Tuesday, October 10, 2006

Power play

Storyline The same day Gov. Rod Blagojevich walked in Chicago’s Columbus Day parade, a state House committee met for nearly six hours in Springfield and approved a measure to freeze electricity rates in Illinois for three years despite warnings that the state’s two largest utilities could face bankruptcy.

Background Rates have been frozen for a decade due to the 1997 state law that was intended to make the electric industry more competitive in buying electricity and distributing the energy to consumers at a fair price. Competition didn’t quite develop as expected, so the Illinois Commerce Commission and the utilities came up with a type of auction in which more than 20 companies bid to supply energy. The September auction resulted in a projected 22 percent rate increase, or about $13 more per month, for Commonwealth Edison’s residential customers in northern Illinois. Ameren’s residential customers south of Interstate-80 could expect a 45 percent to 55 percent rate increase, costing them about $25 to $35 more per month. Commercial and industrial customers could pay even more. House Speaker Michael Madigan urged the governor to call a special legislative session to approve a rate freeze.

SCENE 1 A last-minute rally of Commonwealth Edison employees formed Monday morning in the Capitol rotunda, kicking off a long day of seemingly staged events. The employees wore white T-shirts that said, “be emPOWERed” and held signs that read, “Keep the lights on with reliable power.”

SCENE 2 Two consecutive press conferences polarized the issue. First, a group called CORE, for Consumers Organized for Reliable Electricity, represented the utility industry and business interests. The group warned that ComEd customers, particularly those in low-income communities, would be negatively affected by a three-year rate freeze because utility companies would have to buy electricity at a lower price than they could pass on to customers, which utilities say would result in bankruptcy and an unstable electricity supply.
Then a group called CUB, the Citizens Utility Board, joined AARP and Lt. Gov. Pat Quinn to argue on behalf of residential customers. “The consumers of Illinois are not going to be fooled by powerful utility companies with scores of lobbyists and corporate executives who are paid more than King Midas and will get even more money if this so-called rate increase is allowed to proceed,” Quinn said. “This is really an epic battle in democracy in the Land of Lincoln.”

SCENE 3 The ComEd employees chanted “reliable power” as soon as the House Electric Utility Oversight Committee convened in the Capitol. Here’s a summary of nearly six hours of debate.
- The Illinois Attorney General’s Office said the utility companies would still make a profit if rates remained frozen, and the energy auction did not achieve the intent of the 1997 law to spur competition.
- Republican Rep. Ron Stephens of Greenville alleged the committee hearing was only called for the political benefit of two vulnerable Democrats up for reelection, Rep. Bob Flider of Mount Zion and Rep. Mike Smith of Canton, both substitutes on the committee Monday. Stephens voted present when the rate freeze proposal was called to a vote.
- ComEd Chief Executive Officer Frank Clark said the company’s $7.8 million in costs would not be recovered by $6.4 million in revenue if the rate freeze took effect. He said a rate freeze also would shatter the stability of the supply of electricity in Illinois.
- Ameren Illinois utilities president Scott Cisel said a rate freeze could cost his company $1 billion more per year than it would receive in revenue. The trickling down effect would start with an immediate layoff of 700 employees and all contractors, as well as delayed connections and customer service.
- Martin Cohen, Blagojevich’s director of consumer affairs, said the governor opposed the auction from the beginning because the 1997 law is ambiguous about how the Illinois Commerce Commission can restructure the way utilities buy and distribute electricity. Cohen said the word “auction” never appears in hundreds of pages of the 1997 law. (Cohen also is the former executive director of the Citizens Utility Board and Blagojevich’s first pick for chair of the Illinois Commerce Commission, which was denied by the Senate.)

SCENE 4 By a vote of 9 yes, 4 no and 1 present, the committee approved the measure to freeze electricity rates for at least three more years. It would need approval by both the House and Senate before January 1 to stop projected rate hikes from taking effect.

Finale After the long day, Speaker Madigan granted a rare five minutes to answer about a dozen questions from the press. “There’s solid evidence coming out of the committee that there’s bipartisan support for this, where both Democrats and Republicans in the committee voting for the extension of the rate freeze,” Madigan said. “And so I think the governor ought to take note of what happened in the committee today. He ought to call the special session.”

One potential hang up could be Senate President Emil Jones Jr.
Madigan: “I’ve talked to Sen. Jones, but I don’t have any commitments from Sen. Jones.”

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