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Rate shock roundup

Monday, Feb 26, 2007

Because the House has called a rare Committee of the Whole meeting for Tuesday, I asked my intern Paul to put this together. It’ll give you some idea what’s going on out there…

* House leaders announce rare Committee of the Whole meeting

The leadership said legislators are prepared to hear testimony from all interested parties for as long as is necessary. Members of the public, business owners and representatives of social service agencies that have been affected by higher electric rates are encouraged to attend and share their views with lawmakers.

* Democrats call for freeze while announcing Tuesday’s meeting

The proposal House Democrats unveiled at a state Capitol news conference on Friday would roll back electric rates to their 2006 levels and revive the rate freeze for at least three years. It also would require utility companies to give refunds, plus interest, to consumers for the extra money they have been paying with the higher electricity rates.

* Where does the Senate fit in

But the House proposal could be stymied by the Senate, which did not act on a different House-backed freeze extension in January.
Senate President Emil Jones (D-Chicago) has denounced a potential freeze. The Senate last month approved a phase-in plan that would spread the rate increases out over several years, but the plan was never called for a vote in the House.

* Utility company voices concern

ComEd issued a statement Friday reiterating previously stated concerns about proposed rate rollbacks or freezes, saying such action “could cause ComEd to lose $1.4 billion annually — or $4 million per day — and put the company on the path to bankruptcy.”

* Phil Kadner: skeptical of results

If Scully, who is a legislator in Halvorson’s district, can’t convince her that a rate freeze is needed, I don’t see how he can expect to convince anyone else in the Senate.

And even if the House votes to freeze rates, as it did last fall, it will have no meaning if the bill can’t make it to the Senate floor.

This entire situation is the result of a corrupt regulatory process in Illinois.
The utility companies have far too much political influence in Springfield.
Consumers don’t stand a chance.

* Lawmakers still posturing

Some don’t seem eager to take up the cause, saying a drop in rates would mean poor service from Ameren and ComEd.

“They were darn near closing down,” said state Sen. Mike Jacobs, D-East Moline. “There’s a lot of political posturing going on.”

* Huge bill increases prompting the concern

But some downstate customers, especially those who don’t use natural gas to heat their homes, have seen much larger spikes. Lawmakers say they’ve heard from people whose January bills doubled or tripled because of the rate increases.

* Many hit particularly hard with increases

One young man’s bill increased from $190 in January to $365 in February, an increase of $174 or 92 percent, the Mayor reported. “If he delayed to pay for three years, it would add [an additional] $140 on to what is billed in three years.”

Numbers given in testimony Monday night also included February (and January) totals for comparison: Pauline Rieber - $111.40 ($63.46); Dorothy Pigg - $ 95 ($56); Joyce Marquis - $250 ($137); Steve Free $307.23 ($209); Debbie Walton $301.26 ($150); and Karen Littleton - $365.41 ($192.45.)

* Small businesses feeling particular pain

John Jarvis owns The Little Store, a small doughnut shop in Troy, Ill., that employs him and his wife. It’s an all-electric building, and his electricity bill rose to $987 in January from $406 in December. “We can’t pay it. Business has been slow because of the winter weather. We’re going to have to put the business up for sale,” Jarvis said.

- Posted by Rich Miller        

54 Comments
  1. - Way Northsider - Monday, Feb 26, 07 @ 7:58 am:

    Com Ed is incompetent and corrupt. There is no competition. They do not deserve a rate increase. Let us have real competition. That will result in the best outcomes for the consumer. Com Ed has made sure that does not happen and the politicians are dependent on donations from them so do not have the best interests of their constituents at heart. The time has come for alternative energy and real electric competition.


  2. - Just Wonderin' - Monday, Feb 26, 07 @ 8:25 am:

    My Ameren bill for January was split between the old rate for part of December and first part of January, and increased about 48%. My bill for February doubled. There is a similar story in my area about a small business whose bill tripled, and they contemplate the possibility of going out of business, too.


  3. - Robbie - Monday, Feb 26, 07 @ 8:45 am:

    Remember, small businesses close because of increases in minimum wage, not because of power bills… Sheesh…

    On a sidenote, we have had tons of power outages in the area and the crews have been doing a great job getting people restored. I know previous storms this winter have caused the power companies to take further reputation hits, but this time they seem to have their act together.


  4. - Number 8 - Monday, Feb 26, 07 @ 8:46 am:

    Is there any chance that the natural gas companies, seeing the rate increase bring in big dollars for ComEd, increase their rates as well? How does this work?


  5. - Hon. John Fritchey - Monday, Feb 26, 07 @ 8:50 am:

    I am exceedingly compassionate about people’s electric bills having gone up $50 or $100 a month downstate. Much more so in fact than many of my downstate colleagues have been about Cook County property tax bills going up $3000-$5000 a year.

    Perhaps now there will be more understanding and support when those of us in Cook County try to help our constituents with property tax legislation that has no impact upon their constituents.


  6. - Loop Lady - Monday, Feb 26, 07 @ 8:54 am:

    This fiasco could have been avoided if the legislative leaders and the Governor put aside their egos and actually provided some leadership on this issue last Fall…Way Northsider has it about right…instead of calling these dolts our “leaders” maybe another moniker would be more appropriate…


  7. - zatoichi - Monday, Feb 26, 07 @ 8:59 am:

    On many issues (pensions, debts, borrowing, services), the decision can be put off or live in some vague spin world because it does not effect most people directly or immediately. However electrical rates are an issue where the results are immediate, negative, and directly effect the voters who put the politicians in office. You hear the reports of Ameren’s/Com Ed’s profits, see the Com Ed CEO get a huge wad of bonus/salary cash then claim near poverty for the company, then follow up with how much money the power companies have been giving to the politicians who are now spinning like mad. Duh! There is no weaseling on this issue. When my rates double so I put out an extra $300 per month or I have to give money to my 80 year mother to help pay her electric bill or my neighbor needs to choose: “food, meds, or electric bill”, ya got my attention. Like the recent columist said “Get off your duff and do something”. This issue is not going away and cannot be put off. It will be a hot issue during the next several election cycles. Our local Rep has been a verbal supporter of cutting the rates for a long time. Good move.


  8. - Correction - Monday, Feb 26, 07 @ 9:06 am:

    Just to be clear, the Committee of the Whole meeting is Tuesday - Not Monday - as is mentioned incorrectly (and later, correctly) above.


  9. - RickG - Monday, Feb 26, 07 @ 9:14 am:

    Opinion:

    This is Ameren’s fault, not ComEd’s. If I were ComEd, I’d be encouraging Ameren’s leaders to get to a negotiating table, stat, for everyone’s sake.


  10. - Squideshi - Monday, Feb 26, 07 @ 9:15 am:

    Why do legislators need to have a meeting about this? What is there to discuss? These are some of the most profitable energy companies in the nation. It’s ridiculous to suggest that asking them to keep rates reasonable will lead to bankruptcy. These are monopolies with no competition, and they must be regulated as such.

    The state should consider taking ownership of these utilities through eminent domain. We can run the utilities at a loss if we need to; although, I highly doubt that is necessary.


  11. - Just Wonderin' - Monday, Feb 26, 07 @ 9:21 am:

    Robbie, business is all about their ability to survive and prosper. If they are unable to generate a profit, they go out of business. The small business that I referenced is a small manufacturing operation whose electric bill went from $1000/month to $3000/month. Their product doesn’t allow them to pass on such an increase to their customers if they want to stay in business. In my mind, there are a number of factors that can force a business to close besides just increases in minimum wages…sheesh


  12. - Justice - Monday, Feb 26, 07 @ 9:31 am:

    Complacency, apathy, or simple laziness…..we are to blame for the rate increase. If you don’t watch for the wolf coming down your road, it will be too late when he is in fact pounding at your door. Most of our citizenry are busy watching mindless tv shows, shopping for toys, or planning the next night on the town. Far too few actually keep an eye on our politicians and with whom they are in bed. And “since it’s the other guy that’s affected and not me, why should I worry.” Ameren has done a marvelous job of paying the politicians to ignore the problem, and we the people have also done our part of remaining blind to the pending storm. Monopolizing companies must be watched carefully by everyone, and we ourselves should take responsibility not to drink at the trough too heavily. A combination of asking politicians (the wolf’s accomplice) and the monopolies (the wolf) to watch out for our interest, when we ourselves won’t, always ends up with a bad result. Well, off to light my kerosene lamps!


  13. - farmboy - Monday, Feb 26, 07 @ 9:34 am:

    Ameren reported $547 million net income for 2006. That is $1.4 million per day and that is before the rate increases. They are asking to increase generating profit by $200 million + this year so they can stay “solvent”. I don’t know about anyone else but @1.4mil per day sounds pretty solvent to me.


  14. - Greg - Monday, Feb 26, 07 @ 9:39 am:

    Ah…the Illinois way of doing business. Different interest groups get together amicably discuss what they want and their interests are aggregated by the gatekeepers in state government. Everybody gets a piece and everybody walks away happy…

    The smart play would be to do nothing. State government has screwed this up enough. Prices skyrocketing is the inducement competitors need to enter the marketplace. The mere announcement will put comptetitive pressure on Ameren. The truly angry can then vote with their feet.


  15. - VanillaMan - Monday, Feb 26, 07 @ 9:43 am:

    I want to see the General Assembly do something. I want them to handle this. I don’t want them to pretend it doesn’t exist. I don’t want them to sit on their hands and hope for the best.

    I want each of those people to voice their support or opposition to the rate increases we face together. I want to know who to vote out and who to support.

    I’m tired of seeing cowards cowering under their desks in the General Assembly. They created this mess, it is time for them to stop hiding from it.


  16. - the Other Anonymous - Monday, Feb 26, 07 @ 9:57 am:

    Electricity deregulation has been a disaster in many forms.

    What’s ironic is that the electric companies are now claiming that regulating their rates will lead to a “California-style” energy crisis.

    Truth is, the energy crisis in California was brought about by greedy power companies manipulating a de-regulated environment.

    I hope that the GA does the right thing this time and reins in the utilities.


  17. - Greg - Monday, Feb 26, 07 @ 10:00 am:

    Government sitting on its hands on matters of economics is the best thing they can do. Vanilla man wants “to see the General Assembly do something” and then properly notes, “They created this mess, it’s time for them to stop hiding from it.” What makes anyone think that the GA is going to get it right a second time? They split the difference the first time so all the special interests would be happy. This is the result. You put politics ahead of markets to keep everyone happy, and now their upset.

    For competition to emerge, prices to come down Illinois is going to have signal that Illinois is indeed open for competition. That means doing nothing and allowing competitors to see an opportunity to undercut Ameren’s pricing.

    And carping over Ameren’s profits is a non-starter. The majority of their business is in MO. Does anyone think that regulators and legislators are going to allow their ratepaers to subsidize Illinois’ rates.


  18. - Fan of the Game - Monday, Feb 26, 07 @ 10:04 am:

    The 10-year freeze on rates was a very bad idea.

    The rules which state that power producers can sell on 1/3 of their production to their own customers but must sell 2/3 to other power suppliers is a very bad idea.

    Allowing a split between production of power and the sale of power was a very bad idea. It is easier for a state to regulate a utility when it is a monopoly.

    The lifting of said freeze without a plan in place to make it a smooth transition for both power companies and customers was a very bad idea.

    It will take a miracle to offset these very bad ideas.


  19. - kilowatt watcher - Monday, Feb 26, 07 @ 11:00 am:

    The anger and frustration expressed by so many
    completely ignores the reality that a lot of today’s rate shock is the result of the ten year rate freeze, which followed a rate reduction. And many of the same officials (and consumer advocate groups) who are complaining today were the architects of the freeze and proud to announce that on our electric bills.

    The price of all commodities has risen over the past 10 or 12 years. The reality is that Ameren and ComEd no longer own electric generation. They have no alternative but to purchase the electricity needed to serve their customers. So far no opponent of the wholesale auction process has proposed an alternative to buying that electricity. There have not been any serious allegations that the auction was conducted improperly. The auction offered an open public process run by an independent advisor with input from the Commerce Commission staff. The alternative to a public competitive process is a private negotiation where there is no way to know how the result was reached.
    The price at which electricity can be purchased is
    based on the price in the wholesale markets, and the companies affiliated with Ameren and ComEd that own electric generation are under no obligation to sell that generation to affiliated companies and certainly not at a deep discount. It would not be rational to do so.
    It is unrealistic to think that government, however well meaning and however intelligent, could come up with something that would reduce prices to anywhere near the rate freeze level while ensuring that our electric system continues to operate reliably.
    The reality is that costs have gone up and with new environmental requirements, is likely to increase further in the future.
    Instead of giving people false hopes of a return to prices of an earlier era, the best thing that can be done is to educate consumers about the way in which electricity is bought and sold today compared to how it was done before the rate freeze.
    Instead, this issue is a wonderful opportunity for government officials and public interest groups to take an issue, and get people excited about how a return to the freeze is the answer.
    This is more than unfortunate for all of us who live in Illinois.


  20. - Robbie - Monday, Feb 26, 07 @ 11:14 am:

    just wonderin - It was a joke man. I can understand the complex issues such as expenses and revenues. But thanks for the nice economics lesson.

    Is it true that while power companies no longer generate their own power, that they created child companies that generate the power and sell it back to the parent companies? I recall seeing this several places, but didn’t know the validity of it.


  21. - Team Sleep - Monday, Feb 26, 07 @ 11:18 am:

    If nothing is done, a public referendum will be brought about in 2008. Or people will call for a con-con to deal with the issues of property taxes and electric rates. I really hope this does occur as we can count on our fearless leaders to absomuhlutely nothing.

    Ameren did two things correctly. One, they used “deregulation” to buy up all of their competition. Two, they basically conned people into converting their homes or building their homes to be all electric. This was done in the full knowledge that our elected officials would do nothing to extend the freeze or offer viable alternatives. Ere go, Ameren has acted within the law while getting consumers to lower their bills for a few years only to get socked later.

    When my wife and I were looking for our first house, I purposely only looked at homes that were heated by natural gas. She didn’t understand until I finally relayed my opinion that the GA would do nothing to extend the freeze, thus making natural gas a much more palatble option in the long run. Am I glad I did!


  22. - i d - Monday, Feb 26, 07 @ 11:22 am:

    Corruption in government and in corporate headquarters leaves us all with no voice at all. All of the people telling us to conserve energy are flying around in their big planes and traveling to the speaking arenas in their big SUV caravans to ensure that we are the ones to stay home, turn out the lights and turn off our computers in order keep our complaints to ourselves while we bow down to their admonitions. I’ll comply when they tear my cold dead mouse from my hand.


  23. - cermak_rd - Monday, Feb 26, 07 @ 11:38 am:

    Maybe the answer is at lower levels of government. Maybe the counties (or multi-county coalitions) need to either build their own power generation facilities or make subsidies or loans to a 3rd party to build power generation. They should be able to use the existing T&D grid at an affordable rate. Nothing will strike fear into Amaren or ComEd’s heart like competition especially competition from governmental entities.


  24. - Fan of the Game - Monday, Feb 26, 07 @ 12:10 pm:

    Illinois needs to nuke up.


  25. - Suzanne ICHG - Monday, Feb 26, 07 @ 12:21 pm:

    The Illinois Committee for Honest Government is very critical of ComEd and Peoples Gas. More to come in an upcoming study.


  26. - Truthful James - Monday, Feb 26, 07 @ 1:05 pm:

    Flying outside the Illinois radar today was the LBO to by Texas Utilities by a group of private equity investors for $32 Billion plus assumption of debt

    http://online.wsj.com/article/SB117249171072619202.html?mod=home_whats_news_us

    In order to coddle environmentalists, the syndicate has agreed not to build eleven coal fired plants.

    The TUC caps, by the way wholesale electric prices.

    LBO people are like strip miners, they will attempt to recover their investment by selling off subsidiaries.

    The key here is the cutback in plants to come on line. This will have an upward effect on wholesale electric costs. Because producers can wheel electricity across an endless grid, this reduction in supply will affect distribution utilities and the customers, raising prices.

    Wheeling into the Ameren or the COMMED grid is the only type of possible immediate cost reduction.

    Thanks to the Greenies, the time frame for new construction is in excess of twenty years for nuclear, less for convential.

    The capital investment is humongous per plant. Investors are less likely to invest in projects, given that the regulatory bodies and the legislature are likely to change the deal. That risk in projected income needs to be accounted for.

    One other way to lower costs would be to have the municipalities buy from the utility their own grids and distribution system. It’s a nice idea, extremely expensive as well, and did you ever see a COMMED crew with at least one man lollygaggling?


  27. - Just Wonderin' - Monday, Feb 26, 07 @ 1:20 pm:

    Oops! Robbie, I apologize! I must be getting old and cranky, and missed the tongue-in-cheek. One must be careful when he pulls the trigger as you might be aiming at your own foot…


  28. - Robbie - Monday, Feb 26, 07 @ 1:24 pm:

    its ok… my sarcasm is often misinterpreted online. but for some reason I keep sticking to it.


  29. - Squideshi - Monday, Feb 26, 07 @ 2:11 pm:

    If you want to see this problem solved, stop electing Democrats and Republicans. Neither seem to be able to address this issue. Put a few Greens into office, and you’ll see real action on this issue. Not only will rates stay reasonable, but Illinois will also lead the nation in renewable and sustainable energy technologies.

    Democrats and Republicans both take corporate campaign contributions from the utilities that they are expected to regulate. This legalized bribery has created a conflict of interest that clouds their judgement. It is because of reasons like this that Greens refuse to accept money from corporations–the cycle needs to be broken eventually.


  30. - Truthful James - Monday, Feb 26, 07 @ 2:44 pm:

    All you guys are, as we used to say in the Navy, painting over rust. The ICC and the legislature bit — hey man, ten year rate freeze, and if you like we will roll back rates too. Visions of sugar plums danced in their heads. Nobody did the proper research. Nobody bothered to ask why they were being so kind.

    It was an election year orgy, an equal opportunity for all those Jack Thumbs in Springfield to go to the constituents pulled out there thumbes (from where, you guess) to tell them “Oh, what a good boy am I.”

    It would have been much better dor Chicago, say, and almost everybody to buy the distribution systems, the grids and purchase power. But Exelons and the Ameren’s offered too good a deal.

    Now comes the day of reckoning. Everybody wants more free lunch. There is, as they say, no such thing.

    Tell us, Squid man, what would your Greenies do, that would pass muster in the courts?


  31. - Anon - Monday, Feb 26, 07 @ 4:52 pm:

    If I understand you correctly, the freeze for ten years means it is now alright to raise the rates over 104%, over ten percent per year. I don’t know many that receive raises of this magnitude. I also don’t see any comments about the information at www.opensecrets.org showing that in 2002 Senator Emil Jones received over $93,000 from electrical utilities and a huge amount from the phone companies. Mr. Michael Madigan received $90,000 from electrical utilities in 2002 and they both received over $40,000 then from the phone companies. It is clearly long overdue to clean house in Sprinfield, and Washington, D.C.. Does anything every really change, or do the lips just keep on flapping.


  32. - Truthful James - Monday, Feb 26, 07 @ 5:46 pm:

    Anon –

    The righteousness of Senator Jones is not the issue here. I do not know if he is righteous or resides at the Everly Sister’s place. That is for another day. A Springfield General Assembly ball team would certainly not be nicknamed the “Saints

    Let’s not cloud the facts of the matter

    Ten years ago rates were reduced and a freeze was put in place. On that, you and I can agree.

    After review and approval by the ICC and the legislature and the Governor, a formula was derived for the rates at the ten year coming out party. Can we agree on that?

    The appointed (ICC) and elected officials acted in good faith. Exelon and COMMED acted in good faith. Are we agreed there?

    The ICC has control only on rates insofar as they can control the rate of return to the regulated entity, That would be COMMED. They do not have control over the price at which power is bought from suppliers, unless like Texas Utilities there was a regulatory cap on wholesale prices. I do not know if ICC set a cap on purchased power or whether one now exists.

    COMMED indicates that they have purchased power at the lowest available cost, from its internal supplier and on the open market This should be easy to show. Whether or not they engaged in price lowering hedges again another matter.

    It alleges that prices have risen substantially since 1997 and that it is permitted to raise its prices to its customers under the terms of the prior agreement in order to achieve a previously agreed rate of return to the Corporation. That rate of return would be a combination of the ICC permited rate of return on investment in the regulated business and the rate of return on the remainder of its assets, which are unregulated.

    The combination would yield a rate of return to shareholders which would yield in turn a price for Exelon in the marketplace,

    Lenders have loaned, shareholders have bought stock in the Exelon company based on that expectation.

    Yes, I agree that ten percent per year is high.
    I doubt that either party expected such an increase. But make sure that you are measuring from the old rates and not the reduced rates in place during the freeze.

    Now a little bit on compounding. For rates to start at 110 (adding back the original reduction of 10%) and terminating at 204 (an increase of 104%) requires that they increase 6.4% every year.

    Just slightly below the rate of increase of teacher’s pay.


  33. - Squideshi - Monday, Feb 26, 07 @ 5:47 pm:

    “Tell us, Squid man, what would your Greenies do, that would pass muster in the courts?”

    Here’s our 33-point energy policy for Illinois.


  34. - Truthful James - Monday, Feb 26, 07 @ 6:17 pm:

    Squideshi –

    Goodness, a 32 point set of generalities, most of which are good ideas, many where I agree, idealist that I am.

    Not related, though to the present hullabaloo, which is what I am talking about. Implement your platform here. You propose to buy out the Illinois operations of COMMED, or just the Grids and the Distribution systems? Who is to pay the billions of dollars, who assumes the debt of the organization?

    A corporation is the sum of the market value of its assets which is in sum equal to the market value of its debt plus the market value of its stock.

    Platforms are good, but ideals have to be paid for.

    Aye, there’s the rub.


  35. - Rich Miller - Monday, Feb 26, 07 @ 6:45 pm:

    “The appointed (ICC) and elected officials acted in good faith. Exelon and COMMED acted in good faith. Are we agreed there?”

    No.


  36. - Disgusted - Monday, Feb 26, 07 @ 6:46 pm:

    Ah rhetoric, blather, blather, blather. Try using all of talk to explain to your 84 year old neighbor, who has an 8th grade education and worked hard all his/her life and now can’t pay the heat and/or light bill. The people who are falling between the cracks are the poor and elderly and no one gives a damn, especially our elected reps. Shame on us all.


  37. - Truthful James - Monday, Feb 26, 07 @ 6:52 pm:

    I know that you may think this is probably a dumb question, Rich, but which one, or more than one did not act in good faith? That is, did one or the other or both not intend to fulfill the terms of the agreement?


  38. - Rich Miller - Monday, Feb 26, 07 @ 7:02 pm:

    It’s a very long story, but the proponents of the breakup (what they called “dereg”) argued that if Illinois didn’t do it on its own, the feds would come in. The feds may have threatened to do so, but it was pretty obvious that wasn’t gonna happen. So, the whole dereg movement was based on scary fiction.

    Since then, it has been one con game after another, with the hack-filled ICC coming up with this ridiculous “reverse auction” plan that was guaranteed to be rigged against consumers.

    Those legislators who took big bucks from ComEd and Ameren looked the other way, buying the hype that the rate hikes wouldn’t be so bad. The Ameren tankers have found out the hard way that their trust was misplaced. ComEd’s tanker’s may start howling this summer, when their constituents complain about their cooling bills.

    The ICC should shoulder much of the blame here because it wasn’t mandated to concoct that reverse auction. Legislators, however, should have listened to the warnings instead of their campaign finance reports. The utilities did what utilities always do. In 17 years, i have yet to see an honest piece of legislation written by a utility company.


  39. - Lied to - Monday, Feb 26, 07 @ 7:04 pm:

    The majority of Ameren’s business is not in Missouri. SOME FOLKS JUST CAN NOT PAY THESE UTILITY BILLS! You will see the middle class disappear when the Utiltiy companies and the Oil companies take all our money, money that could be spent in the general ecomony. Watch business and factories close. More jobs will be lost. Someone tell me how this WILL NOT HAPPEN!!! Ameren’s profit tripled during the 4th quarter and they want more. GREED!


  40. - Rich Miller - Monday, Feb 26, 07 @ 7:04 pm:

    And I haven’t even mentioned the $5 billion scandal of ComEd’s nuke plants yet.

    This has been a complete, utter farce from Day One.


  41. - Rich Miller - Monday, Feb 26, 07 @ 7:10 pm:

    “Lied to,” while I appreciate some of the sentiment, try to avoid using caps and claims that the utilities will cause the middle class to disappear. It makes you look like a goofball.

    Is it a problem? Yes. For some, like the elderly and the poor in Ameren’s turf who have had the rug pulled out from under them, it’s the most serious financial problem they’ve faced in years. But it won’t vaporize the entire middle class.

    Even so, now you see why utility rates were regulated for so many years. It never should have ended. Allowing them to jack up their prices for the same commodity that they sold for far less just two months ago is ridiculous, particularly since, for the most part, these reverse auctions are little more than one branch of the same company selling to another, either directly or through Wall Street investment firms.


  42. - I'm disgusted too - Monday, Feb 26, 07 @ 7:12 pm:

    Truthful James:

    That was the longest, most twisted way to go after the teachers unions I have ever seen!

    Emil Jones:

    You should be ashamed to show your face.


  43. - DRB - Monday, Feb 26, 07 @ 7:15 pm:

    Just remember everyone, we are now a Democrat state and the Democrat government brought you these massive rate increases. The Democrats had options “for the little people” but voted with big business. This is, for all practical purposes, a Democrat inspired tax increase.


  44. - Rich Miller - Monday, Feb 26, 07 @ 7:19 pm:

    C’mon, DRB, the knee-jerk partisanship is a bit much, especially considering the original law was passed under a GOP governor and a GOP Senate.


  45. - Rich Miller - Monday, Feb 26, 07 @ 7:27 pm:

    Not to mention that the Republicans have come up with nothing to address it except to sign on to a ComEd-drafted proposal to defer the entire amount of the rate increase for a few years, when consumers would have to pay the full rate increase plus the deferred amount. Then there was all that hinky language in there about mysterious bond fees that were never properly explained, but looked like a way to soak consumers even more.

    There’s plenty of blame to go around without this stuff. Some of the greatest Ameren & ComEd tankers, after all, are Republicans.


  46. - So Blue Democrat - Monday, Feb 26, 07 @ 8:00 pm:

    Why has our fearless Governor been so quiet on this issue since the election? Where is his so-called leadership?


  47. - Anon - Monday, Feb 26, 07 @ 8:42 pm:

    I have read with interest the comments by Truthful James at 5:46 pm. You know if the Gov. had taken the right path and appointed the executive director of CUB to the ICC, the ratepayer may have had a prayer.
    I don’t know any teacher’s that receive anywhere near 10 percent raises, they usually receive COLA of about three percent. I think we are clouding the real issues here of honesty and not allowing back door politics as usual to continue. People are sick of this nonsense. Please tell it to our small town grocer who was paying $2,500 per month for utilities, and now is paying $5,000 this month. I forgot to mention he is closing his doors, and laying off his employees. Shouldn’t this be about human beings? Most bureaucrats forget who is paying their paychecks. It is the citizens of this great state of Illinois!


  48. - Rich Miller - Monday, Feb 26, 07 @ 8:45 pm:

    Anon, the guv DID appoint Marty Cohen to the ICC chairmanship. The appointment was rejected by the Illinois Senate, with both Democrats and Repblicans voting against him.


  49. - Team Sleep - Monday, Feb 26, 07 @ 8:52 pm:

    Wow, Rich, you are hot on this issue!

    When do reverse auctions and deregulation help the public? Out east, reverse auctions are very costly, with energy companies in places such as Baltimore and northern Virginia have been charging outrageous rates for years. They have effectively lobbied the state legislatures in their power supply area and have a stranglehold on consumer prices and supply. That will occur in time if the ICC and the GA do not act appropriately.

    The GOP did not spend nearly enough time chatting up this issue last fall. I can’t remember JBT even bringing it up, and doing so might have gotten her closer than 10%. It’s all knee-jerk now.

    I do wonder, though, if a state-owned entity would be the answer. Our current government doesn’t seem to do much right, so how could they really make much of a difference with energy costs?


  50. - Cynical one - Monday, Feb 26, 07 @ 9:41 pm:

    our state legislatuer and the governor have approached this issue like the arsonist that burns a building so he can be the first one on the scene to save it and become a hero. Only there are too many such “heroes” on the scene right now. This issue WILL be the undoing of many an incumbent unless solved before the summer air conditioning season hits. Earlier, even: if we get another cold snal and someone’s house burns down or people die because they were heating with kerosene or coal or something, because they couldn’t afford electricity, well, citizens are going to storm the bastille early this year.


  51. - Disgusted - Monday, Feb 26, 07 @ 10:13 pm:

    Citizens should also be worried about the brain drain at the Nuclear Division of IEMA, which was not looked too kindly on by ComEd because it was a nuclear power watchdog for the citizens of Illinois. Nuclear safety was formed over 20 years ago because the state couldn’t trust ComEd to report its “incidents.” Several of its most effective upper manager have left or “retired” and now word on the street is that Bill Burke, the agency director, is leaving post haste. Here’s hoping nothing happens to or at our nukes because there are precious few watchdogs left. And I wonder who at IEMA, with little formal training in emerency situations, is so afraid of the expertise of the nuclear folks that they have forced this?


  52. - Mr. CUB - Tuesday, Feb 27, 07 @ 8:26 am:

    Remember, CUB had 10 years to help foster competition and develop residential markets for customers, and did nothing beyond take its share of dereg funds from ComEd. Why does CUB get off scott free? Why doesn’t the media hold CUB accountable?


  53. - Truthful James - Tuesday, Feb 27, 07 @ 8:52 am:

    Re: Nuclear oversight

    Yes we need moe and better inspectors and managers. I do not know from wehere the State has been recruiting. If they haven’t tried to get close to retirement people at all lvels from the Navy’s nuclear program to look forward to illinois as a place for employment, they are missing a bet. These men and women come already equipped with Navy pensions.

    The problems are likely two — pay levels and motivation. The Navy has run soundly based programs in this field for decades.

    Re: Ameren and all

    Yes, these people need relief. The question is how to give them and who pays. That is always the question. Who pays.

    Buying the local grids and distribution systems for the cities and towns is one way. But there are a lot of small towns and country places where this would not work. Rural Electric Districts?. ICC could have like Texas a cap on wholesale rates. That is one way to manage it.

    Southern Illinois has enough soft coal in the ground close to the surface, but the coal is high sulfur and needs to be cleaned before it is burned. Coal gasification will help, something the state might subsidize in view of the jobs involved.

    There needs to be three overlapping solutions, all of which start now. There needs to be rate relief for Ameren customers — that is the short term solution. Whether it takes place in the form of income tax credits or direct payments, or whether Ameren will take a rate reduction without going to the courts is one question which needs answering.

    I am loathe to look at one year’s net income on a balance sheet and say that profits are obscene. Let the ICC finance people look over many years. That income number, however, wound tend to increase the value of the assets in any sale.

    Middle term — out ten year, The state could get involved in the wholesale electric purchase market, and perhaps be able through purchases and hedging to lower the average cost. The megawatts would then be sold to the Ameren distribution people.

    Basic rate structures need to be changed. There are legitimate firms who have a handle on the market and who can, dependent on usage lower the cost of electricity depending on the time of usage. To make it economic, it requires total bills in excess of two thousand a month, and small businesses are buying into this. It seems that the true cost of usage varies by time of day. Under the single cost bills of CommEd and I guess Ameren, the costs may not be blended. Just a thought. Perhaps Ameren might be encouraged to either sell its system to a State entity or to have an ESOP buy the Illinois assets.

    Long term, we need new plants, and we need more efficient and safe ones. And we need to reward conservation. Every municipality likely has a franchise agreement with its electric distributor.
    They are for specific period of time. In the past the electric company was nearly certain that the cost to enter the market for a new company made it unlikely that anybody would enter the market. These agreements do provide some leverage, because to leave the market and be forced to retrieve all those poles and wires and boxes in expensive as well.

    Another matter.

    I have been taken to task in comparing teacher’s pay increases with electric rate increases. One comment suggested that he/she was not aware of increaes above three percent. When pay is renegotiated an increase is announced. Those are longevity increases. Teachers are paid on a grid basis in most districts with additional step increases, if they have spent the summer — or evenings — piling up additional hours in Ed School courses. In measuring teacher increases, one must go to the year over year audits which show increases in pay and benefits in the Education Fund.

    Finally, Rich –

    I agree that the republicans were governors and had a Senate majority. Which party had a House majority? You didn’t say.


  54. - Rich Miller - Tuesday, Feb 27, 07 @ 9:11 am:

    Obviously, the Democrats. But that was in response to someone who wanted to blame the Dems for everything. The blame is everywhere. Now, let’s move to Tuesday’s post.


Sorry, comments for this post are now closed.


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