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Rate hike showdown today *** Updated x5 ***

Friday, Mar 30, 2007

* The Senate is expected to vote today on Sen. Gary Forby’s plan to roll back electric rates to last year’s levels and freeze them for a year. Word is that will happen sometime around eleven o’clock, so check back often for updates on this post.

*** UPDATE 1:34 pm *** Both parties left for caucus about an hour ago. They should be back soon. Stay tuned.

*** UPDATE 2:00 pm *** They’re back from caucus, but they have a ways to go before they get to the bill.

*** UPDATE 2:26 pm *** Lots of hot rumors right now, but I was asked by the Senate Democrats to hold off on an “Extra” for a few minutes. Stay tuned for more.

*** UPDATE 2:43 pm *** It doesn’t look like the Forby bill will be called today. Subscribers, check your fax or e-mail.

*** UPDATE 2:48 pm *** They’ve adjourned. It won’t be called. Forby told reporters he plans to call the bill after the two-week break.

———————————————————

* Here’s a background story. And here’s another one.

* I kinda doubt that this little flower shop was as successful as claimed if they’re going out of business after one month of high rates, but we’ve seen several stories like this so here’s another one

Kerry Bieker started work at the little flower shop here the day it opened, and she thought the place could really make a go of it.

It did, too. At least for a while. But when the Ameren electric bill this month cost more than the rent, the owners decided to fold, making it perhaps the first store in the area to go out of business because of the electric company’s rate increases. […]

Rent at the four-room building was just $300 a month. Last month’s electric bill, though, was more than $400.

* I’ve told you before that Attorney General Lisa Madign believes there may be some collusion between New York bond rating firms and the electric utility companies. She filed a “motion to compel” this week for force out information about the relationship between the companies. Here’s a background story, but here are some excerpts from that motion…

There have been a number of instances in which the nature and timing of credit rating agencies’ announcements relating to Illinois utilities, including Ameren, have raised troubling questions as to whether the credit rating agencies are providing objective information or promoting the interests of their clients - the utilities and their parent companies.

a. In the fall of 2005, Standard and Poor’s and Moody’s issued warnings and downgrades — seemingly right on cue to promote the interests of the utilities and their parent companies in a lobbying campaign claiming that elected officials and regulators were setting Illinois on a course toward a “California-style energy crisis” that would lead to utility bankruptcies:

On September 27, 2005, a utility-sponsored “consumer coalition” called Consumers Organized for Reliable Electricity (”CORE”) announced its formation “to warn the public about political threats to the electric industry…”

On September 30, 2005, Moody’s Investors Service announced that it might cut its ratings on Ameren and Commonwealth Edison Company, citing “an increasingly contentious political and regulatory climate in Illinois.”

On October 3, 2005, Standard & Poor’s lowered the credit ratings of Ameren and Exelon because of the “heightened adversarial regulatory environment in Illinois.”

On October 3, 2005, CORE issued a barrage of press releases:

“Standard & Poor’s Ratings Services said today that it lowered its corporate credit rating on diversified energy company Exelon Corp. and its subsidiaries […]

“Moody’s places the long term debt ratings of Ameren . . . [Illinois subsidiaries] under review for possible downgrade.” […]

On October 3, 2005, Fitch Ratings noted that “despite the controversy, there have not been any adverse regulatory rulings.” Fitch left the ratings unchanged for Ameren and ComEd and kept their outlooks stable. […]

b.More recently, Moody’s downgraded the Ameren Illinois utilities to junk status, even though there was no change in the utilities’ revenues or costs, thereby “forcing” Ameren to cancel millions of dollars of rate relief […]

On March 13, 2007, the Illinois Commerce Commission approved Ameren’s rate relief plan and, only hours later, Moody’s announced that it was downgrading the Ameren Illinois utilities’ rating to junk status.

[Emphasis added]

- Posted by Rich Miller        

5 Comments
  1. - HoosierDaddy - Friday, Mar 30, 07 @ 9:53 am:

    400 bucks might not be much in Chicago, but it’s a lot of jack for a one-person small business just getting started in Hardin– especially if you are looking at that figure as a monthly bill. The owner is probably operating on a pretty small margin to begin with. Now they have to decide if they want to keep going after having that already small margin cut by $400 (who knows, maybe 20-40% of the margin).

    Not a big deal in the larger sense, but I’m sure it’s a big deal to the owner. Our economy depends on small businesses, and most of them start out REALLY small.

    Of course, once you get going, and start bringing in more gross receipts, the governor will be gunning for you…


  2. - Truthful James - Friday, Mar 30, 07 @ 10:19 am:

    Rich,

    Should Moody’s or Standard and Poor’s not announce that certain companies are on a watch list for possible downgrades for whatever reason from regulatory, to the effects of a permanent strike, to malfeasance by the Board, etc., etc?

    They owe nothing to the Company. Their ratings are an essential part of Company business. They owe all to the holders and buyers/sellers of the Bonds.

    They get paid for doing the ratings by the Company regardless of what they opine. (In their infancy the rating services got paid only through the publication of their books and ratings.)

    To drop the rating services, the company then sells into the junk market for unrated (read higher yielding) bonds.

    The warning notice was indeed a warning to Ameren and to ComEd to get their ducks in order.

    Ms. Madigan has been an outstanding AG. I wish her well on this quest. But the Fitch (new kid on the block) rating quoted (was 2005 the right year)reflects the situation at that time, not now.


  3. - Squideshi - Friday, Mar 30, 07 @ 11:11 am:

    I applaud Attorney General Madigan’s effort to investigate these New York bond rating firms.


  4. - VanillaMan - Friday, Mar 30, 07 @ 11:47 am:

    I said this before, and I have to say it again!

    YEEHAWWW! Get some of those corporate bonds!

    There’s gold in them little pieces of paper!

    SHHHH! Not for the masses though, OK?


  5. - RichMo - Friday, Mar 30, 07 @ 4:12 pm:

    Why is it acceptable for the State to raise the cost of doing business (minimum wage law) such that many close shop, but it seems so wicked if it is a privately owned entity doing the same? Should we stand up against both?


Sorry, comments for this post are now closed.


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