May 23

Utilities offer rate relief proposal, but no rate freeze

Ameren and ComEd on Tuesday significantly raised their offer to give consumers relief on soaring electric rates, as long as lawmakers don’t freeze rates again, The Associated Press has learned.

Metro-east lawmakers said they are now seriously weighing both utilities’ offer of $500 million in credits over three years to customers hardest hit by the dramatically higher electric rates that took effect Jan. 2.

State Sen. Bill Haine, D-Alton, said the choice breaks down to accepting the money now, or continuing to push for a rollback of electric rates and freezing them at 2006 levels — the latter an option that has been repeatedly thwarted by Senate President Emil Jones, and which will surely trigger a legal challenge from Ameren Corp., and Exelon, the corporate parent of ComEd.

“And the question is, ‘Do we give some of that money to consumers now … or do we vote for a freeze bill and fight it out in court with all that entails, with the unknown result of that?” Haine said. “And I don’t have an answer for you. We’ll have to wait and see all the cards on the table.”

State Sen. Frank Watson, R-Greenville, the Senate minority leader, said he also wants to learn more about the proposal before making a decision. Watson noted that the $500 million rate relief package now on the table is more than three times greater than the $152 million package that the two energy giants had presented a month ago.

“Just by us holding out like this, it has been potentially good for the consumer,” Watson said. “We’ll talk about it. And we’ll make a decision at some point in time whether we want to move this further down the field or not.”

The proposal made public Tuesday would provide $300 million to ComEd customers and $200 million to Ameren customers.

Ameren customers would receive $130 million in aid this year and the remainder in 2008 and 2009, while ComEd customers would see $150 million this year, $130 million next year and $20 million in 2009.

Much of the relief would be targeted at reducing the pinch of high electric bills during the winter months earlier this year and at easing expected spikes this summer as heat drives up electric usage, documents show.

Ameren spokesman Shelley Epstein said Ameren’s proposed $50 million offer would cut residents’ summer bills in half. ComEd said in the document that the $200 million it was offering would reduce the average rate increase for the three summer months to 5 percent, and many customers would see no increase at all.

David Kolata, executive director of the nonprofit Citizens Utility Board, called the $500 million rate relief plan “movement in the right direction,” as well as “a relatively small step forward.” Kolata noted the $500 million package amounts to a fraction of the nearly $7 billion in new profits that Ameren and Exelon will rake in over three years under the new electricity rates.

Kolata continued to argue for a rate rollback and freeze to 2006 levels while lawmakers search for a way to buy electricity that’s fairer than the reverse power auction that Ameren and ComEd set up last year.

But the utilities emphasized the proposal would only go forward if lawmakers agreed not to freeze rates, impose a tax on electric generators or approve other legislation that could prevent them from recouping costs through electric rates.

The Ameren spokesman said the plan is designed to meet legislators’ requests and concerns but said it’s not the company’s final offer.

“It’s fluid,” Epstein said. “We’re talking about it, and it’s part of the process for today.”

ComEd spokeswoman Judy Rader said there are a number of proposals being considered and discussions are continuing, but the company would not confirm making any new proposals to lawmakers.

Sen. James Clayborne, the Belleville Democrat leading discussions in the Senate, said the plan still could be tweaked and more money could be added but the plan helps accomplish what he and other lawmakers have wanted.

“It gives people relief and it goes forward to assist as well,” Clayborne said. “We’re trying to satisfy quite a few people.”

Lawmakers have gridlocked all year on how to help consumers deal with electric bills that have doubled or tripled after a 10-year rate freeze ended. The House has backed another rate freeze, while the Senate is pushing rate relief through credits on customers’ bills.

The utilities hope their latest plan helps resolve legislative concerns by earmarking millions of dollars to help customers deal with higher air conditioning costs’ this summer.

Clayborne says he’s worried nothing short of a rate freeze will be accepted by the House, and Bradley and a spokesman for House Speaker Michael Madigan stressed they’re still pushing for a rate freeze.

But another House Democrat indicated he and his colleagues would consider any proposal that provides relief that customers can understand.

“I think there needs to be some sort of increase, we just need to have reasonable rates and make sure that people can afford to pay their electric bills,” said Rep. Dan Reitz, D-Steeleville.

Epstein also said the offer essentially is a minimum benefit because some programs’ costs have not yet been determined, including a proposal to let customers phase in their increases over four years with no interest tacked on.