Power politics

In the midst of all the budget talk, high electricity rates finally emerged in legislative action Wednesday. The House advanced last-minute changes to legislation this morning. The Senate is expected to move a different measure tonight. Whether either chamber is interested in working to approve the same language in the same piece of legislation is yet to be seen.

Under the House measure, not only would consumers pay cheaper electricity rates and get a refund for the higher ones they’ve been paying since January, the state also would create a new Illinois Power Authority to buy electricity and eventually generate its own. A House committee advanced the proposal along partisan lines. The same House committee approved an earlier version of the measure that I wrote about May 25 (scroll down). But Rep. George Scully, a Flossmoor Democrat, changed the bill to do a lot more. Here’s a recap of what’s already been approved:
- Roll back electricity rates to their 2006 levels for one year (consumers would see a credit on their monthly bills);
- Refund customers for the higher rates they’ve paid since January (consumers would get a check in the mail from the utilities);
- Tax power generators to reimburse utilities for the mandated refunds;
- Prohibit utilities from shutting off the power of delinquent payers until March 2008;
- Change condos to be charged residential rates rather than more expensive commercial rates.

Here’s what Scully’s changes would add:
- The tax on power generators would expire once all the refunds and the new efficiency initiatives were paid for (the initiatives would aim to reduce the amount of power in demand at "peak" times when electricity is most expensive);
- Separate electric utilities from their parent companies and prevent utilities from joining regional transmission organizations that are federally regulated;
- Abolish the current Illinois Commerce Commission and appoint five new members with specific qualifications to avoid conflicts of interest with the electric industry;
- Create the Illinois Power Authority to procure the cheapest possible power and eventually generate its own power using Illinois coal;
- Require utilities to disclose whether they’re behind advertising campaigns and prohibit utilities from passing those advertising costs on to consumers.

Utilities obviously hate the plan. Commonwealth Edison CEO Frank Clark had the most colorful interpretation, saying the legislation is “blatantly unconstitutional,” “socializes the electricity industry,” and the equivalent of “going to Los Vegas and throwing dice.” More specifically, he said the Illinois Power Authority would buy and sell power but have no responsibility for the outcome, leaving utilities to deal with customers if something goes wrong or if rates are sky high.

A Midwest Generation representative added this assessment, saying it would take the industry a long, long time to put Humpty Dumpty back together again. “In two days, we’re being asked to turn this industry on its head,” said Becky Lauer of Midwest Generation, adding the measure would ruin competition and incentives to keep costs down, risking unreliable power supplies for customers. Ultimately, she said consumers would pay the price.

Rep. Karolyn Krause, a Mount Prospect Republican, said this doesn’t give immediate rate relief and will be tied up in lawsuits for more delayed relief.

Scully could call the legislation any time, but he said he feels no pressure to get it on the House floor before Republicans gain legislative power after May 31, the constitutional deadline. “I don’t see [Thursday] as a deadline at all,” he said. “I think we’ll go into overtime.” He said he’d rather that the House approve the measure on its merits than on party lines. Yet, Republicans have repeatedly voted against his bill.

Meanwhile, Attorney General Lisa Madigan, filed a lawsuit in Jackson County Circuit Court against AmerenIP and AmerenCIPS for allegedly deceiving customers shortly before a 10-year rate freeze came off the books January 2. According to a release, Madigan said the Ameren Illinois companies enticed customers to sign up for all-electric services by promising a discount, but they knew months before that they would end the discount as soon as the electricity rate freeze was lifted. “Ameren IP and AmerenCIPS took unfair advantage of their customers,” Madigan said in the release. “Many of these families invested in all-electric power or installed new electric appliances as part of home construction or remodeling because they were looking at the long-term savings that the all-electric discount program would provide. Now their investment means nothing but additional hardship and incredible additional expense.”

Ameren Illinois spokesman Leigh Morris responded in an e-mail: “AmerenIP and AmerenCIPS have not been formally served with the lawsuit. We understand the nature of the allegations which are under review and take them very seriously. The Ameren Illinois utilities expect to prevail in this lawsuit because the companies have not improperly promoted all-electric rates.”

“The rates that are in effect are lawful and have been approved by the Illinois Commerce Commission. The power prices associated with these rates were not known until the September 2006 auction, and the delivery service components of the rates were not known until November 2006. Ameren Illinois utilities’ rates now are approximately at the national average. The change in rates comes after a 10-year rate freeze and a legislatively mandated rate reduction.”

Later tonight, we’ll follow the Senate’s action on a different electricity rate freeze bill. Who knows if any electricity legislation will land on the governor’s desk any time soon.

Also later tonight, we’ll follow House action to find out whether House Speaker Michael Madigan moves a no-growth budget that would propose a short-term solution. If so, lawmakers would have to come up with a longer-term revenue and spending plan during an expected overtime or special session.