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EDITORIAL: Electric rate relief may be late and imperfect, but it's better than nothing
[July 29, 2007]

EDITORIAL: Electric rate relief may be late and imperfect, but it's better than nothing


(Herald & Review (Decatur, IL) (KRT) Via Thomson Dialog NewsEdge) Jul. 29--It is unfathomable that it took until the end of July for legislators and utility companies to reach a compromise to mitigate the effects of skyrocketing electric bills. In a perfect world, something would have been done about this last year, before the freeze that began in 1997 expired.



But now is not the time to quibble about timing. At least the legislators took a serious run at coming up with a solution by reaching a deal that will provide $1 billion of rate relief to Illinoisans. While the new proposal from the legislature does not suit everyone, it is infinitely better than retaining the status quo.

The mess in Illinois has its roots in legislation enacted in 1997 that deregulated the electric utility industry and imposed a decadelong rate freeze that expired on the last day of 2006. The idea behind deregulation was that competition would keep electric rates down. It seemed like a good idea at the time, but the competition never materialized. In fact, two utilities, Ameren Corp. and ComEd, now serve virtually the entire state.


As anyone who has to pay a power bill knows, the end of the freeze was a disaster for most electric customers. Rates shot up by anywhere from 20 percent to 200 percent and beyond. People who had enjoyed a discount for having an all-electric home lost that break and were hit even harder.

Deregulation has worked to some degree for huge consumers of electricity, such as manufacturers. Some businesses will benefit from deregulation because of cooperative buying opportunities, including one established by the Greater Decatur Chamber of Commerce. But that didn't help homeowners and small businesses, which really had no choice other than to pay the higher prices.

The proposal is not a cure-all. Ameren customers would receive, on average, a 40 percent to 70 percent discount, mostly through rebate checks. The discounts essentially cut in half the increases that customers have paid this year. The deal also provides for new rate increases starting next year, but would be more reasonable than this year's steep increases. Ameren's rates would rise about 33 percent from next year through 2010. Rate relief also will come in the form of credits stretching into 2010 to help phase in the higher costs of electricity. Unfortunately, there was nothing in the legislation for people who were socked with losing the discount for having an all-electric home.

Perhaps the best news is that the justifiably maligned reverse auction process will be consigned to the scrapheap. A new Illinois Power Agency would negotiate the best electric rates it can get for Ameren and ComEd customers. The agency also may be given the authority to build power plants, or sell bonds so cities and other governmental bodies can build plants, to produce electricity more cheaply. How exactly this will work wasn't spelled out, but the bottom line is that the agency will end the reverse auction that had Ameren-owned power stations selling power to Ameren and its subsidiaries such as AmerenIP and AmerenCIPS.

Expectations that electric rates would not jump after the freeze expired were unrealistic. Any thought that rates would be rolled back to 1997 levels were equally unrealistic. The cost of running a utility has increased over 10 years, and a moderate increase in rates should have been easy to justify.

The General Assembly has done its job by approving this package of legislation. Now Gov. Rod Blagojevich needs to do his job and sign it into law as soon as possible.

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Copyright (c) 2007, Herald & Review, Decatur, Ill.
Distributed by McClatchy-Tribune Information Services.
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