Cairo Association of Teachers - Newsletter

CAT Tracks for March 8, 2007 ILLINOIS VERSUS AMEREN

Who's got the power?

From the Southern Illinoisan...

Illinois Senate committee approves rate rollback

BY BECKY MALKOVICH, THE SOUTHERN

A bill that would temporarily return Ameren electric rates to pre-hike levels for Illinois customers passed through a Senate committee Wednesday, prompting Ameren Illinois officials to warn that any rollback would place "downstate Illinois on the brink of a catastrophic event."

The bill, approved unanimously by the bipartisan committee, would freeze Ameren rates only for six months, returning rates to those charged by the utility company before a 10-year rate freeze was lifted at the beginning of the year.

The Senate action came just one day after the House voted to rollback the rate increases that took effect in the new year and freeze them at the lower levels for at least three years.

Hours after the Senate committee vote, Ameren Illinois officials released a statement that said while they remain committed to finding a resolution ensuring safe, reliable electricity at a reasonable cost to customers, "the rate rollback bill passed by the Illinois House and today's action by the Senate Environment and Energy Committee threaten to place downstate Illinois on the brink of a catastrophic event that will jeopardize the safe and reliable delivery of energy."

The release said either of the Legislative actions, if approved, would risk the credit rating of Ameren Illinois with the possibility of a downgrade to junk status. Such a downgrade would increase the utilities' financing costs and reduce access to capital, "triggering an unfortunate economic reality that no one can afford."

If downgraded, the release said, the company would be forced to implement the following actions:

- Immediate steps would be taken to lay off employees;

- Nearly all of the companies' contractors would be laid off;

- Reliability projects, including tree trimming, would be postponed;

- Connections for new homes and businesses would be delayed;

- Response to customer calls would stretch from seconds today to many minutes;

- Elimination of the proposed $20 million customer credit, primarily for the relief of residential electric heat customers;

- Elimination of the zero-percent interest Customer Elect Plan (CEP) for phasing in higher electricity rates;

- Elimination of the zero-percent deferral assistance program for certain nonresidential customers;

- Elimination of the $15 million pledged for energy assistance, energy efficiency programs and aid for low-income customers; and all community donations and projects would be discontinued.

"Many people do not believe this serious and unfortunate chain of events will ever happen," said Ameren Illinois utilities President and CEO Scott A. Cisel. "We have tried to achieve a constructive resolution to provide relief to our customers - especially those with low or fixed incomes - while maintaining our financial stability. As difficult as these possible actions are to consider, we have simply run out of options."

Cisel said the company remains open to any constructive approach that would modify the reverse auction process and/or consider different methods to purchase electricity on behalf of our customers as well as other long-term solutions.

Forby said the Senate's short-term freeze would allow time for negotiations with the utility company to continue. Also, any other company interested in competing with Ameren would have the opportunity to discuss becoming a service provider, Forby said.

"What this bill does is keep everyone at the table to negotiate more reasonable rates," Forby said. "If we can agree on rates everyone can afford - with Ameren or some other company - we can lift the freeze before the six months is over. If not, the freeze can stay on."

Forby, D-Benton, is already drafting an amendment to the bill that would require Ameren to reimburse customers for the difference in rates paid on bills since the freeze was lifted in January.

The bill should come up for a vote of the full Senate within two weeks if not sooner, Forby said.

"I'm confident we can get it passed in the Senate since we had the support of both Democrats and Republicans in committee," he said.

Forby said he feels the Senate bill is a more viable option than the House legislation which he said would discourage other electricity providers from trying to get into the Southern Illinois market.

"I think we learned that having a long-term freeze on rates does not help bring in competition. No one wants to come in to a state when a rate freeze is in effect. By doing it this (Senate) way, we might actually encourage competition," he said.