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Ameren & ComEd: Continued rate freeze will bankrupt us



Springfield, Ill. – A committee of Illinois House lawmakers met for six hours Monday before approving a measure to keep electric rates frozen.

During the hearing, the two utility giants that serve most of the state told lawmakers that the companies will go bankrupt if lawmakers extend an electric rate freeze set to be lifted Jan. 1.

The freeze passed anyway, and House Speaker Michael Madigan urged the governor to call a special session so the entire Legislature can vote on the proposal.

ComEd and Ameren Illinois are fighting a move by lawmakers, just three weeks before an election, to prevent power prices from jumping when a 10-year-old deregulation law expires at year's end.

ComEd Chairman Frank Clark told the House Utility Oversight Committee that extending the rate freeze another three years would be disastrous.

The company's costs for buying electricity are climbing, he said, and ComEd must be allowed to pass that along to consumers. If it can't, ComEd will go bankrupt and consumers will suffer, he said. "They'll pay more all around and have less reliable service," Clark said.

Ameren President Scott Cisel warned if rates stay frozen, he will immediately have to cut 25% of his work force, hundreds of contractors and projects that improve service reliability.

Lawmakers in 1997 locked in power rates for 10 years, expecting competitors to emerge and allow industry deregulation starting in 2007. But serious competition hasn't materialized, and rates will jump dramatically if the freeze ends this year. ComEd's 3.7 million customers in northern Illinois will see prices climb by an average of 22%. Ameren's 1.2 million customers in central and southern Illinois face a jump of up to 55%.

Those figures are for homes. Businesses face even larger increases up to 100%, witnesses told the committee.

Ameren's residential customers can expect to pay $1 more per day next year, the company says. "That's a substantial amount of money for everyday people who live paycheck to paycheck," Lt. Gov. Pat Quinn told the committee. "Freeze the status quo in place and make sure things are done fairly."

Madigan, a Chicago Democrat, rejected predictions that a rate freeze will force Ameren and ComEd into bankruptcy or interfere with electric services. "I don't think there will be even an impairment of service," he said.

Madigan last week asked Gov. Rod Blagojevich to call a special session to consider the rate-freeze extension bill. The Democratic governor has said he will call lawmakers to Springfield for action if he's certain there are enough votes to approve it. Senate President Emil Jones, another Chicago Democrat, has said he thinks the Legislature should keep its hands off.

Madigan said he believes the freeze has enough votes to pass. The utility committee approved the idea 9-4, with support from both parties, he noted. If Blagojevich wants to know whether it can pass, he should be talking to lawmakers about their position on the issue, Madigan added. "I've done that, and my judgment is that the votes are there."

The governor's office did not immediately return a call seeking comment Monday evening.

While some Republicans voted for the freeze, others called it a pre-election ploy to help endangered House Democrats. Madigan substituted several representatives for regular committee members for Monday's vote.

Earlier Monday, the business-backed group Consumers Organized for Reliable Electricity argued at a state Capitol news conference that freezing rates would mean service and maintenance cutbacks, threatening reliability.

"I urge all elected officials to lower the rhetoric and try to find common ground," said one of the group's members, the Rev. Leon Finney Jr. of Chicago.

The group's spokeswoman, Avis LaVelle, said utilities might agree to phase in the higher electric rates to minimize consumers' pain, but said there could be no compromise on the size of the increases.

Illinois Public Radio's Amanda Vinicky prepared this report.