Editors note: The following is in response to the Dec. 13-19, 2006, Guest Column, Shedding some light on electric rate freeze issue, by State Rep. Jim Sacia (R-89).
In his latest Guest Column, Rep. Jim Sacia made some disparaging and inaccurate remarks about the Citizens Utility Board (CUB) and our efforts to protect consumers from a 26 percent rate hike set to hit ComEd customers Jan. 1.
First, the representative claims that CUB was the driving force behind deregulation in 1997. In fact, ComEd and the other big utilities in the state had been pounding the drumbeat of deregulation for more than a decade prior to the 1997 law that restructured the industry. The push didnt come from consumers.
That year, ComEd went to the General Assembly with a proposal for complete deregulation with no cap on how high the rates could go. CUB fought that plan and worked to ensure that any changes to the law included upfront benefits and protections for consumers.
And we succeeded. The 1997 law slashed ComEds rates by 20 percent and locked in the new, lower prices through 2004. In 2003, the rate freeze was extended for two more years, through the end of this yearwith the support of ComEdbecause competition had not developed.
While the 1997 law was a good deal for consumersit stopped ComEds total deregulation plan, mandated record rate cuts and saved consumers more than $3 billionit was a great deal for ComEd and its parent company Exelon.
The giant utility posted record profits of $2.1 billion last year, its stock price has soared to record levels, and Exelon is now the most profitable utility in the nationthe Exxon Mobil of the utility world. And, the company will reap an extra $2 billion a year in windfall profits if the rate hike takes effect in January.
Thats because the nuclear power plants Rep. Sacia talks about produce power at a cost of about 1.9 cents per kilowatthour, yet under ComEds auction, customers will pay 6.5 cents for that power. With a profit margin like that, its no wonder the company pulled out all the stops to block a bill to extend the current rate freeze.
ComEd claims its unfair to consider Exelons profits. It says its a separate company that must stand on its own. But the two companies have the same stock price, and ComEd executives are compensated with Exelon stock options. The more money Exelon makes, the more money the folks at ComEd make.
Exelon is so profitable it offered rate cuts totaling more than $800 million to customers in New Jersey and Pennsylvania in an effort to win approval of its merger with an East Coast utility. But in Illinois, the company demands a big rate hike.
The 1997 law set Illinois on a careful transition toward a competitive electricity market. But it was never intended to be the last word. Everyone involved in the debate over electric priceseven the head of Exelonagrees that the electricity market in Illinois has problems.
Its time to stop pretending we have a competitive electricity market when we dont. Extending the rate freeze will not only protect consumers from unjustified rate hikes, it will give lawmakers time to develop a statewide energy plan that protects consumers, not just ComEd and Exelons bottom line.
From the Dec. 20-26, 2006, issue