Like I wrote in this morning’s Capitol Fax, if AG Madigan is right, then this revelation is beyond huge…
Attorney General Lisa Madigan alleged Thursday that corporate manipulation caused the huge jump in electric rates that Illinois consumers are facing, and she asked federal regulators to suspend the rates and investigate.
Electric rates have soared since January, when a 10-year freeze on prices expired. The new prices were set through a “reverse auction” that was meant to keep rates as low as possible.
But Madigan says the auction yielded prices far higher than the actual cost of producing electricity. That’s because some 15 power companies manipulated the process, she claimed in a complaint to the Federal Energy Regulatory Commission.
Exelon Corp., the parent of power company ComEd, immediately denied the allegations.
More…
In a 31-page complaint filed with the Federal Energy Regulatory Commission, Madigan lays out what she says is evidence that last year’s power auction involving Ameren and ComEd may have been fixed to ensure that specific wholesale suppliers got the most lucrative parts of that business _ at the expense of rate-payers who ended up with bills some 40 percent higher than they should be under a competitive market. […]
“The wholesale suppliers are charging prices that are at least double the marginal cost of generating electricity,’’ the complaint alleges. It goes on to allege that “there is evidence that some of the wholesale (power) suppliers manipulated prices in the auction,’’ possibly with secret side-agreements among the suppliers.
The complaint states that “quid pro quo arrangements’’ are a “likely’’ explanation for unexpectedly high power rates that resulted from the reverse auction, which was ostensibly designed to ensure that Ameren and ComEd got the cheapest possible power supply contracts from competing wholesale electricity providers.
It is “possible’’ that “departing bidders’’ were rewarded with side-agreements that their power would later be purchased “at favorable prices,’’ the complaint states. It cites a similar “market manipulation scheme’’ that was uncovered in the Enron corporate scandal.
[Emphasis added]
More…
State Sen. William Haine, D-Alton, praised Madigan’s action and suggested it could lead to the Illinois Senate passing a bill to return Ameren’s rates to last year’s frozen levels as soon as next week.
“If the auction was tampered with, obviously, it should be thrown out,” he said. “If there is fraud in the procurement process, it’s across the board. All of it is void. It’s the fruit of a poisoned auction, and as such, these contracts are voidable, which means we have a new ballgame in the procurement of electric power based upon lower rates.”
CUB’s response…
It’s abundantly clear that the auction and the rate hikes it produced must be scrapped.
True dat.
Meanwhile, Sen. James Clayborne picked a really bad day to complain that CUB and AARP, of all people, are not negotiating in good faith…
Some Illinois consumer advocates are being so inflexible in their demand that newly raised electric rates be legally forced back down that they’re endangering attempts at a compromise with the utility companies, the state Senate’s top utility negotiator hinted Thursday.
“I’m not going to say (they’re) obstructionist. I just feel like they haven’t come to the table in good faith,” said state Sen. James Clayborne, D-Belleville.
He said advocates, including the Citizens’ Utility Board and AARP, “aren’t cooperating like they’re supposed to” in closed-door negotiations that Clayborne is conducting, looking for a compromise to ease the impact of electric rates that skyrocketed this year after Ameren and ComEd deregulated in Illinois. […]
“If being uncooperative means not agreeing with the utilities … and representing the best interest of our members, then yes, we’re uncooperative,” said Donna Ginther, director of state affairs for AARP-Illinois.
The charge is ridiculous, particularly in light of Madigan’s investigation.
* Madigan’s press release
* FERC complaint
* Supporting exhibits