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This just in… Madigan wants special session *** Updated x11 ***
Monday, Oct 2, 2006 - Posted by Rich Miller *** BIG UPDATE *** Guv will call special session, but WITH A BIG CAVEAT From the governor’s letter to the leaders. “Once we have the votes to pass the legislation, I will immediately call a special session to do so.” So, don’t hold your breath. This looks like a Kabuki dance. He does say in the letter that he will eventually call a special session if not enough votes can be found, and that the General Assembly will stay in session through the holidays if necessary. That sounds like he could be putting it off until after the election. We’ll have to wait and see. Click the pic for the full letter.
Also, whoever wrote this Reuters story is an idiot. - Illinois Gov. Rod Blagojevich on Monday called for a special legislative session to extend a nine-year electric rate freeze for customers of Exelon Corp.’s (EXC.N: Quote, Profile, Research) Commonwealth Edison unit and Ameren Corp. (AEE.N: Quote, Profile, Research). ———————————————————————————– Speaker Madigan has sent a letter to Governor Blagojevich asking that he call a special session within the next seven days to address the pending electricity rate hikes. Madigan specifically wants the special session to take up Rep. Lisa Dugan’s bill, HB 5766, which would extend the decade-old rate freeze. As I’ve told Capitol Fax readers before, the rate hikes have become a big issue for Madigan’s incumbents. A special session would showcase his targets. Check back for updates. I’m told the guv’s office will have something “as soon as possible.” *** UPDATE *** The SJ-R has more: “The auction has become little more than a sham procedure for tremendously profitable utility companies to potentially turn already record earnings and profits into exorbitant gains for their executives and shareholders …” Madigan wrote in the letter. *** UPDATE 2 *** The letter to the governor can be downloaded by clicking this link. [pdf file] *** UPDATE 3 *** Speaker Madigan reportedly informed the governor’s staff of his intentions this morning. As of noon or so, the word is that the guv’s people were still debating it behind the scenes. As of 12:25, I’m still waiting on a return call from Senate President Emil Jones’ office. Jones is very close to ComEd and a major supporter in the Senate. It’s doubtful that he’ll want this special session, but opposing it could do some real harm to his incumbents and his candidates. *** UPDATE 4 *** There are two options to convening a special session. Either the governor calls it or the two legislative leaders can call it together. From the state Constitution: The Governor may convene the General Assembly or the Senate alone in special session by a proclamation stating the purpose of the session; and only business encompassed by such purpose, together with any impeachments or confirmation of appointments shall be transacted. Special sessions of the General Assembly may also be convened by joint proclamation of the presiding officers of both houses, issued as provided by law. Also, SB1714 may be the vehicle. The HDems want something that they could move in a day or two, and Rep. Dugan’s original bill would take too long to process because it never got out of Rules. *** UPDATE 5 *** Pantagraph: “There appears to be a lot of anxiety among consumers. A lot of these people are senior citizens. Why bring that anxiety into their life? If the legislature can take some action and put a hold on this… that makes some sense to do,” said [Madigan spokesman] Brown. *** UPDATE 6 *** Senate Republican spokesperson Patty Schuh: “It needs to be dealt with as soon as possible. Sooner rather than later would probably be best… We’d have to review the House bill [so the SGOPs, in other words, won’t commit to the exact language of Rep. Dugan’s bill]… The [special session] call certainly should be broad enough to start the debate… There needs to be public debate on this issue and a special session is probably the way to do it.” *** UPDATE 7 *** House Republican spokesman Dave Dring: We think it could be done in the veto session… Politically motivated… We’re trying to find out if it’s real… But if it’s real and it happens, we’ll take a look at it. Two House Republicans, candidate Dick Cain and Rep. Bill Mitchell, have already called for a special session on this issue. *** UPDATE 8 *** If you’re having trouble viewing the Madigan letter, you can download it by clicking this link. [pdf file] *** UPDATE 9 *** Senate Democratic spokesperson Cindy Davidsmeyer: We should let the Commerce Commission do their job… Anything that needed to be done could be done during veto session… She said she didn’t ask Senate President Jones about his views on the specific language that Madigan wants addressed, but Jones is most likely opposed to that. *** UPDATE 10 *** AP: Citizens Utility Board executive director David Kolata praised Madigan for seeking the special session. *** UPDATE 11 *** Lt Gov. Pat Quinn: “I’m all for passage of the rate freeze extension, the sooner the better, and I commend Speaker Madigan for taking action on this important issue that affects so many Illinois families.”
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- Jeff Trigg - Monday, Oct 2, 06 @ 11:57 am:
Interesting. Does this mean they will eliminate or, at least, reduce the state tax and get Daley and others to eliminate local tax on electricity. Or is it they don’t mind higher bills for us little guys when it is them adding on, but now they suddenly care? I’m sending Quinn a tea bag with a copy of my bill with the taxes circled and highlighted. Almost 10%. The first thing they should do to help with electric bills is get rid of their own tax on it.
- Rep. John Fritchey - Monday, Oct 2, 06 @ 11:58 am:
So extending the cap on electric rates is okay, but not on property taxes?
- anon - Monday, Oct 2, 06 @ 12:04 pm:
House Rules committee has just sent SB 1714 to the Electric Utility Oversight. No hearing posted as of yet.
- Guy Fawkes - Monday, Oct 2, 06 @ 12:08 pm:
Come Out! Come Out! Where ever you are?
Oh I forgot it’s a big state and I’m the governor! Your “Weasel Factor” is alive and well Rod!
- Bill - Monday, Oct 2, 06 @ 12:11 pm:
Rep.,
Extending the cap on electric rates helps the consumer at the expense of only the utility companies which seem to be doing pretty well. Extending the property tax cap without some alternate revenue enhancement like a hike in income or sales tax deprives schools and other units of local gov’t of much needed revenue. If citizens do not approve of the way the local gov’ts spend their tax dollars they have recourse at the polls.
We have no recourse with utilities monopolies. I think that a windmill in my yard might violate the local zoning ordinance.
- Pat Hickey - Monday, Oct 2, 06 @ 12:18 pm:
Que Hombre! Didn’t some Phi Betta Kappan remark on this site last week that Madigan was quacking in his boots? Now, that’s some Quaker.
- Cassandra - Monday, Oct 2, 06 @ 12:20 pm:
Where is Marty Cohen? Didn’t the guv hire him into state government with a lavish compensation package to prevent these kinds of dramatic utility rate hikes. Where was the utility board.
We’ve known about this rate hike for a long time…why is Madigan leaping in now. It must have something to do with Lisa’s gubernatorial prospects.
Having said that….utility issues are extremely
complicated, greedy though the utility companies may be. We need to know what the consequences would be to us, the taxpayers, if the freeze is extended. Would such a freeze merely lop off a few company profits or would it cause the companies to go under or go elsewhere. In such a case, would a competitor fill the gap? At what price? What would be the effect on on utility capital expenditures. More unsafe plants, fewer plants would not be a good outcome. Especially we want them to maintain those nuclear-powered plants.
Politicians are always for simplistic solutions which often benefit them in the short run but
end up costing taxpayers in the long run. That’s why, unfortunately, one can never trust a politician’s assessment of matters affecting the pocketbook. They are idiots, corrupt idiots. We have to think for ourselves.
- MTWT - O - Monday, Oct 2, 06 @ 12:31 pm:
I’m wondering if this wouldn’t be extremely short sighted, because if you extend the rate freeze for 3 more years, the State can only impose that rate freeze on ComEd, but not on Excelon Nuclear.
Now, being that ComEd is the distribution network, but Excelon Nuclear is the producer/generator, we (the State of IL) can impose that rate freeze on the distributor, but we’ve got a whole lot of nothing that we can impose on the producer/generator in this case.
Which means (in practical terms) that we extend a rate freeze of around $37.00 per Mw. hour on ComEd, but when ComEd goes to purchase electric power from Excelon Nuclear, the open market price is right at $50.00 per Mw. hour.
So, for each Mw. hour ComEd buys for it’s customers, they lose about at $13.00 per Mw. Hour.
Now, there’s a formula for staying in business. Are we really sure we want to do this??
- Wumpus - Monday, Oct 2, 06 @ 12:42 pm:
While I hate increases, a 10 year freeze is ridiculous. There needs to be some give on the part of consumers. When you have a rate freeze in effect for a decade, a 25% increase in rates is still a gift.
- Pat Hickey - Monday, Oct 2, 06 @ 12:45 pm:
Wumpus,
It would be a three year freeze.
- cermak_rd - Monday, Oct 2, 06 @ 12:57 pm:
Why not a compromise? Com Ed agrees to be re-regulated as it was before with the ICC setting their rates; and they get a smallish rate increase.
If they suffer because they are now sundered from Exelon–tough. That was a business decision made by CECo/Exelon and business decisions have consequences.
- Gregor Samsa - Monday, Oct 2, 06 @ 1:06 pm:
The house and senate chambers are all torn up for the renovation/remodeling. Guess they’ll meet at the old capitol or maybe the convention center? The latter would leave lots and lots of room for prote… um, “observers” to watch.
I expect Rod is about to come out with the formal declaration of the special session, wording the press release so it looks like it was his idea to help “the little guy”. Maybe while he’s at it he can explain what his hand-picked and appointed utility board members were thinking.
- Frank - Monday, Oct 2, 06 @ 1:27 pm:
Rich,
Could you tell us how much this special session will cost the tax-payers per day? They say they only want it a day or two, but we all know better.
- Wumpus - Monday, Oct 2, 06 @ 1:35 pm:
Pat Hickey, a 13 year freeze it would be. I am not some schill for Comed, but this is purley politcal pandering.
- MTWT - O - Monday, Oct 2, 06 @ 1:35 pm:
cermak-rd, just a point…
If ComEd goes $13.00 per Mw hr. in the red every time they buy power, they won’t be buying power for very long. In fact, they’ll have to file for Chapter 11 or Chapter 7.
But what do we (the average everyday citizen) all do when there’s NO ELECTRIC POWER available to us, because ComEd’s out of business?
Again, we can’t force Excelon Nuclear (or any of the other power generators) to sell us power at below market rates. It’s their option to do so after January 1, 2007. That’s when the jointly agreed upon rate freeze expires.
Facts are that these days, the power generators have a whole bunch more options than we do. We here in IL don’t want to pay a fair (market) price? - No problem, there are other places (states) out there that will pay the going rates.
- One Man Can Make A Difference - Monday, Oct 2, 06 @ 1:45 pm:
Where’s the Special Session to amend the State Officials and Ethics Act so that the people can see tranparently through it’s government; THE OFFICES OF EXECUTIVE INSPECTOR GENERAL?
Is that not of importance too, or does it not have any support from AG Madigan, Quinn and others?
- Pat Hickey - Monday, Oct 2, 06 @ 1:46 pm:
Wumpus,
I don’t know about the pandering but it sure is politics - Cermak Rd. had a nice compromise idea; he said, “Com Ed agrees to be re-regulated as it was before with the ICC setting their rates; and they get a smallish rate increase.”
Politics when played by the pros is a thing of beauty.
- HoosierDaddy - Monday, Oct 2, 06 @ 2:01 pm:
Let’s see, five weeks before the election, hot-button consumer issue, big business “bad guy” to attack… politically motivated? Nah.
- Truthful James - Monday, Oct 2, 06 @ 2:20 pm:
A thought to ponder.
We did it to ourselves when we unbundled production and delivery in order to raise the rate of return on the utility’s stock. Before that the utility was a regulated monopoly and the rate of return was the control that the ICC had on utility companies and their rates.
Exelon is a low cost producer, with all the nuclear plants and they can deliver anywhere, by wheeling (transmitting) their power on the common grids connecting the diferent states. The feds keep wheeling rates down low, or else some Billy Goat Gruff would gouge the wheeler to send the power across his portion of the lines. In theory any producer from a wood fied plant owned by Indeck to Paciific Gas and Electric can use the grid.
If the production of electricity is an unregulated market, Exelon can make as much as the market will bear.
Because we permitted the low cost producer to maximize their profits we lost the goose that laid golden eggs.
Distribution and delivery are what is left and the ICC can regulate the heck out of it, limiting the rate of return for this part of the business, but no longer the production part, nor — as I understand it — the combination. At the same time, Exelon renewed their long term franchise agreement with the municipalities for the right to provide monopoly service.
There is probably no way to return everything to Pandora’s box, and very little desire since the utility taxes and the other taxes delivered to state and local governments are interwoven into the tax and revenue structures.
- yet another anon - Monday, Oct 2, 06 @ 2:28 pm:
So were the Rambler’s, oops, I mean Dring’s candidates issue motivated when they called for the special session? Just trying to see if there’s any hypocrisy of if that little nugget will just be swept under the rug.
- Political Junkie - Monday, Oct 2, 06 @ 2:37 pm:
Electric energy deregulation is a disaster for the consumer(rate payer) and everyone knows it now and knew it when the legislation was proposed and passed. Big corporations and utilities are the winners. Just another example of big business/big money screwing the average working person and retiree on a fixed income.
- big al - Monday, Oct 2, 06 @ 2:42 pm:
Pat Quinn’s statement is interesting and will probably be opposite of the Gov’s actions. He will not or should not (for his poltical future, which is all that matters to him) go against Senate Pres Jones. The guy is only courting the minority vote.
- aidanquinn - Monday, Oct 2, 06 @ 2:49 pm:
Last time I looked California still has lights after several bankruptcys. The lights will stay on, minus a storm or shortage in power. How well the system will operate without significant infrastructure capitol and the associated work should be a concern. In this case bankruptcy does not mean the lines, poles, and pipes will be torn down or destroyed. Don’t get me wrong, bk is a bad thing and should be avoided.
If MJM truly believes in this as much as he does most things he proposes he has leveraged it at the best time to pass it. A wise media type once told me MJM really cares about 3 things, his ward, democratic majority in the house, and Lisa. I believe he also cares about the people of Illinois, in his own way.
A question to ask is can the Exelon and Ameren corporations transfer revenue from the unregulated corporations to their regulated subsidiaries? The affect being the unregulated generation arms of the corporations will be supplementing their regulated affiliates. The answer lies with either the Dereg law, the ICC, or FERC. I am not sure. This problem will not be fixed over night and will likely take several legislative sessions, but in the mean time this legislation is out there.
One last question will MJM really do something to cause ComEd or the Ameren subsidiaries CIPS, CILCO, or IP go bankrupt?
- Carl Nyberg - Monday, Oct 2, 06 @ 3:03 pm:
There’s a quid pro quo in deregulation.
There needs to be competition.
Without competition deregulation is just the government sanctioning getting consumers gouged.
Will Exelon go broke if the cap is extended? If not, why are we even debating this? Extend the cap until competition exists. If the framework is screwed-up and won’t produce competition, rework the plan.
But giving the utilities a license to gouge consumers is bull.
- Carl Nyberg - Monday, Oct 2, 06 @ 3:05 pm:
If Emil Jones sides with ComEd against consumers he should be challenged for president of the Senate.
- 105th Blues - Monday, Oct 2, 06 @ 3:13 pm:
Agreed. I think the electricity monopoly needs some competition before we open the flood gates and allow them to raise prices however they see fit. We as consumers have no choice at all and this is unfair.
- David Starrett - Monday, Oct 2, 06 @ 3:39 pm:
Meanwhile, SB1714 is posted for hearing in the House Utilities Oversight Committee on October 9th at 1:00p in 118.
This is probably the calendar ballpark Madigan hopes to play in.
- IVote - Monday, Oct 2, 06 @ 3:41 pm:
So, the Guv says “when you have the votes, I’ll call a special session.” Is this the SAME Governor that called a special session EVERY DAY in 2005 to force the General Assembly to stay in Springfield to pass a budget? I’d say he’s really opened himself up to charges that he is completely failing in leadership on this issue, don’t you think? The Guv is also gonna #$%#-off President Jones, since MJM will announce pretty quickly that the House has the votes, and the Senate Repubs (if they’re smart) will announce they have “X” votes for it–laying ALL of the blame on Emil! UNLESS–Emil tosses it back at the Guv, telling him “Call a session or don’t! Take some leadership here.” Oh. . this could be FUN!
- Squideshi - Monday, Oct 2, 06 @ 3:44 pm:
It’s ironic that Madigan brings this up now, only days after Rich Whitney holds a press conference in Chicago with Dorian Breuer, a former member of the Board of Directors of the Illinois Citizens’ Utility Board, regarding this very same issue.
- MTWT - O - Monday, Oct 2, 06 @ 3:53 pm:
Carl - There is competition.
It’s just not “low cost competition”.
If we’re really into low cost competition (and that means “consistant quanity”), that means we need to build more nukes. They’re by far the most efficent power producers.
Up to recently, there’s been a fair amount of market consolidation between the different power generators. Excelon Nuclear has been a big player.
Here in IL, we’ve gotten all crazy over “green power” (mostly wind farms). But that’s really expensive power (cost per Mw. hour). If we really want competitive prices, we’ve got to create a large supply of available power, substantially greater than demand.
Then, the second part of the equasion kicks in.
There’s a fair number of states (mostly East & West coast) that don’t have a large excess supply of power, and they’ll be more than happy to buy up all the excess power they can get “wheeled” into their electrical grids. Want to guess one area that has an excess of electric power that can be “wheeled” into other states?
Short answer: The rate freeze agreement has been scheduled to expire on January 1, 2007. That deal bought us a 9 year rate freeze at right at $37.00 per Mw. hour for electric power. Deals’ up on 01.01.2007. We (State of IL) can’t just impose terms on the producers - not legally an option.
So, we get to decide what we want to do. Do we want to replay CA’s energy crisis all over again (only here in IL), or do we want to get smarter?
Not matter what we do, it sure looks like it’s going to cost us more.
- Time to do something - Monday, Oct 2, 06 @ 3:57 pm:
We were told competition would thrive, but it never materialized for residential customers. I believe the utilities knew that would be the case when energy deregulation was enacted. Perhaps a small to moderate rate increase is fair, but the utilities shouldn’t be allowed to “bankrupt” consumers.
I sure wish there were more advancements in solar panels or other decentralized technologies so I wouldn’t have to rely on the utilities and their inefficient, polluting power generating/distribution systems to provide electricity to my home.
- 105th Blues - Monday, Oct 2, 06 @ 4:07 pm:
Oh ok, lets allow property taxes and utility rates to skyrocket out of control all at the same time. Not politically smart and a one way ticket to being voted out of office as I (and most others) will be inclined to vote against anybody who is not doing something to prevent this from happening
- Jaded - Monday, Oct 2, 06 @ 4:07 pm:
Actually, I believe the Speaker can call session whenever he wants as long as he is not in for more than three days without the Senate being in Session (Rich please correct me if I am wrong). So he could call session, pass the bill, and then send it back over to Emil. If the Speaker really wants to turn up the heat on both the Governor and Emil (and give his incumbents some cover), I believe he could do it.
- Truthful James - Monday, Oct 2, 06 @ 4:15 pm:
Alternatives that nobody has brought up and some of which is immediately available. First we have all that great high sulfur coal in Southern Illinois. It can produce cheap electricity but is forced to scrub out the sulfur to protect the environment. Not a good choice.
We can also start to think smart with our much of our petroleum derived trash (plastics), including those pesky tires. Processes are coming available not to burn it but to put it under pressure and return through pyrolysis to the basic form of the oils and gases from which they originally came. We can do the same thing with the masses of manure and offal. Our landfills produce a great deal of methane gas which can be turned into electric power.
In the long run we will be using small atomic and large fusion energy plants. I see that the PRC has now held in a vessel the fusion for three seconds. The amount of energy produced is breathtaking. Parallel research is taking place in Illinois and Switzerland.
In the near term, we can adjust our electricity usage. We might be able to cut such uage by up to 20% obliterating the rate increase.
- Squideshi - Monday, Oct 2, 06 @ 4:15 pm:
Nuclear power is not competitive. How much do you think it costs to store an ever-increasing amount of spent nuclear fuel, under safe conditions, for the amount of time that it remains radioactive? This is a large part of the cost of producing nuclear enegy, but the energy companies don’t have to pay it–it’s taxpayer subsidized. The nuclear industry wouldn’t be able to afford storage for even the half-life of the spent fuel. What about the free insurance that the industry receives in the form of the federal Price-Anderson Act? Lucky for them that they don’t have to pay the premium, because if they had to go to the private market, they wouldn’t be able to afford this either. Not only is nuclear energy unsustainable, but it’s also not cost effective.
- Animous - Monday, Oct 2, 06 @ 4:17 pm:
I agree with IVOTE, Good to see our “Take Charge” Gov sitting on the sidelines again. Great demonstration of leadership.
Both legislative majority leaders running his campaign, utility boards loaded with his appointees, and the authority to handle this problem well within his statutory powers–even though he hasn’t needed the law to be on his side to step in before.
This increase will affect a lot of people more than any minor tax increase ever would (especially those with lower and fixed incomes)but he’s sitting this one out.
All this and he’s not about to lift a finger for the citizens before the election (well,…maybe one finger)
NICE.
- Jaded - Monday, Oct 2, 06 @ 4:45 pm:
I think Topinka could make a really big deal out of this at the debate tonight. She could blast the Governor for his non-answer and say he should be calling a special session and working to get the votes between now and then. She could say that the best place to convince legislators to pass legislation is in Springfield and not on the campaign trail while they are sitting in their district offices. She could say that she is willing to go to Springfield and work to pass this bill if the Governor calls a special session. She could really make it look like he is not willing to take the extra step to help Illinois consumers. Of course, these are all things she could do, but will she?
I am not sure the 16th floor really thought this response through before they sent it out.
- Yellow Dog Democrat - Monday, Oct 2, 06 @ 4:55 pm:
CUB responds to the whole “bankruptcy bunk”:
While Ameren argues that it needs rate hikes to stay financially healthy, its profits have nearly doubled and its stock value has soared during a statewide electricity rate freeze that began in 1997.
While Exelon/ComEd argues that it needs to raise rates to stay financially healthy, its profits have increased by 320 percent since 1997 and its stock value has shot up 1,500 percent more than the S&P 500, even during a statewide electricity rate freeze. In fact, Exelon/ComEd’s return on equity makes it the nation’s most profitable power company.
Madigan has never forgotten that old Daley adage: Good government is good politics.
- aidanquinn - Monday, Oct 2, 06 @ 5:01 pm:
Jaded, I believe you should advise Judy on this topic prior to the debate tonight. The Guv is missing an opportunity likely only because he didn’t come up with it first. If he gets hammered on it tonight he deserves it.
No doubt MJM has the votes, Cross will have to allow targets on it and likely others, and Watson is drooling at this chance. Will Emil protect his friends in the Senate or his friends in the industry?
Anyone know for sure if a chamber can hold a session less than 3 days in length without the Governor’s approval? If it can be done, this is the time to use it to protect a caucus majority.
- Jaded - Monday, Oct 2, 06 @ 5:13 pm:
aidanquinn,
It is not the Governor’s approval required, but it is the approval of the other chamber that is required. The Senate and the House could get together and call a special session whenever they want (with the proper notice). The problem in this instance would be the Senate President. The reason, I am guessing, that Madigan suggested the Governor call the special session is that he either suspects or knows that Emil will not agree to one called by the two leaders.
- Carl Nyberg - Monday, Oct 2, 06 @ 5:49 pm:
“Competition” that fails to keep prices down is more properly called “collusion”.
- wondering ??? - Monday, Oct 2, 06 @ 6:23 pm:
Did anyone tell the Speaker that Monday is a State Holiday and that there might not be any staff for the Utility Oversight Committee Hearing?
- Sage observer - Monday, Oct 2, 06 @ 7:09 pm:
Once again the Speaker has exquisite timing. The main articles tomorrow will be on an arcane policy issue and the state constitution, with the political substance of the story being the Governor quoted as supporting a rate freeze.
Absent this letter, the story would have been “Topinka attacks Blagojevich on $1500 gift.”
Note that I write this before the debate.
- Silence Dogood - Monday, Oct 2, 06 @ 7:49 pm:
Yellow Dog shouldn’t believe everything he/she reads on CUB’s website. On it, CUB overstates Exelon’s “record” profits as $2.1B in 2005 when, in fact, Exelon’s 2005 10-K filing with the SEC shows net income for 2005 at ~$970M (a $1.2 billion exaggeration to make a political point). The fact is that Mr. Kolata has not been a credible player in his short tenure as Director. His rhetoric in the media on this issue demonstrates a fundamental misunderstanding of issues regarding energy deregulation and worse, is replete with many seemingly intentional misstatements of fact.
In any case, as much as we would all like to lump ComEd and Exelon’s financials together, we can’t.
ComEd, as a separate legal entity from Exelon, must prosper or fail on its own. If ComEd is forced to buy from the market and sell at capped rates that are lower than the prevailing market price, it will go bankrupt — period. Trust me when I say that Exelon shareholders will see to that if John Rowe doesn’t act quickly enough for them.
Further, one big issue not discussed here is the role of the federal government in all of this.
The state legislature can throw out the auction, it can freeze current rates, but it has next to zero control over who sells to ComEd and at what price. The federal government has sole dominion over wholesale transactions (interstate commerce) and it will not allow sales from Exelon (or anyone else) to ComEd to be less than “at market”.
If you somehow think that Illinois could convince the feds to make an exception in this case, ask the AG’s office what kind of reception they got from the FERC (Federal Energy Regulatory Commission) when they showed up last December with the same tired arguments you’ve been reading and asked the FERC to stop the Illinois Auction. They probably won’t want to talk about it.
The one question everyone should be asking those who would extend this rate freeze is “Where will ComEd get its power and at what price?” Don’t jump on the bandwagon until you get a good answer to that question.
At the end of the day, if the rate freeze passes and is signed into law, both Illinois utilities will go bankrupt. Before that happens, the one political figure that should be on the mind of every Springfield legislator as he/she casts his/her vote is the last guy that tried this . . . Gray Davis.
- West - Monday, Oct 2, 06 @ 9:12 pm:
Go Rep. Fritchey! He’s right. Madigan is screwing homeowners by opposing a cap, but he’s going to call a special session to demagogue on utility rates?
- respectful - Monday, Oct 2, 06 @ 9:47 pm:
Fritchey and his northside pals in the House should refuse to support an extension of the rate freeze unless his downstate Dem colleauges, whose districts face a 40-50% hike in electric rates, agree to support extension of the 7% assessment cap, that protects homeowners in Fritchey’s district.
Now that Judy has come out for the freeze, that puts pressure on Republicans if the bill comes up for a vote before Nov. 7.
- swede - Monday, Oct 2, 06 @ 10:48 pm:
If Jones sides with Com-Ed, he should resign as Senate President. These rate increases especially hurt minority communities. I have to take my hat off to Madigan this time. You can call it politics all you want, but the bottom line is a freeze will help the “little guy.” I hope MJM is successful.
- aidanquinn - Monday, Oct 2, 06 @ 11:27 pm:
Jaded, sorry I wasn’t clear, I meant you should advise Judy to rip on Rod tonight at the debate concerning the rate freeze issue and how he could agree to an immediate special session. I understand that the leaders can call one with out him, but you are right Emil is not likely to agree to call one with MJM.
I only read listener reviews of tonights debate but it didn’t sound like JBT hit very hard on the rate freeze special session, so she didn’t listen to you.
I believe public perceptions versus real character are all to important in elections, but it appears the public perception of Rod is more favorable than that of JBT. Not saying perception is correct but it is what it is…perception.
- norseman - Tuesday, Oct 3, 06 @ 2:14 am:
It’s amazing to me how the utilities and anyone else opposed to extending the freeze talk so patronizingly about how we wild-eyed radicals just don’t understand that such a move would be disastrous to the power companies and it would lead to California-like blackouts.
Baloney!
No. 1: There’s NO true competition in Illinois’ electricity market.
No. 2: The auction system Ameren and ComEd say they need so dearly to stay financially sound is merely a profit-making tool for their parent companies.
Supporters of the rate freeze are not the radicals. The rate freeze protects customers and would alloiw Exelon and Ameren to continue to make healthy profits. (Note I say “healthy” and not exorbitant profits.)
The truly radical idea is the auction because it would scrap all key regulations that put some limit on rate hikes. Calinfornia’s real problem was that it ceded control of its electric industry to the likes of Enron. In Illinois we seem to be doing something similar. We’ve adopted an auction system that allows the power companies to become deregulated monopolies. This is their dream come true!
Extend the rate freeze. It just doesn’t pass the smell test for Illinois consumers when we here these wildly profitable power compenies talk about how they need rate hikes of 26-55 percent to stay healthy.
- norseman - Tuesday, Oct 3, 06 @ 2:17 am:
Also, didn’t the utilities simply extend their electric contracts the last time the Legislature extended the rate freeze? Isn’t it a bit of an exaggeration when they say they would be thrust into the spot market to buy power if the rate freeze were extended?
- Silence Dogood - Tuesday, Oct 3, 06 @ 7:59 am:
norseman, I don’t think you’re a wild-eyed radical. I do, however challenge you (or anyone else who supports the rate freeze) to answer the following three questions:
1. After the rate freeze where will ComEd get its power?
Note: You mention that electric contracts might just be “extended” like last time. The problem is that “last time”, market prices were below the frozen ComEd rates. That’s why ComEd and Ameren didn’t object then. That can’t be done now, because market prices are above the current ComEd rates. Again, FERC won’t allow below market transactions between ComEd and Exelon — it calls that “affiliate abuse”.
2. Since, consistent with federal law, ComEd must purchase its power at market prices and, under the rate freeze, sell at a price below which it buys, how will it stay in business?
3. How does a ComEd bankruptcy benefit Illinois ratepayers?
I look forward to your answers to these questions.
- Pat Hickey - Tuesday, Oct 3, 06 @ 8:12 am:
3. How does a ComEd bankruptcy benefit Illinois ratepayers?
I look forward to your answers to these questions.
Dear Silence- ComED threats of going bankrupt reminds me of the near thirty years it took Wally’s Last Stop at 85th & Kedzie to announce last call -’Stop in on Friday for Wally’s Farewell Party - All Mixed Drinks Regular Price - No Ball Games on During the Soaps.’
- Silence Dogood - Tuesday, Oct 3, 06 @ 8:23 am:
Pat, that’s pretty good!! However, in that case, one presumes Wally got to decide when to turn off the tap.
While technically ComEd would actually file the papers in this case, it would be Exelon shareholders driving John Rowe to do the deed. If Exelon won’t bankrupt ComEd, Exelon’s institutional shareholders will undoubtedly sue.
Of course, it will never get that far. Mr. Rowe has made it clear what he will do if ComEd is forced to sell at a loss.
- Pat Hickey - Tuesday, Oct 3, 06 @ 8:32 am:
And Like our Favorite Utility Wally never ‘put one up on the House.’ Wally always had butts on the barstools.
- Silence Dogood - Tuesday, Oct 3, 06 @ 8:44 am:
Which expains why he stayed in business for so long.
- Pat Hickey - Tuesday, Oct 3, 06 @ 8:45 am:
Yes, he did indeed and when he goes to meet Our Maker he will be taking his First Communion money with him.
- Sammy Insullt - Tuesday, Oct 3, 06 @ 3:09 pm:
This is a lobbyist’s dream come true. A full employment battle! Just in the nick of time, as well. 2006 has been a short and somewhat uneventful year, but an expensive election cycle nonetheless. Whew! Thanks Speaker! Thanks Governor! If the Senate President sticks to his guns, it could be a real long Special Session and the kids need new shoes….
Pingback 52nd District beat: Obama, Danville debate, IP attacked, rate freezes, commercials and MySpace at The TPS Report - by Kiyoshi Martinez - Wednesday, Oct 4, 06 @ 2:53 am:
[…] It’s an interesting tactic from the Myers campaign. With Ameren set to raise prices on consumers about 40 percent starting in January, lots of downstate voters are even getting upset at the sitting Democrats. This probably prompted Speaker Madigan’s letter to Blagojevich, requesting a special session on trying to get a rate freeze passed. […]
- norseman - Thursday, Oct 5, 06 @ 1:18 am:
Thanks for the good questions Silence Dogood. However, I don’t agree with the underlying premise of all those questions—that ComEd and Exelon are truly separate companies. It’s a paper separation. The company has one stock price, and ComEd executives get stock options, which means they’re rewarded when Exelon’s stock increases. Exelon has record profits and a record share price. It has offered hundreds of millions of dollars of rate cuts in other states. It just doesn’t pass the straight-face test to say these are separate companies and that ComEd faces bankruptcy if it doesn’t get its 22-26 percent bill increase.
As to your first question (After the rate freeze where will ComEd get its power?), are you telling me that Exelon is locked into the auction price of 6.5 cents per kWh? I don’t think that’s the case. Those auction contracts are for future purchases of power, so the company could go shopping for power (like Naperville did) and secure a lower price than what it got in the auction (like Naperville did). I don’t think the company would allow itself to swallow such a huge shortfall (between the auction price and the freeze). It would find creative ways to secure a lower price than what the auction produced. Again, I don’t buy the premise that Exelon and ComEd are truly seperate companies. Exelon is the most profitable power company in the country, and it could remain more than healthy under the freeze.
As to your second question, are you really telling me that ComEd will cease to exist if it doesn’t get its huge rate hike? I don’t believe Exelon would shutter ComEd, which has been a profit-making tool for it. Also, I don’t think the auction price accurately reflects the “market” price. I believe Exelon could find contracts below the auction price it secured. Finally, again, it does not pass the straight-face test to imply that ComEd is floating alone and doesn’t have the financial resources that Exelon has.
As to your third question (How does a ComEd bankruptcy benefit Illinois ratepayers?), I doubt it would get to bankruptcy, but even if Exelon/ComEd engineered such a filing, it would be invisible to the average consumer. The lights have to stay on, under federal law. I don’t wish for a bankruptcy filing, I just don’t believe it would be a sincere move on the company’s part. It’s bankruptcy blackmail.
I’m sure you’ll have a response. Looking forward to hear your challenges.