ComEd’s new electric rates: Case against a rate increase

In 1997, when the Legislature restructured the electric industry, it recognized that the movement from regulation to competition required a transition period. The Legislature cut rates 20 percent and froze them at that level through the end of 2006, allowing for a period in which it anticipated competition would develop. However, things have not played out as anticipated.

It was assumed that all the other states in the Midwest would open their electric industries to competition and that all customers, including the smallest residential users, would have the opportunity to switch to a new supplier. Neither has happened. Most Midwestern states still are fully regulated, and not a single competitor is serving any Illinois residential customer.

While ComEd emphasizes that consumer prices have been frozen since 1997 while the price of other goods and services has increased, or tries to focus on what happened in California, the fact is that during the rate freeze, Exelon has benefited along with consumers. Profits have soared and the stock price has more than doubled. The company has failed to justify the kind of rate increase that the auction will bring, when the company’s profits are already so high with current rates.

Fortunately, the 1997 law, which ComEd agreed to, provided protection for consumers. The law specifically states that if the ICC has not deemed the market competitive, ComEd must continue to supply electricity, at regulated rates, just as it always has.

ComEd’s auction proposal ignores this mandate. It allows the company to let a few powerful electricity generators set prices based on a complicated process that is a recipe for unlimited rate hikes. The company’s singular goal is to circumvent state oversight of its actions and to avoid any findings that it is not meeting its obligation to serve customers at the lowest price possible. It wants to wash its hands of any responsibility for the prices charged to consumers.

And who is the biggest beneficiary of ComEd’s plan? The utility’s parent company, Exelon, stands to reap an additional $1 billion in profits with the auction, according to one study. That’s because an Exelon affiliate now owns all of ComEd’s nuclear plants and is the Midwest’s largest power generator.

Of course, when ComEd owned those plants, they were shut down half the time and produced expensive power at high rates. Now that an unregulated affiliate owns the units—and Exelon pockets every nickel of profits from them—they run efficiently and produce very inexpensive power.

The bottom line is ComEd’s auction proposal is a great deal for ComEd and Exelon, providing the surest way for the company to maximize its profits from those plants. It puts all the risks of a competitive market on consumers and retains all the benefits for the company.

That’s why Illinois’ top public officials, including Gov. Rod Blagojevich, Attorney General Lisa Madigan, and Cook County State’s Attorney Dick Devine, along with dozens of senior, labor and community groups are opposing the plan. And that’s why ComEd has poured $4 million in a front group called CORE, and is saturating the airwaves with misleading commercials about the need for a rate hike.

If you’re interested in getting the real facts about the utility’s plan, go to and take action to protect consumers from the unlimited rate hikes in store if ComEd gets its way.

From the Dec. 7-13, 2005, issue

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