From Belleville.com:
BY MIKE FITZGERALD
News-Democrat
What's not to like about the electricity rate relief package that Gov. Rod Blagojevich is poised to sign?
Once it becomes law, the bill would shower $1 billion worth of rebate checks and credits on Ameren and Commonwealth Edison customers, while slashing their 2007 electric rates.But energy experts interviewed -- citing sobering lessons from California and Canada -- contend the deal could boomerang badly, shooting up power rates and leaving taxpayers on the hook for billions of dollars' worth of soured deals. How could this happen?
Because the rate relief bill sets up the Illinois Power Agency. In theory, this new arm of government could flex its immense purchasing muscle to negotiate low electricity prices, selling power with little mark-up to Ameren and ComEd, which would pass on the savings to customers.
David Kolata, the executive director of the Citizen's Utility Board in Chicago, compared the new agency to Costco or Wal-Mart in its buying power.
"I'm cautiously optimistic this will work and produce lower prices," Kolata said.
But economist Robert Michaels predicted a different outcome in Illinois, based on the track record of the California power authority.
"Basically, you're simply putting a lot more of ratepayers' money on the table and saying, 'Let's let the state government gamble with it,'" said Michaels, an economics professor at California State University-Fullerton.
Panicked by a power crunch in 2001 -- which was manipulated by rogue traders with Enron -- California's power authority signed long-term electricity deals at huge mark-ups that taxpayers there are still paying for, Michaels said.
"This is just unbelievable," he said of Illinois. "You're basically looking to make the same blunders California did. You have an incredible train wreck to behold."
State Rep. Tom Holbrook, D-Belleville, argued that a state power authority makes more sense than what it replaces -- the reverse power auction in September that Ameren and ComEd designed.
The auction sent their profits soaring, but also triggered a harsh public outcry as electricity bills doubled and even tripled for many residential customers when new rates took effect Jan. 2.
"You can debate it all day. That's the system we have here, and that's the relief that's in there," Holbrook said of the new power agency. "And it's better than what we had, and I don't hear anyone putting any better alternatives on the table."
Jeff Mayer, the president and CEO of MXenergy, of Stamford, Conn., predicted that Illinois' power authority will backfire, based on the experiences of California and the Canadian province of Ontario, which set up a power agency in 2004.
"All this is going to do is add another layer of cost, and it's going to drive consumer prices higher, not lower," said Mayer, whose firm supplies natural gas and electricity to customers in the U.S. and Canada, including Illinois.
If the rate relief bill has a "saving grace," it is that it puts government in the middle of the pricing process, defusing the populist reaction to high power costs, Mayer said.
"The prices aren't going to change," Mayer said. "But at least the utilities won't be cannon fodder anymore."
House Speaker Mike Madigan proposed the power authority three months ago. With the help of Emil Jones Jr., the Senate president, Madigan sent the rate relief bill racing through the General Assembly in record time.
The measure, which spans more than 300 pages of text, landed on lawmakers' desks on Wednesday.
A day later it sped through both statehouse chambers with no public hearing or legislative scrutiny. The final bill resulted from secret talks between a small team of lawmakers headed by state Sen. James Clayborne, D-Belle-ville, and Ameren and ComEd.
Scott A. Cisel, the president of Ameren Illinois, called the bill the product of an "open process" that benefited from the input of lawmakers and utility experts.
"And so I think an adequate amount of time has occurred enabling all the parties to carefully consider the various different scenarios that we can face," Cisel said.
Patty Schuh, a spokeswoman for state Sen. Frank Watson, R-Greenville, disagreed. Senate Democratic leaders allowed only four members to speak on the bill Thursday before voting on it, Schuh said.
"So instead of allowing a full public hearing on the issue and on the implications of this package, they rushed it through, and that's a mistake," Schuh said.
A decade ago, the General Assembly moved too fast when it passed the electricity de-regulation law that led to the problems the current rate relief bill is trying to fix, Schuh said.
"We should've learned from that," she said. "You cannot rush utility legislation, and that's what this is."
Contact reporter Mike Fitzgerald at mfitzgerald@bnd.com or 239-2533.
© 2007 Belleville News-Democrat and wire service sources. All Rights Reserved. http://www.belleville.com
Sunday, July 29, 2007
Saturday, July 28, 2007
No Price Roll Back, No Rate Relief, Plus New Giveaways to Illinois Utilities
From Belleville.com:
By RYAN KEITH
Associated Press Writer
A $1 billion relief package for consumers fed up with high electric rates sailed through the Legislature, but not without criticism that highlighted two different ways of looking at the complex, emotional issue.
Most lawmakers saw it as a "glass half-full" solution - not perfect but much better than doing nothing. It refunds some of the rate increases consumers have endured and creates a new agency to minimize future price surges.
But others view the plan, passed by the Legislature Thursday, as half-empty. It fails to roll back rates, it allows more increases and it halts legal efforts to determine whether power companies colluded to inflate prices.
The critics say their constituents deserve more.
"They see through this," said Sen. John Jones, R-Mt. Vernon. "The general public's not dumb. They understand what's going on up here more than some people think they do."It's fitting that disagreements would continue even after the relief package was sent to the governor's desk. Nothing polarized legislators this year like the problem of electric rate increases.
Prices spiked in January, when a 10-year freeze on electric rates ended. The outcry from angry consumers forced legislators into action. But agreeing on what action took months.
House Speaker Michael Madigan pushed for rolling back rates and freezing them again, while Senate President Emil Jones wanted to negotiate a rebate from the power companies and was willing to settle for much less than $1 billion.
In the end, the two leaders agreed to make Ameren and ComEd return about half of the increases over four years and to set up a new state agency to negotiate better power prices in the future.
Democrats, utilities and consumer groups take the "half-full" approach to the compromise. No, it didn't roll back rates as much as they wanted. But if nothing else, it did something to deal with consumers' complaints they were paying too much for power.
"I think most people are positive that something happened and that finally something got done after all this time," said Rep. John Bradley, D-Marion.
The relief package gives Ameren customers at least $100 back this year, and many will see much larger checks. ComEd customers, who saw smaller increases, will get about $80 back this year.
Advocates say $1 billion is a better deal than a rate freeze, which sounded enticing to consumers but might have placed the utilities in financial peril and been tied up for years in costly court battles.
And it's much more than the $50 million and $150 million the utilities originally offered in negotiations, they note.
"I think this is what we had to do and I think it was the best thing for everybody," said Sen. Dale Risinger, R-Peoria.
Even better than the rebates, they say, are the long-term moves to keep prices reasonable.
An auction process that was used to set rates last year is being thrown out. Instead, a new Illinois Power Agency will use independent experts to negotiate deals, much like buying clubs for bulk purchases of prescription drugs.
Even if the new agency isn't able to get consumers cheaper rates, at least the old auction - which some argued was rigged to bilk ratepayers - is dead, they say.
The agreement also ends several lawsuits filed by Attorney General Lisa Madigan's office contending collusion and fraud by the utilities. Advocates say giving up on those lawsuits provides certain relief instead of uncertain and costly court fights.
But for some Republicans, the deal was too much show, too little go.
The $1 billion, while certainly large, amounts to only a few bucks a month for people hit hard by increases. That's only a fraction of the billions of dollars the utilities and power generators will collect over the same period in rate increases.
"No one in my district has contacted me who was fooled by this proposal," said Sen. Bill Brady, R-Bloomington. "Everyone that has talked to me thinks that it's laughable."
Rates will slowly go up over the next several years, and could go up even more if the new state agency can't negotiate good deals. And critics argue the new power agency will essentially duplicate work done by the Illinois Commerce Commission.
Some even compared the agreement to utilities paying a bribe. Consumers get some money, but the electric companies get out of lawsuits that might have shown whether the utilities engaged in bad business practices.
"The consumers should be protected, not the utilities," said Rep. Carolyn Krause, R-Mount Prospect.
Lawmakers on both sides expect the issue will play a role in next year's elections. Supporters will blast the lawmakers who voted against $1 billion in rebates for consumers, and critics will play up consumer disappointment in getting back only part of their rate increases.
The next few months could help determine which side has the advantage.
If consumers can live with the money they get back and rates don't jump much, the "half-full" group will look good. But if rebates don't go smoothly and prices continue to climb, critics will have a better argument.
One top lawmaker predicts both sides will be able to make their case to voters.
"There's an explanation on all sides as to how and why you did what you did," said Senate Minority Leader Frank Watson, R-Greenville.
By RYAN KEITH
Associated Press Writer
A $1 billion relief package for consumers fed up with high electric rates sailed through the Legislature, but not without criticism that highlighted two different ways of looking at the complex, emotional issue.
Most lawmakers saw it as a "glass half-full" solution - not perfect but much better than doing nothing. It refunds some of the rate increases consumers have endured and creates a new agency to minimize future price surges.
But others view the plan, passed by the Legislature Thursday, as half-empty. It fails to roll back rates, it allows more increases and it halts legal efforts to determine whether power companies colluded to inflate prices.
The critics say their constituents deserve more.
"They see through this," said Sen. John Jones, R-Mt. Vernon. "The general public's not dumb. They understand what's going on up here more than some people think they do."It's fitting that disagreements would continue even after the relief package was sent to the governor's desk. Nothing polarized legislators this year like the problem of electric rate increases.
Prices spiked in January, when a 10-year freeze on electric rates ended. The outcry from angry consumers forced legislators into action. But agreeing on what action took months.
House Speaker Michael Madigan pushed for rolling back rates and freezing them again, while Senate President Emil Jones wanted to negotiate a rebate from the power companies and was willing to settle for much less than $1 billion.
In the end, the two leaders agreed to make Ameren and ComEd return about half of the increases over four years and to set up a new state agency to negotiate better power prices in the future.
Democrats, utilities and consumer groups take the "half-full" approach to the compromise. No, it didn't roll back rates as much as they wanted. But if nothing else, it did something to deal with consumers' complaints they were paying too much for power.
"I think most people are positive that something happened and that finally something got done after all this time," said Rep. John Bradley, D-Marion.
The relief package gives Ameren customers at least $100 back this year, and many will see much larger checks. ComEd customers, who saw smaller increases, will get about $80 back this year.
Advocates say $1 billion is a better deal than a rate freeze, which sounded enticing to consumers but might have placed the utilities in financial peril and been tied up for years in costly court battles.
And it's much more than the $50 million and $150 million the utilities originally offered in negotiations, they note.
"I think this is what we had to do and I think it was the best thing for everybody," said Sen. Dale Risinger, R-Peoria.
Even better than the rebates, they say, are the long-term moves to keep prices reasonable.
An auction process that was used to set rates last year is being thrown out. Instead, a new Illinois Power Agency will use independent experts to negotiate deals, much like buying clubs for bulk purchases of prescription drugs.
Even if the new agency isn't able to get consumers cheaper rates, at least the old auction - which some argued was rigged to bilk ratepayers - is dead, they say.
The agreement also ends several lawsuits filed by Attorney General Lisa Madigan's office contending collusion and fraud by the utilities. Advocates say giving up on those lawsuits provides certain relief instead of uncertain and costly court fights.
But for some Republicans, the deal was too much show, too little go.
The $1 billion, while certainly large, amounts to only a few bucks a month for people hit hard by increases. That's only a fraction of the billions of dollars the utilities and power generators will collect over the same period in rate increases.
"No one in my district has contacted me who was fooled by this proposal," said Sen. Bill Brady, R-Bloomington. "Everyone that has talked to me thinks that it's laughable."
Rates will slowly go up over the next several years, and could go up even more if the new state agency can't negotiate good deals. And critics argue the new power agency will essentially duplicate work done by the Illinois Commerce Commission.
Some even compared the agreement to utilities paying a bribe. Consumers get some money, but the electric companies get out of lawsuits that might have shown whether the utilities engaged in bad business practices.
"The consumers should be protected, not the utilities," said Rep. Carolyn Krause, R-Mount Prospect.
Lawmakers on both sides expect the issue will play a role in next year's elections. Supporters will blast the lawmakers who voted against $1 billion in rebates for consumers, and critics will play up consumer disappointment in getting back only part of their rate increases.
The next few months could help determine which side has the advantage.
If consumers can live with the money they get back and rates don't jump much, the "half-full" group will look good. But if rebates don't go smoothly and prices continue to climb, critics will have a better argument.
One top lawmaker predicts both sides will be able to make their case to voters.
"There's an explanation on all sides as to how and why you did what you did," said Senate Minority Leader Frank Watson, R-Greenville.
Saturday, July 14, 2007
Illinois Legislature Sells Out to Utilities - No Price Roll-Back Planned As Utilities Rape Illinois
OK, if you have been following the saga of Faces you know that the Illinois State Legislature allowed Ameren and ComEd to more then double their utility rates since Janaury 2007. Both utitities have been pouring money in the legislator's pockets to insure that they (the utilities)will collect over $8 billion in additional profits over the next 3 years. Small businesses like Faces have been crippled by these utitity increases. One of the primary reasons that we were forced to close was because our electric bills would have exceeded $8000 to $10,000 a month this summer. Illinois legislators have failed the people and it looks like there will be no relief in sight. According to Stltoday, both utilities will be allowed to continue to charge the increased prices with no roll back or freeze. Their concession to the people of Illinois will be some sort of credit or rebate over 3 years of less then one billion dollars. So to be clear...the utitilites have bought the legislature like cheap whores and will be allowed to continue raping the people of Illinois to the tune of over $7 billion. Without some sort of fair and equitible roll-back of these prices, it becomes that much harder for us to develope a business plan that would insure that Faces could survive or prosper. We do not see how any Illinois small business will be able to survive without doubling or tripling the prices that they charge their customers.
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