Patricia Reid Lindner

November 2006

Legislators are often in the position to vote for or against legislation that is politically unpopular, but that is based on sound public policy. This week a bill of this nature was heard in the House of Representatives. As you may have read, the bill to extend the ten-year electric rate freeze for three additional years failed. The bill will most likely be called again in January when the legislature reconvenes.

The current legislation only proposes to extend the 10-year-old freeze for three more years and does not address any of the long-term issues facing the future of electricity. House Republicans are currently working with the Senate on compromise legislation that will protect consumers from a dramatic electric rate hike by capping increases while addressing the real concern for potential employee layoffs, rolling black-outs and brownouts . I am hopeful that we will be able to also consider this alternative legislation in January.

The rate freeze extension is a complicated issue with a lengthy history. The deregulation required electric companies to separate the generation and distribution of electric service and divest their nuclear plants. All parties, including the Citizens Utility Board (CUB), agreed to the legislation, which included a ten-year expiration on the rate freeze. Legislators anticipated it would lead to competition among electricity providers. Competition developed in the business sector, but in the residential market, the rate was set lower than the market could bear so competition never developed.

As a result of deregulation , ComEd only distributes electricity. They no longer own the power they sell, nor do they set the price of electricity. By law, ComEd must purchase the power they sell from external providers and cannot purchase more than 35% of their power from their parent company, Exelon . Because distributors no longer owned electricity, the deregulation legislation called for a working group comprised of the Illinois Commerce Commission (ICC), ComEd representatives, the Citizens Utility Board (CUB), the Attorney General's office and others to determine the best way to set electric rates once the ten-year freeze expired at the end of 2006. They found that a reverse auction would be the most equitable process.

Under the direction of the ICC, a reverse auction was held this September. 21 electricity providers participated and ComEd signed 16 contracts. The best rate ComEd received was .20 on the dollar more than the rate they are currently allowed to charge under the freeze. So, if the freeze were extended as proposed, ComEd would lose .20 on every dollar of electricity sold. The company estimates this loss at $4 million per month, which would force them to file for bankruptcy.

I am sure you remember that the California General Assembly passed legislation to stave off increasing rates from their electric provider. The rate was frozen at a price lower than what it cost the provider to supply the service. This gap led to brownouts , blackouts and severe delays in power restoration. The only reason California has reliable service today is because the government stepped in with financial assistance, which cost taxpayers $2 billion. Unlike California , Illinois would not have the money necessary to bail out ComEd in a similar situation, nor do I think the citizens of the state would appreciate being asked to foot the bill.

As a legislator, it is my duty to look beyond misinformation and political pressure, study the facts and make the right decision for our state. As a ComEd customer, I do not want to pay higher rates, but as a legislator I need to ensure that we have reliable electric service in the future. We must let the market take over with minimal government interference for the security of future electric service as well as for the health of companies that employ thousands of Illinois residents. If the freeze expires and market prices prevail, competition will most likely develop in the near future. There are already several municipalities who have contracted with other companies for their power. Solid public policy is the only thing that will provide us with reliable, affordable service for years to come.

Please feel free to contact me directly if you would like to discuss this issue in greater detail: (630) 466-9791.



							Lindner's Opinions
							Lindner's Opinions
						November 2006 Legislators are often in the position to vote for or against legislation that is politically unpopular, but that is based on sound public policy. This week a bill of this nature was heard in the House of Representatives. As you may have read, the bill to extend the ten-year electric rate freeze for three additional years failed. The bill will most likely be called again in January when the legislature reconvenes. The current legislation only proposes to extend the 10-year-old freeze for three more years and does not address any of the long-term issues facing the future of electricity. House Republicans are currently working with the Senate on compromise legislation that will protect consumers from a dramatic electric rate hike by capping increases while addressing the real concern for potential employee layoffs, rolling black-outs and brownouts . I am hopeful that we will be able to also consider this alternative legislation in January. The rate freeze extension is a complicated issue with a lengthy history. The deregulation required electric companies to separate the generation and distribution of electric service and divest their nuclear plants. All parties, including the Citizens Utility Board (CUB), agreed to the legislation, which included a ten-year expiration on the rate freeze. Legislators anticipated it would lead to competition among electricity providers. Competition developed in the business sector, but in the residential market, the rate was set lower than the market could bear so competition never developed. As a result of deregulation , ComEd only distributes electricity. They no longer own the power they sell, nor do they set the price of electricity. By law, ComEd must purchase the power they sell from external providers and cannot purchase more than 35% of their power from their parent company, Exelon . Because distributors no longer owned electricity, the deregulation legislation called for a working group comprised of the Illinois Commerce Commission (ICC), ComEd representatives, the Citizens Utility Board (CUB), the Attorney General's office and others to determine the best way to set electric rates once the ten-year freeze expired at the end of 2006. They found that a reverse auction would be the most equitable process. Under the direction of the ICC, a reverse auction was held this September. 21 electricity providers participated and ComEd signed 16 contracts. The best rate ComEd received was .20 on the dollar more than the rate they are currently allowed to charge under the freeze. So, if the freeze were extended as proposed, ComEd would lose .20 on every dollar of electricity sold. The company estimates this loss at $4 million per month, which would force them to file for bankruptcy. I am sure you remember that the California General Assembly passed legislation to stave off increasing rates from their electric provider. The rate was frozen at a price lower than what it cost the provider to supply the service. This gap led to brownouts , blackouts and severe delays in power restoration. The only reason California has reliable service today is because the government stepped in with financial assistance, which cost taxpayers $2 billion. Unlike California , Illinois would not have the money necessary to bail out ComEd in a similar situation, nor do I think the citizens of the state would appreciate being asked to foot the bill. As a legislator, it is my duty to look beyond misinformation and political pressure, study the facts and make the right decision for our state. As a ComEd customer, I do not want to pay higher rates, but as a legislator I need to ensure that we have reliable electric service in the future. We must let the market take over with minimal government interference for the security of future electric service as well as for the health of companies that employ thousands of Illinois residents. If the freeze expires and market prices prevail, competition will most likely develop in the near future. There are already several municipalities who have contracted with other companies for their power. Solid public policy is the only thing that will provide us with reliable, affordable service for years to come. Please feel free to contact me directly if you would like to discuss this issue in greater detail: (630) 466-9791.