Rate hike bill blasted by CUB
Wednesday, Feb 9, 2011 - Posted by Rich Miller
* ComEd’s legislative proposal to raise rates ostensibly to pay for its $2.6 billion grid modernization program is not receiving rave reviews from CUB…
The rate hikes, which would take effect in 2011, would guarantee double-digit profit margins for ComEd during the next decade, enabling the company to overhaul existing cable, replace 130,000 poles per year and upgrade substations with digital micro-processor relays, among other things.
But the state’s top utility watchdog said the legislation would effectively do an end run around the Illinois Commerce Commission, which has had the traditional task of signing off on utility rate hikes.
“Under the guise of saying they want to modernize the grid, which could be a good thing if done right, what they’re really proposing to do is gut the regulatory system that’s been in place about 100 years and replace it with one that’s got far less oversight of rates and lead to rate increases year after year,” said David Kolata, executive director of the Citizens Utility Board.
And Speaker Madigan wasn’t sure whether the plan will survive…
House Speaker Michael Madigan (D-Chicago), who traditionally has not been a staunch legislative ally of the powerful Chicago-based utility, told reporters the company’s package would be considered by the Legislature but he wouldn’t predict its outcome.
“I know that they are not happy with the response that they’ve been getting out of the Commerce Commission. And so they want to go to the Legislature and try and get a section in the statute that would give them more of a guarantee that they will be reimbursed for improvements to the power lines,” the speaker said.
Keep in mind that ComEd’s parent company Exelon fought hard against a “clean coal” electricity plant in Taylorville because it said the rate increase would kill thousands of jobs. But this new ComEd plan is supposed to raise rates and create jobs.
* CUB is also trying to kill a bill that passed both chambers by a wide margin last month…
A clean-coal gasification plant slated for Southern Illinois could be reduced to coal dust if Gov. Pat Quinn fails to sign off on the project by March 14.
Proponents are urging Quinn to OK the measure, which is predicted to create 1,500 construction jobs and 700 permanent positions in the coal industry. But a consumer advocacy group Quinn founded years ago while working as a consumer rights crusader is running strong opposition to the bill, claiming that Illinois citizens will pay for the jobs with higher heating bills.
“We’re looking at a ticking time bomb for gas bills,” said David Kolata, executive director of the Citizens Utility Board, the group asking Quinn to place an amendatory veto on the legislation — a move that would kill the bill, sending a message to the Legislature that clean coal’s cost burden cannot fall on consumers.
* Other, somewhat random stuff…
* Rich Take From Poor as U.S. Subsidy Law Funds Luxury Hotels: The landmark Blackstone Hotel in downtown Chicago, which has hosted 12 U.S. presidents, opened in 2008 after a two-year, $116 million renovation. Inside the Beaux Arts structure, built in 1910, buffed marble staircases greet guests spending up to $699 a night for rooms with views of Lake Michigan. What’s surprising isn’t the opulent makeover: It’s how the project was financed. The work was subsidized by a federal development program intended to help poor communities.
* UI’s financial status better, but cuts still possible
* Cook’s black-owned business count topped counties nationwide, census says: Cook County had 83,733 black-owned businesses in 2007, more than any other U.S. county, according to the Census Bureau.
* Proposed city law would protect airport restaurant worker jobs, wages
* Homeschoolers contact lawmakers about registration bill
* Another blizzard casualty: the Block 37 mall auction
* The Extreme Difficulty Of Evaluating Teachers
- ChicagoR - Wednesday, Feb 9, 11 @ 8:57 am:
I’m glad CUB exists and am sure they do fine work. But everytime I see a story about them, they appear to be flat out opposed to any rate hikes at all, rather than suggesting an alternative that would be reasonable. When they are always just ‘opposed’, I’m not sure I take them as seriously. It’s the ‘boy who cried wolf’ syndrome.
- Small Town Liberal - Wednesday, Feb 9, 11 @ 9:06 am:
As an employee in the utility business, I absolutely believe in investing in infrastructure and modernization. However, like in any large organization, there is a tremendous amount of inefficiency and waste that occurs. The answer is not to circumvent the regulatory process. Right now there is an attitude of hostility between the ICC and the utilities, I think a better approach would be to foster a working relationship so better decisions can be made for everyone.
- Yellow Dog Democrat - Wednesday, Feb 9, 11 @ 9:17 am:
@ChicagoR -
There is already a process in place for rate hikes, through the Illinois Commerce Commission. They are public hearings that allow citizen input, and CUB supports them.
From what I understand, what Com-Ed is proposing is that the ICC be cut out of the process and they be guaranteed a 10% profit every year.
While Com-Ed likes to compare their bill to the recent AT&T bill, there’s a big difference.
If telephone rates skyrocket or service quality drops, most people in Illinois have plenty of companies to choose from besides AT&T, so you have market regulation replacing government regulation.
But if you don’t like your local power company, who are you going to call? The Green Lantern??
- Leroy - Wednesday, Feb 9, 11 @ 9:25 am:
So the state (and its monopoly) can raise tax rates in order to increase much needed revenues, but Com-Ed? Well, they don’t need the money so much, they are just being greedy.
Who exactly does the Green Lantern need to save me from again?
- ChicagoR - Wednesday, Feb 9, 11 @ 9:38 am:
YDD: Thanks for the explanation. I’m not in favor of cutting the ICC out of the process. My point was a more general one regarding the credibility of CUB. When I perceive them as saying “no hikes, not now, not ever”, I don’t know when to take them seriously.
- jaranath - Wednesday, Feb 9, 11 @ 10:17 am:
I share the same perception, ChicagoR. I like groups that ostensibly are looking out for citizens, but when “looking out for you” is functionally redefined as “no rate hikes,” there’s a problem, and I suspect that’s CUB’s approach.
Regardless of any stunts Exelon may or may not be pulling, we DO need big power grid improvements on a national scale. I dunno if rate hikes are the way to do it–I’m not sure private companies should even own the grid in the first place. And we seem to have an incoherent long-term strategy for energy production, which would affect how the grid should be improved. But there is a need.
- 4 percent - Wednesday, Feb 9, 11 @ 10:30 am:
Generally, CUB opposes legislative initiatives from utilties until they get their money. Ask CUB how much money they got from utilities in the 97 deregulation law discussions. Once the utility’s ponied up, they signed off on the bill.
- wordslinger - Wednesday, Feb 9, 11 @ 11:25 am:
Why toss out the ICC? They, at least, can’t take campaign contributions from Exelon like legislators. It seems to me they’re a necessary buffer.
- Anon-? - Wednesday, Feb 9, 11 @ 11:26 am:
Who funds CUB anyway. I would like to know how to get information on who funds them. Is there a list somwhere?
- Anonymous - Wednesday, Feb 9, 11 @ 2:45 pm:
CUB sometimes does support rate increases when they believe they’ll benefit consumers in the long run - such as what they did on the Taylorville project that was rejected.
- Going nuclear - Wednesday, Feb 9, 11 @ 3:05 pm:
I don’t believe CUB opposes the grid modernization program. The group is questioning why ComEd wants to bypass the traditional administrative review process. This sounds like a pretty significant proposal. It deserves a thorough and critical evaluation, with expert testimony from all sides, to ensure the upgrades are done in a prudent and cost-effective manner. I say let the ICC do its job.
- Ghost - Wednesday, Feb 9, 11 @ 3:48 pm:
Springfield has a public owned/operated utility, and the lowest utility rates in the State….
Perhaps the model should be expanded. apparently the much vaunted private sector is not always best at everything.
- Just The Way It Is One - Wednesday, Feb 9, 11 @ 3:58 pm:
CUB is a blessing from above for Illinois consumers–they WILL, ofcouse, always err on the side of opposing any attempt at unnecessary rate hikes by ComEd and although they are always cautious, (they do go through the painstaking process of sifting through all of the details to get to the bottom of what it will REALLY end up costing consumers) they are, nevertheless, fair. Also, of course ComEd would be overjoyed at eliminating the ICC once and for all–they’re obviously like the company’s Shift Supervisor, often letting them do what they want but always overseeing what ComEd is up to so as to ensure they’re being kept in check and don’t try anything stupid. No way the ICC goes–ComEd has too much power (pun intended) and they must always have the citezenry (through CUB AND the ICC for that matter) there to be looking over their shoulder and serve as the occasional–but necessary–uncomfortable pebble they just can’t always seem to shake in their awfully big walkin’ shoes….
- for the little guy - Wednesday, Feb 9, 11 @ 6:36 pm:
Rich, did you hear the debate on power holdings in the senate? This was the bill that passed by one vote at 2am, after the tax bill, in the full glory of vote trading. Hendon stood up and said he wanted to take his vote back on power holdings because he was promised they wouldn’t call another utlity bill. It’s rumored he helped get votes to pass that bill that earlier in the day had a roll call showing not enough support in senate.
This was the 2nd bill to zoom through the GA. They went through committee for the 1st time & were voted on the floor within 2 weeks. By the time the PH bill came to a vote - the power holdings bill in senate, legislators finally understood the rate hikes in both leucadia & power holdings bills. The PH vote in senate is more indicative of sentiment once people understood what was being presented. So, to say they passed with huge support is not necessarily true. If both bills were up for vote again in house & senate, votes would be very different, and Gov. Quinn knows that.