Saturday, July 28, 2007

No Price Roll Back, No Rate Relief, Plus New Giveaways to Illinois Utilities

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.