Energy bust

It very well could be too good to be true for Mattoon and the state, which lost federal support of the groundbreaking FutureGen coal power plant one month after winning the project. I thought something was peculiar when I listened to President George W. Bush’s last State of the Union speech Monday night. He mentioned the need “to build a future of energy security” and pioneering “a new generation of clean energy technology,” but he didn’t name FutureGen, an international project touted to do just that.

Mattoon was selected by the energy industry group, FutureGen Alliance, to host the $1.75 billion project capable of generating energy with much less pollution. It was to be an economic boon and an environmental breakthrough. The blow to Mattoon and the entire state came Tuesday after news of a meeting between the U.S. delegation of Sen. Dick Durbin and Rep. Tim Johnson and U.S. Energy Secretary Samuel Bodman, according to published reports.

Durbin said in a statement that the feds’ move was unmatched in “cruel deception.”

“After our meeting today it is clear that Secretary of Energy Sam Bodman has misled the people of Illinois, creating false hope in a FutureGen project which he has no intention of funding or supporting.”

Gov. Rod Blagojevich said in a statement that the state will not give up the fight to make FutureGen a reality in Illinois.

Even if Illinois were to fight and win a scaled-down version of FutureGen or another kind of clean coal technology project, it likely would cost a lot more than the original estimate. FutureGen Alliance’s Michael Mudd gave an online interview about the unknown reason the U.S. Department of Energy had yet to issue a decision by mid-January. But he also said the more delay, the higher the cost — as much as $10 million a month — because of inflation.

Editor’s note: The upcoming February issue of Illinois Issues has an article about FutureGen that was printed before it could be updated with today’s news. Watch the blog and our March issue for more updates.

Utility debate returns
Get ready for another round of energy debates involving natural gas and electricity rates for Commonwealth Edison and Ameren Illinois customers. A group of consumer advocates gathered Tuesday to say consumers have a voice and should get involved in the rate-setting debates before the Illinois Commerce Commission.

Ameren proposes collecting about $245 million from customers of all three subsidiaries to deliver natural gas and electricity. The utility also proposes something called “decoupling,” which would allow it to add a surcharge on natural gas delivery rates to make up for a decline in the average amount of therms used by customers. For instance, Beth Bosch of the Illinois Commerce Commission gave this example: If Illinois has a warm winter and Ameren Illinois customers use less heat, then the utility would lose money. There is a cost to deliver the natural gas no matter how much or little customers use, says Leigh Morris, Ameren Illinois spokesman. He adds the amount of the surcharge would be minimal. The proposal also could benefit customers in the opposite scenario: If Illinois had a colder than normal winter and the utility made more money, then customers could get a credit on their bills.

The Illinois attorney general opposes that billing scheme. Janice Dale, chief of the public utilities bureau in the AG’s office, says it’s “a plan to have customers pay for natural gas service that they won’t use.”

Dale joined AARP at a Statehouse news conference Tuesday. Along with the Citizens Utility Board, they want to organize opposition to proposed rate increases and ask customers to attend public hearings before the Illinois Commerce Commission accepts some, all or none of the rate increases. Any rate changes wouldn’t be effective until at least this fall, according to Bosch.

Morris says Ameren Illinois asks customers to participate with an open mind about the company’s proposal, considering those rates apply only to the cost of delivering the power, amounting to about 25 percent of customers’ bills. Last year’s political turmoil contributed to the company’s poor credit rating, which makes it more expensive to borrow money when other costs — equipment, operations, fuel — are increasing. The company also plans to spend $900 million on infrastructure through 2010. “A rate increase is essential to our ability to meet our mission,” he says.

Public hearings are scheduled for 7 p.m. throughout Ameren’s service area:
- February 4 at the Decatur Public Library
- February 6 at Marion’s Williamson County Pavilion
- February 13 at the Belleville City Council chambers
- February 19 at Peoria City Hall
- February 26 at the Quincy City Council chambers
- February 28 at the Champaign City Council chambers.

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Revenue, health care and electricity rates

The House and Senate advanced different pieces of legislation — a cigarette tax and a health care plan in the Senate and an electricity rate relief plan in the House — but there’s no clear indication that these individual pieces could actually converge into the much-delayed state budget. House Democrats spent about three hours in what felt like an end-of-session gathering behind closed doors Wednesday afternoon. And each of the pieces is expected to be heard on the floor in their respective chambers Thursday, but their futures in the opposite chambers are murky. The same goes for their future in Gov. Rod Blagojevich’s office. As House Speaker Michael Madigan said of the cigarette tax advance in the Senate, “We’ll see.” Here’s a recap of the different measures:

Cigarette tax
BY DEANESE WILLIAMS-HARRIS
Seven days before a possible government shutdown, lawmakers moved a bill out of committee that would generate additional revenue for the state by taxing smokers.

The measure would increase the tax on cigarettes by 75 cents a pack. If approved by both chambers and signed by the governor, the proposed tax on cigarettes would generate about $328 million a year.

It’s unclear how the money would actually be spent, but its sponsor, Chicago Democratic Sen. John Cullerton, said that so far, the money would go into the state’s general revenue fund and be intended to fund a road and school construction plan. Cullerton also said legislators have their own wish lists for the money, such as education funding, capital and health care. However, he assured the final decision would be made collectively by the General Assembly.

Sen. Chris Lauzen, an Aurora Republican, wasn’t so quick to jump on the cigarette tax band wagon. He said Democrats would control where the money goes. “What’s happened to the rest of us who serve a quarter of a million people back home is truly disgraceful,” he said, mentioning unfunded projects for school and road construction in Republican districts.

“Somebody’s [going to] have to take a chance,” Cullerton said. “I know one thing. We can’t fund it at all if there’s no new revenue. This is new revenue, and it’s the easiest way I can think of to get support of three-fifths.”

Opponents voiced concern about small businesses losing revenue from people crossing the borders to buy cigarettes. Coincidentally, Indiana increased its cigarette tax by $1.01. In Washington, the U.S. Senate also approved a $1 tax on cigarettes.

The Illinois Department of Revenue said it supports the proposed cigarette tax, straying away from the governor’s campaign pledge not to sign any legislation that would increase sales tax. “This is different than the sales tax,” said Larry Doll, spokesman for the department. “It’s an excise item. It’s different than a general sales tax. A sales tax is applied to all items including necessities. People need food, clothing, what have you, whereas I don’t think you can make the same argument for cigarettes.” Doll also said it’s his understanding that the governor would sign the legislation if it wins approval.

The governor’s office hasn’t confirmed that yet. If approved, the legislation would immediately go into effect.

Revamped health care proposal
BY DEANESE WILLIAMS-HARRIS
Despite a weird afternoon of goofs and misunderstandings, the governor’s scaled-back Illinois Covered health care proposal moved out of a Senate committee with a 7-4 vote along party lines.

The governor wants to pay for the $1.2 billion initiative with a 3 percent payroll tax on businesses that employ at least 10 but that don’t provide comprehensive health benefits to them. The biggest question of the day was how many businesses would actually be subject to the tax. The committee will have to wait for that answer because no one had those numbers on hand.

The $1.2 billion would go into a trust fund, and the General Assembly would be limited to spending 90 percent of the cash per year to curtail overspending.

Some Senators voiced concern that almost 500,000 of the 1.4 million uninsured and underinsured Illinoisans wouldn’t qualify for either of the two health care packages the governor proposed. Eligibility would be modified as the program moves forward, depending on the revenue generated. Sen. Carol Ronen, the measure's sponsor and Blagojevich ally, estimates that 300,000 people will qualify for one of the programs, and 600,000 would qualify for a second option.

Todd Maisch of the Illinois Chamber of Commerce said the payroll assessment tax would “target the most vulnerable employers.” He also called the tax erroneous and excessive. “The major change is funding,” he said. “This is not a scaled back proposal.”

The proposal will most likely be called for a vote in the Senate this week.

Electricity rate relief
BY BETHANY CARSON
The $1 billion in electricity rate relief for Ameren Illinois and Commonwealth Edison customers is one step closer to becoming law. It’s not without controversy, however, as House Republicans aren’t happy that they weren’t part of closed-door negotiations for most of the past month. If Wednesday night’s House committee hearing was any indication, House Republicans could protest by voting “no” or “present” when the legislation reaches the House floor. But it would still have enough votes among Democrats to return to the Senate.

House Speaker Michael Madigan seemed to smile as he welcomed the chance of Republican rejection. “If there’s some member of the legislature who wishes to vote ‘no’ against $1 billion of rate relief, be my guest.” In other words, a Republican “no” vote for rate relief would make prime campaign literature for the Democrats during election season — it’s the equivalent of saying their opponent voted against health care for children or meals for the elderly.

One controversial portion of the deal that’s unsettling to some is that the state would dismiss six lawsuits brought against the utilities and power companies as a result of the September power auction. That includes the case filed by Attorney General Lisa Madigan’s office that alleged the power companies colluded to set electricity prices that robbed customers of an extra $4.3 million.

Rep. Jim Durkin, a Western Springs Republican, was one of the skeptics. “How’s the public protected by not following through and getting to the bottom of each one of these lawsuits instead of just dismissing them with the signing of this letter of understanding and the passage of this legislation? How in good faith can the state of Illinois settle those two cases when you have made serious allegations of manipulation and fraud upon the public?” He was the lone Republican to vote “present” in committee because he said he supported offering rate relief but didn’t like the process of coming to this deal.

Susan Hedman, senior assistant attorney general, justified the dismissal of the lawsuits by saying her office believed rate relief was needed now and that the procurement of power needed to be reformed for the future. “There’s a tradeoff between getting relief up front and waiting. If we do not get reforms in the procurement process now, it would mean that every year that we’re litigating that case, there could be another reverse auction with the danger of the same problems that we observed last time.” She later cut someone off and said, rather bluntly, that without dismissal of the lawsuits, “the deal falls apart.”

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How do you spell relief?

A long awaited plan for electricity rate relief was announced Tuesday by Illinois’ two major utilities. It’s expected to be discussed and possibly voted on in the House Wednesday. The package is the result of months of public hearings and closed-door meetings, but it may not meet some expectations.

Customers around the state could get a lump sum credit in their September bills ranging from about $50 to about $80, which would cover some of their increased costs for the first half of the year. Starting in October, they would get monthly credits that would eventually decrease until they phased out in 2009.

Officials from the utilities — Commonwealth Edison that serves northern Illinois and Ameren Illinois that serves south of I-80 — held separate press conferences in Springfield to say they supported the compromise proposal.

“It is a very expensive deal for, I think, our industry and for the generators in this state, but I think it does strike all of the right balances,” said Frank Clark, ComEd chairman and chief executive officer.

It’s expensive for power generators because they’re footing most of the $1 billion package, which prevents Clark and Scott Cisel, Ameren Illinois president and chief executive officer, from projecting financial bankruptcy like they did for months as the General Assembly threatened to refreeze electricity rates to give customers a break. But in exchange for the power generators paying for the credits, state lawmakers agreed not to reinstate a freeze or levy a tax on power generators, Clark said.

There’s also something for everyone. House Speaker Michael Madigan and Attorney General Lisa Madigan would get their Illinois Power Authority, a new public power agency that would buy power on behalf of the utilities and potentially generate its own power. Gov. Rod Blagojevich also would get some of his environmental policy proposals for energy efficiency and renewable resources. And Senate President Emil Jones Jr. doesn’t have to vote on a rate freeze.

But it’s not a completely rosy picture. There are lots of questions about the pending legislation. State Rep. Bill Black, a Danville Republican, pointed out on the House floor Tuesday that the monthly credits won’t live up to the hype. “You may see a 70 percent reduction in the increase, but you’re not going to get a 70 percent reduction of your bill,” he yelled. He’s right.

Here’s a chart with examples of Ameren Illinois bills before and after the relief. Regional info can be found here. ComEd customers in October and beyond would get an average monthly credit of about $7 — that’s half of the $14 average increase they were paying over their 2006 monthly bills. “When you hear us talk about $7 a month, I know that’s not overly exciting,” Clark said, “but it’s approximately half of the increase.”

From the industry’s point of view, here’s a few ongoing questions:
- A newly created Illinois Power Authority would buy power on behalf of the Illinois utilities, but it’s unknown how successful the state would be in buying power at a cheaper rate than the utilities.
- It’s also unknown how the state would succeed in building power plants and essentially competing with existing power suppliers.
- It’s also unclear how the proposal would be flexible in allowing utilities and their parent companies to restructure. Further, what are the implications of any restructuring?

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One of those weeks

Monday’s events could set the tone for an action-packed but odd week at the Capitol. Strange bedfellows flew around the state to announce an electricity rate relief package that took months to unfold, and the governor spent the day in Chicago while busloads of Chicago ministers drove down to Springfield to rally and pray outside of his Statehouse office, as well as the House and the Senate.

First, the strange bedfellows of Senate President Emil Jones Jr., House Speaker Michael Madigan and state Attorney General Lisa Madigan flew around the state Monday announcing a long-awaited deal to relieve electricity rates for Ameren Illinois and Commonwealth Edison customers. Details of the agreement are provided from the House Democrats’ Web site in this press release and this fact sheet. Highlights: In addition to one-time credits, customers’ bills would reflect between 40 percent and 70 percent off of the 2007 rates. The rates going forward would be set by the new Illinois Power Authority, which would scrap the type of auction that set this year’s rates and that was supposed to transition Illinois into a deregulated system. Legislation is expected to move soon.

Second, four busloads of ministers and education advocates tried to storm the Capitol to urge state lawmakers and the governor to increase education funding. When guards calmly told them they couldn’t get onto the floor of each chamber, the group knelt in prayer and then sang spiritual hymns as they walked to the next door. When they approached the governor’s office, they were again greeted by guards and then by the governor’s chief of staff, John Harris. Their momentum deflated when Harris told them the governor wasn’t even in the Capitol, that he was in Chicago signing the statewide smoking ban. The ministers were invited to a meeting with all legislative leaders and the governor in the Capitol Tuesday, but most of them returned to their busses.

Earlier, the ministers held a Statehouse press conference and said lawmakers have a “moral obligation” to increase education funding. They stressed they weren’t in town for anyone’s agenda other than the children’s and that they were in Springfield to urge the governor to stand by his promise to put more money into education. (Blagojevich and Jones proposed $1.5 billion for education.)

“We’ve had the governor to our churches on several occasions, singing, what’s his favorite song, ‘Precious Lord, take my hand,’” Rev. Roosevelt Watkins of Bethlehem Star Church in Chicago said. “I think that if there’s no budget, absolutely, he’ll get a different reception. Not only him, but we’ll have Emil Jones, who we have a lot of lines with. All of them, they all will get a different reception.”

But Rep. Arthur Turner, a Chicago Democrat, said the group is the first of many to stressing the need for more education funding, but they’re just starting to realize the complexity of weighing all the budgetary needs. “If you’ve got funding in the schools and the CTA busses aren’t running on a school day, you’re still no better off than you were before,” he said after speaking with the ministers.

Third, AFSCME Council 31, which represents about 40,000 state employees, sent a letter Friday urging the leaders and the governor to avoid a government shutdown, preferably with a 12-month budget or at least with another one-month budget.

Fourth, the governor signed the statewide smoking ban in Chicago Monday. It bans smoking in restaurants, bars, bowling alleys, hospitals, nursing homes, sports arenas, casinos and other places January 1, 2008.

More action gets under way Tuesday.
Deanese Williams-Harris contributed to this report.

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Electricity deal could come soon

The Capitol is buzzing about a potential deal on electricity rate relief for Ameren Illinois and Commonwealth Edison customers, who have been paying between an average of 25 percent to 55 percent higher electricity rates since a state law expired January 2.

The general framework of the relief package footed by the power utilities and potentially their parent companies is expected to total about $1 billion — doubling the former proposal — and offer relief for customers over three years, according to Sen. James Clayborne, a Belleville Democrat who’s been following the negotiations. Customers could receive checks for credits as early as two weeks after the agreement were approved by the state legislature and processed through the Illinois Commerce Commission. Another major change could be the creation of an Illinois Power Authority, which I wrote about in our June issue and could procure and generate power for Illinoisans.

We’ve been following the electricity rate debate and private negotiations for months, but Clayborne says, “We’re very, very close,” and, “I think we pretty much have an agreement. Logistically, we have to work out some issues.”

Rep. John Bradley, a Marion Democrat also close to the negotiations, said those details that still have to be ironed out are enough to stop him from screaming from the rooftops that a deal is coming. “The deal isn’t completely done. It’s being finalized. It’s in the final stages, but it’s not completely done.” But he did say he didn’t deny anything Clayborne said or deny that the deal is very close to being turned into legislation for the General Assembly to consider.

Ameren Illinois spokesman Leigh Morris had this to say: “I’m very optimistic that we are going to see a positive resolution to all of this in the very near future.” He added, “We certainly will be making the appropriate announcements to the news media. I think you will hear the thunder of feet running to the Blue Room.” (The Blue Room is in the Statehouse Press Room where people hold press conferences in front of a blue curtain.)

Gov. Rod Blagojevich is expected to approve an electricity rate relief package that comes his way. “For several months, the governor has urged the legislature to pass a bill that provides consumers significant relief from skyrocketing electric rates,” wrote Blagojevich spokeswoman, Rebecca Rausch, in an e-mail. “We understand negotiators are close to an agreement, and we look forward to reviewing the final product.”

Small group meetings or small progress?
The governor has been in town since Monday, but no official leaders’ meetings have convened. The legislature has broken up into small group meetings so far to discuss gaming, a capital plan, education, revenue, agency spending and the Illinois Department of Corrections. They’re closed to the public.

The governor also sent a letter to House Speaker Michael Madigan, House Minority Leader Tom Cross and Senate Minority Leader Frank Watson criticizing them for halting progress on a proposal to expand gaming, which would pay for the debt service on a capital plan and for education. “Negotiations broke down over your refusal to dedicate some portion of new gaming revenue to education,” the governor wrote. He also said, “A budget that invests in infrastructure without providing resources for education and health care is not an option. We must find a way to meet all of our obligations.”

A leaders’ meeting will convene in the governor’s Capitol office Wednesday afternoon. The Senate Education Committee also is holding multiple-hour hearings every day this week, and many witnesses testify about the impact of the state budget problems on education and its relationship to student achievement. The hearings are a well-organized love fest between educators and some of the lawmakers and won’t result in a vote on legislation.

Other legislative movement
Illinois is on an even playing field with Texas in the final stages of competition for a $1 billion coal gasification plant, which would bring national and international attention to the state, according to sponsors of legislation designed to attract the FutureGen project to Tuscola or Mattoon in central Illinois. The Illinois House approved the incentive package 99 to 0 with one voting present this afternoon. If Illinois were chosen by an international alliance, this state would house the world’s first zero-emissions coal-fired power plant that’s touted to be a cleaner source of energy. It also would be a groundbreaking public-private partnership between local, state, national and international entities, with the added perk of creating a lot of new jobs wherever it lands. The bill has to go back to the Senate for final approval.

The House also “approved” a resolution stating the current governor should stay in Springfield during overtime session. It’s written to identify and pressure Gov. Rod Blagojevich, not future governors. Despite loud “boos” primarily from Democrats, who said the resolution was unfair and presented only for political gain, the resolution was considered approved by a “voice vote.” The measure is nonbinding.

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Greg Baise Called Me Last Night

The called ID said, “UNKNOWN CALLER,” but Greg told me his name and that he was President of the Illinois Manufacturers Association.

He wanted to talk to me about electric “rate relief for consumers who need it the most.”

Guess that’s not our household, but, hey, I was willing to listen.

Greg said that some legislators were calling for a rate freeze and that might result in a lawsuit with no one getting any rate relief and might even lead to electric companies’getting into financial trouble.

Oh, he was more elegant than that. I just couldn’t take notes fast enough.

In any event, he wanted me to tell my legislator that I wanted real rate relief and urged me to press 1 to do so (and 2, if I didn’t want to do so).

He wouldn’t answer my questions. I waited but there was not response.

So I hung up.

I’m trying to remember the first time I met Greg.

Was it at the Kane County Fair when Jim Thompson first saw my Thompson/Skinner buttons—the first Thompson buttons ever made, I think. Was he the guy walking Jim’s new dog?

Thompson looked askance at the button. I figured he thought I was trading on his name. Of course, I was running for my third term. I explained that he might be better known in the Chicago area, but I was better known in Boone County.

He certainly was the one in the governor’s office that summer day I held a press conference touting the Non-Game Wildlife Check-Off bill that I had passed during the session.

I had heard an Indian interviewed on WLS one Sunday afternoon. He was raising golden eagles using artificial insemination. I got in touch with him at his home in the Metro-East area and asked if he would be willing to hold a couple of press conferences with me.

I figured that his project would be one that might receive state funding from the money on the income tax check-off.

We drove from opposite sides of the state, meeting at the State Capitol on the second floor in northeast corner, where the bronze stature of an eagle then stood.

I pontificated about we in Illinois being able to have real eagles, at which point, his handler raised his arm and the female eagle spread her wings, or bronze eagles like the statutes behind us.

It was a slow day, so the eagle made the front page of the State Journal-Register in a separately posed picture on the front steps of the Capitol, but, after the press conference, one of the reporters, being in a playful mood, suggested showing the eagle to Governor Thompson, who was working in his office.

We walked into the office and asked the receptionist if the Governor would like to see the eagle.

Out came Greg to find out what was going on.

He delivered the message to Thompson.

Thompson’s Revenue Director Jim Zagel was adamantly opposed to the bill. I knew that.

So it was highly unlikely that the Governor would be willing to be part of a publicity stunt to bring pressure on him to sign the bill.

All of a sudden, I saw the Indian’s mother, who had accompanied him and the eagle, scurrying to the women’s room across the hall between the eagle statute and the Treasurer’s Office.

And, then, splat.

The eagle pooped on the floor.

The mother was there almost as the poop hit the floor trying to clean up the mess.

Boy, did she have a great sense of timing.

“The eagle sure knows who his friends are,” one irreverent reporter observed as Greg came out of the Governor’s office to tell us that the Governor did not want to see the eagle.

All of us were laughing uncontrollably by then, of course.

Afterwards a two-car convoy headed to Chicago for Tribune Plaza to hold another press conference.

The funniest thing about that one was a little black girl asking an older sister as the eagle tried to soar on the river wind current,

"Is that a turkey?"

Oh, as expected, Thompson vetoed my bill, but Virginia McDonald got him to sign it the next year.

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