CUB challenges new ComEd plan to increase power costs

As it seeks state approval for plans that would raise electric bills by at least 20 percent, ComEd is quietly pushing a separate proposal before federal regulators that would boost rates by an additional 17 percent, for a total combined annual increase of $963 million, or an average of $275 per customer, the Citizens Utility Board (CUB) said recently.

In addition to higher rates for consumers, the new federal rate hike plan would produce windfall revenues for Exelon of between $390 million to $1.2 billion, according to an expert study commissioned by CUB. The study, along with a formal objection to the plan, was filed by CUB with the Federal Energy Regulatory Commission (FERC) last month. The consumer group also is asking the Illinois Commerce Commission (ICC) to oppose the plan.

Deemed the Reliability Pricing Model, the proposal would increase the wholesale rates utilities, such as ComEd, pay to reserve capacity at power plants run by generators, such as Exelon. The price increases are in addition to the cost of electricity itself and would be reflected in higher energy prices on consumers’ bills after a state-mandated rate freeze expires at the end of 2006.

“These three rate hike proposals add up to the largest fleecing of consumers we’ve ever seen in Illinois,” CUB Executive Director David Kolata said. “It’s a triple whammy for ComEd customers of almost a $1 billion in higher rates, and it’s completely unjustified.”

PJM Interconnection, the regional power grid operator for ComEd’s northern Illinois service territory, filed the wholesale rate increase in August, despite the fact that a majority of the organization’s members, including CUB, opposed it. Exelon and ComEd, also PJM members, support the plan.

Akin to an air traffic controller, PJM runs the electric transmission grid serving 45 million people from the East Coast to northern Illinois. It also operates the regional wholesale power market, from which ComEd purchases power.

At the urging of large power producers like Exelon, PJM has concluded that current market prices for generating capacity are too low and need to be propped up artificially by regulators. So, PJM has asked FERC to approve an increase in what are known as “capacity payments,” the charges ComEd and other utilities pay to reserve capacity from power plants for their customers.

These capacity charges, along with the cost of the power itself, make up the energy cost that gets passed through to customers on electric bills.

Although PJM and Exelon claim the wholesale rate increase is needed to ensure future reliability of the electric system, the plan imposes no requirements that generators invest the additional revenues they earn in new power plants. The result would be a “huge wealth transfer from ratepayers to owners of existing generation,” like Exelon, according to the study, conducted on behalf of CUB by Synapse Energy Economics, Inc. The Synapse study found that the revenues associated with this scheme would be substantial.

In addition to the wholesale power increase, ComEd is pushing a controversial auction plan and a $317 million increase in delivery service charges, which the utility predicts will increase bills by at least 20 percent. The wholesale power increase pending at FERC would translate into a 17 percent boost on ComEd bills, for a total rate hike to consumers of 37 percent after a state-mandated electric rate freeze expires next year.

The ICC is expected to decide the auction case in January. The delivery services case will conclude next July, and FERC could rule in less than six months.

CUB is a nonprofit statewide utility watchdog organization created by the state legislature to represent the interests of residential and small-business utility customers. For more information about CUB call 1-800-669-5566 or visit

From the Nov. 23-29, 2005, issue

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