The Real Deal on Electricity in Illinois
By: Source: AARP.org Date Posted: 2006-10-23 11:48:00-04:00
Status of Electricity in Illinois
In 1997, Illinois restructured the state's electricity industry. When this was debated, residential consumers were promised lower rates through competition. Discounted rates and a freeze were put in place for residential customers to give the market time to adjust and residential competition to develop. Residential customers were not deregulated under the restructuring act as some claim.
The restructuring law permitted competitors to market to residential customers beginning Jan. 1, 2005. Because no competitor had entered the residential market in Illinois, this date was pushed back to Jan. 1, 2007. With Jan. 1 looming there is still no sign of competition on the horizon. While the utility companies have complained that the rates were rolled back to pre-1997 levels and frozen, they have continued to generate record profits during this period.
This spring, the Illinois Commerce Commission, over the objection of AARP, the Attorney General and other consumer groups, permitted the utility companies to auction off the electric needs of residential customers. The auction, which was conducted on Sept. 5, returned increases of over 20% in ComEd service area and up to 55% in the Ameren companies' service territory, which is consistent with the results of a similar auction in New Jersey.
AARP is committed to stopping the implementation of the auction and rate hikes that go with it.
Extend the Electric Rate Freeze
Seniors and young families cannot afford skyrocketing electricity bills. Electricity is not a luxury item that you can choose to purchase or skip for a month or two, because you have to tighten your belt. When we cannot afford to shop at Jewel's or Schnuck's, we can always go to Aldi's. In this instance, we are at the mercy of one electrical company and "no thank you" just isn't a choice. We need strong state oversight to ensure that residential rates are reasonable and just. Until the state figures out how this should work, the rate freeze must continue.
Don't be fooled by the Scare Tactics
Myth:
The consumer group Consumers Organized for Reliable Energy (CORE) says the rate increases are needed and extending the rate freeze will jeopardize service.
Truth:
CORE was started by ComEd and its parent company Exelon. In testimony last spring before the Illinois House of Representatives a senior ComEd official testified to providing all of the funding for CORE at a figure well over $4 million.
Myth:
Illinois will face a California-style energy crisis if rates are not allowed to increase.
Truth:
Contrary to the threats and commercials running on TV and radio, Illinois is NOT at risk of the energy-crisis that happened in California, nor will any of the major electric suppliers go bankrupt if they don't get their way. You have only to watch the documentary ENRON: the Smartest Guys in the Room to understand that the California crisis was manufactured through the manipulation of the power supply to drive up the cost of electricity.
Myth:
The increases are needed to ensure service reliability and line quality.
Truth:
The skyrocketing rates do NOT address reliability or quality of electrical services—they just mean increases in your electric bill.
Myth:
The only way to develop competition is through increasing electricity prices.
Truth:
The purpose of the 1997 restructuring act was to develop competition to provide residential customers with better prices for electricity. It was NOT to develop competition at the sake of higher electricity prices.
The facts are simple
- Competition doesn ' t exist for residential customers.
- Illinois ' auction has failed — producing skyrocketing rate hikes.
- Illinois utilities have posted record profits — while rates were frozen.
- Residential customers are facing skyrocketing rates — up to 55%.
- Without state oversight residential rates will further skyrocket.
Send a message to your state legislator online.
For more information contact us at AARP Illinois via email or call 1-866-448-3613.
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