Friday, May 25, 2007

Going after the big guys

Customers would get a rebate and pay cheaper electricity rates under a proposal approved along party lines in a House Committee late Thursday night. A $2 billion tax on power generators would allow utilities to start doling out reimbursements in January, a full year after most Illinois customers were hit with higher utility bills. Last January, a decade-long rate freeze was lifted. Under the measure, electricity rates would be rolled back and frozen at their 1997 levels for one year.

The major power companies subject to the tax — mainlny Exelon Generation, Ameren Generation, Midwest Generation, Dynegy and Dominion — predictably opposed the idea and threatened financial disaster. They also said Thursday night that the tax would be passed on to consumers (they would be taxed on their capacity for producing electricity, not on the actual amount of electricity they produced).

“Are you trying to run out … profitable business in Illinois?” asked Rep. Dave Winters, a Shirland Republican. “Because that’s what the message of this bill is, is you’re trying to destroy jobs, destroy industry that needs electricity. And believe me, if this goes through, you might as well shut the doors, blow up the bridges because nobody’s going to want to live in Illinois if there’s no power available. And this will do it.” He pointed out that the measure has no sunset, and his Republican peers on the committee didn’t like that the measure fails to specify what the state could do with the revenue once customers received their rebates.

The House sponsor, Democratic Rep. George Scully of Flossmoor, said he knows this would only yield a short-term solution, but it would buy time for lawmakers to come up with a longer-term idea for procuring power (read: getting rid of the Illinois Commerce Commission’s auction process that set electricity prices for distribution companies this year). Scully said, again, he doesn’t believe the power companies’ threats. “The hyperbole that the sky was going to fall that I heard tonight was over the top. The only thing that didn’t really disturb me is I’ve heard the same thing so many times before. That’s the exact same rhetoric. I don’t believe it this time. I didn’t believe the last time.”

Other changes in the measure include prohibiting utilities from shutting off power until March 2008, and condominiums would be charged residential rates rather than commercial rates they’ve been paying since January. Scully said he could call the bill today, Friday, but he hasn’t talked to anyone in the Senate about whether it has a chance in that chamber. The Citizens Utility Board executive director, David Kolata, said one good sign is that Sen. James Clayborne, a Bellville Democrat, first proposed a similar idea in his chamber. (Clayborne later said he sponsored the bill to tax power generators as a way to get them to the bargaining table, not because he thought it would solve any problems.) It’s also the chamber that hijacked Sen. Gary Forby’s original proposal to freeze rates for the Ameren Illinois and Commonwealth Edison utilities. Only Ameren was left in the one-year rate freeze measure approved by the Senate.

Earlier Thursday, House Speaker Michael Madigan surveyed his members about offering property tax relief for Cook County residents and about which income-tax breaks they’d end for businesses. Members received a list of some 20 “corporate loophole” ideas they would close to raise revenue. Next to the possibilities were the names of groups that would be against it.

We’ll blog again later today about legislative action, including whether the Senate acts on the governor’s Illinois Covered insurance program and the gaming proposal that we talked about yesterday that would create up to four new casinos in the Chicago area.

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