:59 am
It just seems the dominoes keep falling to indicate the Republicans will take over completely in a few years.
Comment by Tony Thursday, Mar 8, 07 @ 9:09 am
This is an issue that won’t go away in the minds of the voters. Every month, they will get another bill from Ameren and it will be like a fresh poke in the eye.
The repercussions of this issue are far worse than a tax increase, for example. Tax increases tend to be subtle, like a couple dollars less on your paycheck or a couple dollars more at the grocery store. Even property tax hikes only come once a year. Electric bills come back month after month, and people have to physically write a check to pay for it. This is the mother of all pocket book issues.
There will be hell to pay in the next election.
Comment by Old Shepherd Thursday, Mar 8, 07 @ 9:11 am
Utility bills are indeed the most politically volatile. Monthly reminders of an unavoidable direct cost. Property taxes are hidden for the most part in the mortgagee’s escrow acount with increases perhaps in the PITI once a year.
Those municipalities with large sales tax collections might find it feasible to offer utility rebates,
Comment by Truthful James Thursday, Mar 8, 07 @ 9:20 am
So Emil Jones thinks we should put our trust in that totally-owned subsidiary of the utilities, the Illinois Commerce Commission. Excuse me Senator, but I think the folks with pitchforks and torches may be headed your way.
Comment by fedup dem Thursday, Mar 8, 07 @ 9:27 am
Finally… as I have been saying for years. Somebody understands that the reverse auction is / was a sham the GA bought into.
Comment by Whizbang Thursday, Mar 8, 07 @ 10:27 am
1. Let Ameren or any other power company go broke.
2. Have the State of Illinois buy the power company.
3. Create a state agency like the TVA to run the company.
4. The University of Illinois could manage the company to benefit the citizens of the state and the Civil Engeineering students and Political Science departments would have great built in labs.
5. Name this program, “Power to the Chief”.
Comment by Ali Bin Haddin Thursday, Mar 8, 07 @ 10:35 am
Whizbang, it was the ICC, not the GA, which devised and imposed the reverse auction.
Comment by Rich Miller Thursday, Mar 8, 07 @ 10:36 am
A rate freeze really isn’t the answer. Emil’s right there. It only delays the inevitable. Even with the rate increases, I suspect Amaren customers are paying the same or less per Kwh than ComEd customers and you don’t hear nearly as much yelling from the ComEd crowd.
Now, if Amaren continued offering customers its all electric rate plan after it knew it would discontinue it, without full disclosure, then that needs to be handled in the legal arena.
Comment by cermak_rd Thursday, Mar 8, 07 @ 11:12 am
“The reverse auction was rigged against consumers. Period. ” Rich, you must be one of those few people Speaker Madigan was alluding to who knows exactly how the electrity market works in this state. Why didn’t you testify in front of the Committee of the Whole?
Comment by Kubrick Thursday, Mar 8, 07 @ 1:10 pm
Rich: You are correct. I was wrong. But would you agree that the results of the reverse auction are closer to the price of a peaking generator than that of the average of the total generation portfolio? As you say… coinkinkydink?
Comment by Whizbang Thursday, Mar 8, 07 @ 1:20 pm
I think this Southern Illinois man pays too much attention to Pat Quinn. Come on Pat, this sounds like an idea you can get behind…. Send Pennies to Ameren!
Comment by Frank Thursday, Mar 8, 07 @ 1:26 pm
It doesn’t sound like Emil Jones is interested in any Democrats getting elected in downstate next year. This entire debate is revealing how clueless some Chicago leaders are about downstate and why the Democratic Party needs to start promoting downstate leaders again.
Does anyone really believe there’s no politics involved in the ICC, as Jones suggests? What a joke.
Comment by Sango Dem Thursday, Mar 8, 07 @ 1:37 pm
It’s a lot like printers connected to computers. Soon Ameren will simply give you a house but you have to buy your utilities from them.
Comment by A Citizen Thursday, Mar 8, 07 @ 2:31 pm
I don’t know the details of the Illinois reverse auction but if it’s anything like the california spot market in the 2000-2001 debacle (created by a republican governor but exploded on the watch of a democratic one… sound familiar?) it’s explicitly designed to pay generator companies as much as possible and it is very much anti-free-market. If you bid to sell at $x amt per Kwh for 95% of the power needs of the state, why should you get paid what the marginal 5% bids? Oh, because your lobbyists wrote the bill.
Comment by dbt Thursday, Mar 8, 07 @ 6:02 pm
Here, from Wikipedia, is a description of what a Reverse Auction is.
Reverse auction is a tool used by many purchasing and supply management organizations for spend management, as part of strategic sourcing and overall supply management activities.
In a typical auction, the seller puts an item up for sale. Multiple buyers bid for the item and depending on the nature of the auction (English or Dutch), and one or more of the highest bidders buy the goods at a price determined at the conclusion of the bidding.
In a reverse auction, a buyer contracts with a market maker to help make the necessary preparations to conduct the reverse auction. This includes: finding new suppliers, training new and incumbent suppliers, organizing the auction, managing the auction event, and providing auction data to buyers to facilitate decision making.
The market maker, on behalf of the buyer, issues a request for quotation (RFQ) to purchase a particular item or group of items (called a “lot”). At the designated day and time, several suppliers, typically 5-20, log on to the auction site and will input several quotes over a 30-90 minute period. These quotes reflect the prices at which they are willing to supply the requested good or service.
Quoting performed in real-time via the Internet results in dynamic bidding. This helps achieve rapid downward price pressure that is not normally attainable using traditional static 3-quote paper-based bidding processes.
The prices that buyers obtain in the reverse auction reflect the narrow market which it created at the moment in time when the auction is held. Thus, it is possible that better value - i.e. lower prices, as well as better quality, delivery performance, technical capabilities, etc. - could be obtained from suppliers not engaged in the bidding or by other means such as collaborative cost management and joint process improvement.
The buyer may award contracts to the supplier who bid the lowest price. Or, a buyer could award contracts to suppliers who bid higher prices depending upon the buyer’s specific needs with regards to quality, lead-time, capacity, or other value-adding capabilities. However, buyers frequently award contracts to incumbent (i.e. current) suppliers, even if prices are higher than the lowest bids, because the switching costs to move to a new supplier are higher then the potential savings that can be realize with the new supplier. This outcome, while very attractive to buyers, is often strongly criticized by both new and incumbent suppliers. Due to this the use of Optimization which includes all business constrains and feed back to the suppliers on this is becoming more populair nowadays.
Reverse auctions are used to fill both large and small value contracts for public and private commercial organizations. In addition to items traditionally thought of as commodities, reverse auctions are also used to source buyer-designed goods and services, and has even been used to source reverse auction providers. The first time this occurred was in August of 2001, by America West Airlines (now US Airways) using FreeMarkets software.
The majority of purchasing spend subject to reverse auctions over the years has been in the category of buyer-designed goods, followed by services, and then commodity items. Today, an average of 5% of total corporate spend is sourced using reverse auctions. This figure was higher in past years, indicating the goods and services to which reverse auctions can be successfully applied is limited [1].
———-
The devil is in the details. Rich may be right about it being rigged. The ICC may have been unable to judge what would appear to have been a series of auctions on the spot and forward market and even a term contract. At any point in time, whichever market is used there is a possibility of gundecking it.
If it was a single supplier (the non regulated sub of Escelon providing the only bid) then the possibility for serious problems exist. Some independent body needs to go over the requests for bids over a considerable period of time to determine if it was rigged to maximimize the profit to the unregulated sub — thus creating the higher rates.
The process needed to have been vetted by the ICC
Comment by Truthful James Thursday, Mar 8, 07 @ 6:28 pm
Last week the state of Virginia did away with DEREGULATION!!!!!!! It does not work when GREED is running the show. You won’t see the Missouri Legislators do what our no good lawmakers here in Illinois have done to us. HOW CAN WE IMPEACH ALL OF THEM OR THROW THEM OUT OF OFFICE? Who do they think they are working for? Ameren will not go broke, they will just have to cut some Dividends, perks and some pay checks. They have been making millions and will continue to make millions. I AM A VOTER AND I AM VERY, VERY ANGRY. I didn’t know that Emil Jones was Governor, he should be the first to be thown out.
Comment by Lied to Thursday, Mar 8, 07 @ 8:56 pm
We’re watching Sen. Jones! Start putting the people first, not your buddies at ComEd.
Comment by fedup downstate dem Thursday, Mar 8, 07 @ 9:02 pm
“The reverse auction was rigged against consumers. Period.”
Nice to know that you’re keeping an open mind on the issue. The media’s ignorance on this issue is nearly as staggering as that of the legislators’ themselves.
You seem to think that the money to buy the coal, natural gas or nuclear fuel that makes the power, pays the wages of the workers, pays the taxes (yes - corporations actually do pay taxes despite your claims to the contrary Rich) to the government, buys the upgrades and improvements and funds the environmental controls at the plants is a bottomless kettle of gold. Just in the past few years the cost of coal has nearly doubled to speak nothing of transportation costs, regulatory costs, etc. Power is a commodity and like any other product it is subject to a variety of factors that increase its cost to the consumer. Perhaps if the electric companies would just send in 100% of their gross receipts you would be satisified? Shall they make the check out to cash? Perhaps the Rod Blowhardovich for President 2012 campaign fund????
You dont even seem to realize that the electric companies purchase power from other (unafilliated) companies that produce the power and then distribute it to the consumer market. Power distributors are locked into agreements with power producers and these are legally binding contracts. If the power distributors can’t meet their agreements than the producers sell to someone else at market rate. Carp all you want about corporate earnings…that is a red herring and nothing but an example of class warfare and you know it. The only issue is if revenues exceed or fall short of costs. Businesses are not charitable organizations nor are they in business to lose money….get over it.
No one wants to pay higher fees for anything…period. The problem is that the cost of conducting business, be it in the power industry or otherwise, is ever increasing and the money has to come from somewhere. Unlike government, business cannot trot out irresponsible claptrap like the GRT on a whim just to make up for a shortfall in cash due to negligence, mismanagement or outright stupidity in the way they handle their finances. Businesses are responsible to their shareholders. I suggest to you that the number of people that would willing take a 10 year (or 13 year) freeze in their salary is precisely the same number as those in favor of rate hikes….ZERO.
Comment by Not Impressed Thursday, Mar 8, 07 @ 9:44 pm
The voters who are angry about the recent increases in electric rates by Ameren and Com Ed should be angry at the General Assembly that passed the “deregulation” bill in 1997 and Governor Edgar who signed the legislation.
Interesting to read the Senate debates on the dereg bill. The bi-partisan consensus was that this was a wonderful bill that was to provide great benefits to the public. Senator Farley called it a “tax break for working families.” Only two members of the Senate voted against what became P.A. 90-561 - one of those was Denny Jacobs who stated “those of us who vote no on this bill will vindicated in the future.” It looks like Denny was correct.
Rich your comment that the “reverse auction was rigged against the consumers” is a bit misleading in that it implies that somehow “the fix was in” and the ICC was a party that action. I would agree that the process of determining the post-freeze rate structure was established so that in the absence of true competition, the auction was bound to result in rate increases. But, I don’t think you can blame that on either the ICC staff or the individual commissioners. They had a flawed piece of legislation from which to work. That flawed piece of legislation allowed for limited options. I’m not sure what were the alternatives, if any, to the reverse auction.
It’s easy to engage in demagogery at this point and blame the current mess on the ICC and their staff. Pat Quinn has made a career of that sort of thing, but I expect better from you.
Rather than demand a new rate freeze or rail against the “evil” power companies - who are certainly far from blameless. Someone needs to step up and ask the more fundamental question of whether it is possible to “unbreak the egg” of deregulation.
The old system system of regulation of the power companies worked. But, I’m not sure it is possible to re-regulate at this point. Where does that leave us? Who knows, but in the interim it’s great theater.
Comment by Just the facts Thursday, Mar 8, 07 @ 9:58 pm
Government is rigged against consumers. Period.
Comment by ids Thursday, Mar 8, 07 @ 10:02 pm
Just the Facts:
I agree with most of your points but I am not certain that you can effectively regulate the power industry without regulating the suppliers, the transportation companies and all of the factors that contribute to the cost of the power. This has a whiff of the ‘wage and price controls’ of the 70s and I don’t think that this is the best idea. To regulate just the power distributors places them in the very untenable position of only being able to charge a fixed amount for their product while the companies higher up the supply chain can adjust their prices accordingly. Where does this end?
Comment by Not Impressed Thursday, Mar 8, 07 @ 10:06 pm
ids -
And here you have identified the real culprit here - the government. They have so far done a pretty good job of deflecting criticism from themselves to the power companies despite being the principal cause of this disaster. Taking a page from our wonderful governor they wrap themselves in populist sentiment while refusing to take the blame for any of this. The best part is that is getting pretty difficult to tell Democrat or Republican in this state without a scorecard because they sound exactly alike on this issue. It’s becoming painfully obvious that the ‘best and brightest’ as a rule don’t select politics as a vocation.
Comment by Not Impressed Thursday, Mar 8, 07 @ 10:13 pm
Not impressed -
I agree with your point. I don’t think you can do it without regulating the generators and transportation companies, etc. I don’t know if, or how, you can regulate all of those now independent entities at this point. Hence, my how do you “unbreak the egg” comment.
Comment by Just the facts Thursday, Mar 8, 07 @ 10:17 pm
One other thing that doesnt seem to get mentioned much in this debate is how government is also responsible for driving up costs of power enormously by passing ever-tighening environmental regulations on the power industry. This is especially true of the coal power plants. While everyone wants absolutely crystal clean air and water and this is certainly a laudable goal there is (like everything else) a cost involved. Power plants can add CO scrubbers, baghouses and burn low-sulfur coal (such as PRB) but the trade off is an increase in power prices to offset the improvements. Additionally, power plants find themselves in the position that it becomes cheaper to bring in coal from the western states than to deal with the regulatory pitfalls of burning high-sulfur Illinois coal. This is another loss for Illinois industry and regulatory action is directly responsible for it. I know that this is not strictly germane to the issues of rate increases but this is certainly a factor in the thinking of the power producers and something that should be considered as part of the complete picture.
Comment by Not Impressed Thursday, Mar 8, 07 @ 10:31 pm
The Electric Utilities are still Gouging just like the OIL Companies, all you have to do is look at their PROFITS! It is that simple. If they want to make millions for their shareholders and pad their personal bank accounts they should sell luxury items, not electricity. But then again, we ALL need what they are selling. It’s beginning to look like the Big Boys at Ameren are even getting into a little trouble with the State of Missouri. You many want to go read about the reasons for the Damn damage and now the Contributions to Missouri Politicians. Shareholders may be getting angry too.
Comment by To Not Impressed Friday, Mar 9, 07 @ 2:52 am
“Not Impressed” wrote ===You dont even seem to realize that the electric companies purchase power from other (unafilliated) companies that produce the power and then distribute it to the consumer market. ===
LOL. Almost all of that power that ComEd purchased to sell to residential consumers is generated by Exelon. Don’t come on here and lie.
Comment by Rich Miller Friday, Mar 9, 07 @ 4:52 am