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* The ICC got us into this rate hike mess with its goofy “reverse power auction” that was hopelessly rigged against consumers and ended up lining the pockets of Wall Street. Now, it’s agreed to look into the rate hikes it caused…
Bowing to pressure from the legislature, the Illinois Commerce Commission will hold a special hearing today to consider investigating huge increases in electricity bills after a rate freeze ended in January.
The commission also may decide to explore whether Commonwealth Edison and Ameren, which serves areas mostly Downstate, misled the public. […]
ICC Chairman Charles Box said the goal of any review, if undertaken, would be to see “if some relief can be granted.”
* The House is taking some action, but the Senate President is still resisting any attacks on ComEd…
The House Electric Utility Oversight Committee voted 6-0 on Thursday to roll the rates of Ameren and ComEd back to where they were before this year, freezing them there for another three years and requiring the utilities to pay refunds, with interest, for this year’s increases. The measure is expected to pass the full House next week, but it could face hurdles in the Senate.
* And the horror stories continue…
Kip Hoosier, owner of the Railroad Park Eatery in Camp Point, doesn’t want to hear about political differences. She and her customers just want results.
“It’s killing us. We try to turn a profit and then it’s just going back out on electricity,” Hoosier said.
The restaurant’s bill that covered most of December was $900. The bill that covers early January through the beginning of February is $1,700. Although Hoosier knows January was colder, she can hardly see how rates could climb more than $26 per day. […]
Mendon Mayor Dean Woodruff said the city’s water pumping fees rose from $850 per month to $1,500. Street light bills rose from $450 to almost $900. And in the city’s case, the colder weather did not affect overall usage. […]
One Adams County church congregation saw a bill rise nearly 250 percent.
posted by Rich Miller
Friday, Mar 2, 07 @ 9:15 am
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What reasoning has Jones given, if any, for protecting the profits of ComEd over the interests of Illinois citizens?
Comment by Squideshi Friday, Mar 2, 07 @ 9:28 am
If the press gave this issue as much coverage as Anna Nicole Smith’s death and burial, more of the public would take notice and demand action and explanations from our legislature.!
Comment by Anonymous Friday, Mar 2, 07 @ 10:20 am
Price fixing did wonders for California…
Comment by Crimefighter Friday, Mar 2, 07 @ 10:25 am
Rich, just how long should rates have been frozen, and what would have been the proper exit strategy for the ICC?
Comment by steve schnorf Friday, Mar 2, 07 @ 10:26 am
“Crimefighter” the Enron price fixing scandal in California is completely different than this one. This argument is used often, and it’s totally bogus.
Steve, there were too few safeguards on that reverse auction. It was essentially companies selling power to themselves, either directly or through NY intermediaries. The whole thing was guaranteed to shaft consumers.
Comment by Rich Miller Friday, Mar 2, 07 @ 10:47 am
Rich–Thanks for trying to set Schnorf some what straight. I have an all electric home, have added insulation and a new storm door, plus other “energy” saving measures per AmerenCIPS advice, last October. From November 06 to the bill I received on Feb.1, my electric bill went from $101.00 to $312.00, isn’t that an increase of over 200%. Social Security and a small state retirement isn’t that good.
Comment by WARDOG Friday, Mar 2, 07 @ 12:22 pm
I think Ameren and ComEd helped write the still SECRET ENERGY BILL put our by our VICE PRESIDENT! You know he called all the Energy Companies in to write..whatever they wrote.
Comment by Lied to Friday, Mar 2, 07 @ 3:00 pm
Maybe one way to get the attention of Sen. Jones is to tell him that downstate democrats will not vote for his slate of candidates next time around if he doesn’t deal with escalating utility costs fairly. That’s what I plan to do.
Comment by fedup downstate dem Friday, Mar 2, 07 @ 3:52 pm
Rich,
At the time didn’t the CUB support the reverse auction? I recall Ameren having a quote handy from the then CUB chairman as supporting the reverse auction. It seems to me CUB was intent on opposing any non-govt. solution and that they were going to criticize any reform that didn’t immediately lower costs.
And, why do we blame the Ameren because only two incumbent companies showed up for the reverse auction? It seems to me that the structure of the re-regulation is at fault, which would put the blame squarely on all parties who only looked out for their parochial interests instead of deregulating the industry.
I see barriers to new entrants through price caps on retail consumers, making incumbent provider the default electric supplier and now all this attempted meddling.
And Illinois is like California in the basic structure of the reregulation. Unregulated wholesale markets and price caps on the retail consumers. It works great if prices are falling and predictions of cheap natural gas are realistic.
Comment by Greg Friday, Mar 2, 07 @ 3:59 pm
Wardog,
I don’t feel straight yet. My point was, we made a decision to defy the laws of economics and freeze rates. I understand that politically. From a personal, selfish point of view I wouldn’t have minded gasoline prices being frozen for 8 or 10 years.
But, once we made the decision to freeze, what came next was predetermined. Once you take the freeze off, the market was going to immediately take the price to wherever it would have been by then without the freeze.
So, again, my question was, now that we were ready to turn pricing back to the market, what was the proper strategy for doing that? I’m not arguing with whether we should have frozen or not, or whether we should now (or ever) end the freeze, simply how should we end it?
That’s exactly what is being argued now. Should we continue the freeze, allow gradual (3 year) return to market rates, or bite the bullet all at once.
Comment by steve schnorf Friday, Mar 2, 07 @ 5:06 pm
You can’t put the cart before the horse. You need a market before you can have competition. You must eventually bite the bullet.
The anger out there can be channeled into demand for new market entrants or for short term competitive gain.
With regard to which path to take — gradual transition or shock therapy. We just tried gradual and look what we have. Shock therapy has a better track record over the long term.
Comment by Greg Friday, Mar 2, 07 @ 5:15 pm
Steve schnorf - the point is that with the freeze off, prices are not reverting to MARKET rates as a competitive market for electricity does not exisst. Reverting to market rates presupposes a free market exists to set rates. Consumers have no choice and there is no competition so there is no market. A rate freeze therefore has to be replaced by some pricing mechanism that is not market based.
Comment by Way Northsider Friday, Mar 2, 07 @ 6:39 pm
From 10.2006 article:
“In September, the state held a power auction that allowed suppliers to bid to supply electricity to ComEd and Ameren. The auction set a fixed rate for homes and small businesses and another for large businesses, which would include office buildings.
The auction set residential rates 22 percent higher next year in the ComEd area. To forestall any increase, Illinois House Speaker Michael Madigan has called for a special session to vote for legislation that would extend a nine-year electric rate freeze by another three years.
Though BOMA/Chicago says it supports finding a competitive way to buy electricity, it wants to extend the rate freeze to allow time to review the auction process.
Last year, the building owners’ group proposed an alternative kind of auction, with testimony by former Reagan “supply side economics” guru Arthur Laffer.
BOMA claimed that a key problem with the proposed ComEd auction process is that all winning bidders are paid the same “market clearing” price, which could be higher than the lowest possible bid. BOMA favored a “pay-as-bid” approach, meaning suppliers would sell electricity for whatever they were willing to bid, rather than at a uniform price.
The Illinois Commerce Commission rejected the proposal.”
The link to the full article is:
http://findarticles.com/p/articles/mi_qn4155/is_20061012/ai_n16788332
Comment by Judgement Day Is On The Way... Friday, Mar 2, 07 @ 6:48 pm
Greg, CUB did not support the reverse auction. Your post is factually incorrect. CUB has been fighting the reverse auction since it was announced.
Comment by Rich Miller Friday, Mar 2, 07 @ 9:10 pm
A Check of the IL Board of Elections showed that Ameren CIPS made a donation of $25,000 to Sen. Jones war chest back in 2006, Maybe someone should call Jones on this!
Comment by ANONYMOUS Saturday, Mar 3, 07 @ 6:23 am
Rich,
I know during the period when the reverse auction was taking place CUB opposed it. But, and again it is a statement of recollection not fact (that’s why I asked), that when the bill was passed CUB was on board with the reverse auction. The Ameren spokesman point was that CUB was going to come at them regardless of the process if prices went up at all.
I’ll see if I can find it.
And Way northsider, you are putting the cart ahead of the horse. Competition and its benefits come as a result of allowing freedom, it doesn’t exist prior to the market. You have to start somewhere.
Comment by Greg Saturday, Mar 3, 07 @ 12:05 pm
Greg, as far as I know, the reverse auction was a creation of the ICC, not of the enacting legislation. So, CUB couldn’t have supported the reverse auction when the original bill passed because it wasn’t in the bill.
Comment by Rich Miller Saturday, Mar 3, 07 @ 3:57 pm
Rich,
Okay, I have it. The document I was referring to was the “The CUB Plan for Far Electricity Competition: An Overview” issued in April, 1996. And there is no mention of the reverse auction. I stand corrected. Instead, it largely calls for what we received. Competitive wholesale markets with regulated consumer markets, which is the larger point. Their formula was largely adopted and they largely received what they wanted. However, when it didn’t work out as they expected they blame Ameren.
I have a feeling that Ameren and Com-Ed have probably engaged in some rent seeking to make it a little more difficult for new market entrants. And I was surprised to learn that they weren’t seeking to modernize with smart meter technology to give consumers more control (I think they are moving in that direction) now. But the narrative being told now, evil corporations vs. good government fighting for innocent consumers is not an accurate portrayal of what is occuring. There are plenty of targets to point fingers at.
I may of been confused over the manner of policy implentation with the overall policy planning, but if you read this paper and read what happened, it’s hard to put all the blame on Ameren. It’s the ghost of HL Mencken coming back to say democarcy is the idea that the common man knows what he deserves and he should get it good and hard.
Rich, I appreciate your patience in helping me muddle through this one. Your a good friend. Thanks!
Comment by Greg Saturday, Mar 3, 07 @ 4:51 pm
Greg said… ===Their formula was largely adopted and they largely received what they wanted.===
No, it wasn’t. The reverse auction is a complete scam. No way did CUB want this “formula.”
Comment by Rich Miller Monday, Mar 5, 07 @ 11:59 am