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The pro-consumer governor raises Downstate electric rates

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Illinois

* Early in December, Attorney General Lisa Madigan and the Citizens Utility Board demanded that the Illinois Commerce Commission cut Ameren’s rates by $41.1 million…

The Citizens Utility Board and Illinois Attorney General Lisa Madigan asked the Illinois Commerce Commission on Monday to force Ameren Illinois to cut customer electricity rates.

The utility had sought a $40 million rate hike but withdrew that request as promised when the Legislature overrode Gov. Pat Quinn’s veto and passed controversial smart grid legislation last month. The legislation alters the rate-making process in a way that is expected to increase utility profits.

Consumer advocates say Ameren’s withdrawal of its rate hike request isn’t enough. That’s because when the case came before the ICC, an administrative law judge recommended that Ameren decrease customer electricity rates by $41.1 million because of concerns the company was padding its profit.

An administrative law judge agreed.

* But on December 30th, Gov. Pat Quinn quietly signed the “smart grid” trailer bill, despite his fierce opposition to the proposal. Quinn’s signature killed the rate case…

The bill at first sounded like it would aid consumers by requiring the Illinois Commerce Commission to dump Ameren’s pending request for a rate hike. But it became an accidental detriment when the administrative law judge overseeing the case recommended a decrease for consumers instead.

In the last five years, the vast majority of rate requests that come before the ICC have resulted in an increase to consumers. If the case had continued, and the ICC had accepted that recommendation, Ameren customers would have been on track to receive savings of between $30 and $50 per year.

But with Quinn’s signing of the trailer bill — which lowers the return on equity utilities will receive under a new formula-based rate system and increases the amount ComEd and Ameren will pay to upgrade its aging infrastructure — the case is null and void.

* As a result, some Ameren customers will receive a much smaller rate cut, while others will see a rate increase…

Ameren Illinois made its initial filing under the state’s grid modernization law on Tuesday, one that will initially provide modest rate relief for many electric customers in the Metro East.

Overall, Ameren’s electric rates would decline by $19 million a year if the new rates are approved, Ameren spokesman Leigh Morris said.

But not everyone will benefit. Customers in Ameren rate zones 1 and 3 (formerly AmerenIP and CIPS) would see slight reductions in rates. Those in zone 2 (formerly Cilco) would see an increase, Morris said.

Oops.

* And I don’t know if Mayor Emanuel was dinging the governor or not, but he sure did his best to celebrate Quinn’s trailer bill signature as soon as hizzoner returned from his vacation…

With a promise of 2,400 jobs for Chicago, ComEd on Wednesday launched the hiring blitz it promised in exchange for a $2.6 billion rate hike that will finance “smart-grid” technology.

Mayor Rahm Emanuel held a news conference with ComEd President Anne Pramaggiore to tout the benefits of legislation denounced by Gov. Pat Quinn as “smart greed” for the campaign contributions the utility lathered on state lawmakers who overrode the governor’s veto.

The hiring will begin with 350 to 400 Chicago jobs this year and up to 2,400 over the next decade, Pramaggiore said. […]

In his failed campaign to uphold his smart-grid veto, Quinn likened consumer-friendly improvements to the rate-hike bill to putting “perfume on a skunk.”

On Wednesday, Emanuel made the legislation sound and smell rosy.

* Related…

* What’s Next For The Illinois Power Agency?

* BlueStar sold to huge electric utility

* Ameren files controversial rate hike plan

* Ameren Illinois wants rate increase to upgrade distribution grid

* Ameren begins implementation of MAP

* Smart grid will create 2,400 jobs here, mayor says

* Mayor Emanuel: ComEd Smart Grid to Create 2,400 Jobs in Chicago

* ComEd’s switch to smart grid will create about 2,400 jobs for Chicago, officials say - About 1,000 of those jobs will be related to construction over the next five years; 2 out-of-state firms plan to open offices here

posted by Rich Miller
Thursday, Jan 5, 12 @ 11:14 am

Comments

“But on January 30th, Gov. Pat Quinn quietly signed the “smart grid” trailer bill” Do you mean December 30th?

Comment by Rayne of Terror Thursday, Jan 5, 12 @ 11:35 am
So here’s the problem: Throughout his career, Pat Quinn has demonstrated the political wisdom of standing up strongly for utility ratepayers. Now everybody is following his lead — taking a bite out of the Pat Quinn brand.

The Governor has earned a leadership role on these issues, but he needs to keep in mind that there are a whole lot of voters out there who weren’t even born when he founded the Citizens Utility Board. His press team needs to work hard to remind Illinois voters of Pat Quinn’s extraordinary record on these issues, every time there’s a utility-related issue facing the General Assembly (which is always.) And the Governor needs to get out in front and frame these issues before the other folks jump in front of the cameras and steal his thunder.

Comment by soccermom Thursday, Jan 5, 12 @ 11:39 am
1. You cant raise rates if they were never ordered. This was a proposed order by an ALJ that the 5 commissioners either could have agreed to or not. If the gov vetoed and they voted to increase rates then gov would have been to blame and ameren could have got a bump before they went into the new ratemaking.

2. It was Harmon/Cullerton who put that provision in there at the behest of the metro east guys. they reap what they sowed.

3. Not all ameren areas were a decrease. The peoria region could have seen a 9 million increase.

4. Whatever deferred decreases will more than be made up with in the new rate case. It would have delayed the inevitable.

5. and lastly, the speaker could have chosen not to call the override motion. Then all the benefits in the trailer would be gone.

Comment by Lincoln's Penny Thursday, Jan 5, 12 @ 11:52 am
Yeah that is bad for Ameren clients but putting this one on Quinn and not the legislature that pushed for the trailer and the Smart Grid bill seems a little wrong.

Also it is kind of funny to put this in perspective with numbers Chicago gets 2,400 jobs in a decade ComEd gets $2.6 billion in a decade. That’s a little over a million dollars per job. Yes it’s an oversimplification but still pretty outrageous.

Comment by Dave V Thursday, Jan 5, 12 @ 12:01 pm
Back to the Future

{But on January 30th, Gov. Pat Quinn quietly signed the “smart grid” trailer bill}

Comment by Quinn T. Sential Thursday, Jan 5, 12 @ 12:01 pm
You’re right on target Lincoln’s Penny. As to #5, imagine the heat the Governor would take if ComEd were allowed to a higher return without the trailer bill reduction.

Comment by Robo Thursday, Jan 5, 12 @ 12:03 pm
LP, the guv made a really big deal out of whacking the trailer bill, over and over again. I half expected at least an AV.

Comment by Rich Miller Thursday, Jan 5, 12 @ 12:31 pm
True, Rich. The Gov criticized it as not enough. But show me the public comments he made that said he would veto the trailer.

And an AV would have been ruled non-compliant and then he rolls the dice on a 40 million dollar bet at the ICC. Not to mention he jeopardizes what small protections were in the trailer.

A lot of risk for a very small payback.

Comment by Lincoln's Penny Thursday, Jan 5, 12 @ 12:37 pm
This is bad for Quinn, in that he’s basically bending one of his cardinal principles. What’s next, taking away some veteran’s benefits or maybe destroying some Eagle habitat for a factory site? Only sorta-joking, because this could be the slippery slope, where people have given Quinn a pass on a lot of failings due to staying true to some core principles, they may not forgive as much if he seems to have become a toady to the utility lobby.

Comment by Gregor Thursday, Jan 5, 12 @ 12:44 pm
Quinn also has been criticized for not being willing to play ball on this issue in general. And I would bet an AV would have opened him up to a lot more of that.

Comment by Dave V Thursday, Jan 5, 12 @ 12:47 pm
To this day, every time I hear “Blue Star” I think “Wall Street”.

Wonder if Charlie Sheen reads CapFax? He should.

Comment by Shock & Awww(e) Thursday, Jan 5, 12 @ 12:48 pm
I wonder what activist Pat Quinn would have to say about Governor Quinn

Comment by RMWStanford Thursday, Jan 5, 12 @ 12:56 pm
–I wonder what activist Pat Quinn would have to say about Governor Quinn–

Who knows. But Gov. Quinn is learning the eternal truth that there’s a big difference between governing and campaigning.

Comment by wordslinger Thursday, Jan 5, 12 @ 12:59 pm
Fair market adds volatility. Most actuaries favor smoothing. As for the 90%, it is arbitrary, particularly when there is an artificial date, but every time it comes up, organized labor balks and more concessions have to be made. Last year’s battle between IML and the police and fire unions is a perfect example.

Comment by Shemp Thursday, Jan 5, 12 @ 2:00 pm
One of the big problems here is the arbitrary deadline combined with the unreasonable ramp. This has to be fixed eventually — wouldn’t it be loverly if the GA and the Governor’s Office could just get it done now?

Comment by soccermom Thursday, Jan 5, 12 @ 2:18 pm
===One of the big problems here is the arbitrary deadline combined with the unreasonable ramp. ===

The more I’ve looked into this, the more I am convinced that extending the deadline won’t work. All that does is add more interest payments.

Nobody has ever missed a pension check in Illinois, yet the pension funds have always been “underfunded.” Under the current system, six months after hiring somebody, the state has to have 90 percent of all projected pension payouts for that person “in the bank” to comply. That’s ridiculous. It’s the future borrowing from us, rather than the other way around.

Comment by Rich Miller Thursday, Jan 5, 12 @ 2:24 pm
Don’t we have enough data in the bank to look back and determine the payout versus the pot at that time.

Hasn’t somebody taken the pension balance in 1975,1976,etc… and compared the funding to the payout 30 years later. Wouldn’t that make more sense? If in 1975 there was 19 million dollars in the fund and in 2005 we paid out 4 Billion dollars, wouldn’t it be safe to assume linear cola costs and equalization of employee head count and use that multiplier for adequate funding?

Some would say that the state head count is lower, but that data should be easy enough to get.
Pro rate the data into a head count total and using historical data we should be anble to determine a resonable benchmark for funding.

Comment by Jade_Rabbit Thursday, Jan 5, 12 @ 2:45 pm
Rich — thanks for the clarification. You’re right — the 90 percent figure is crazy arbitrary. Have we ever seen all of the actuarial assumptions that are used to calculate the total amount owed? The last time I tried to check, there was a “black box” approach…

Comment by soccermom Thursday, Jan 5, 12 @ 4:17 pm
Oh, Jade. If only life were simple, pension fund calculations were straightforward, and doughnuts were low in fat…

Comment by soccermom Thursday, Jan 5, 12 @ 4:19 pm
90 percent funded is a psychological “magic number”, like pricing a product at $19.99 instead of $20. Subconsciously, the 19.99 seems way less than the even number 20 bucks. 90 percent sounds so close to 100 percent that you feel “oh, they’re almost perfect, since 90 percent is like an “A” in school”

Same psychology was involved in the rhetorical battles over Quinn’s “BIGGEST TAX INCREASE EVAR!!!! as certain newspapers always referred to the mild and modest bump we took after years without any increases.

Comment by Gregor Thursday, Jan 5, 12 @ 7:10 pm