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Relief for Illinios
Rebate Lowers Electricity for the Prairie State
Provided by our friends at Progressive States Network
Last year, the Illinois Commerce Commission (ICC) unanimously approved a "reverse auction" that allowed utilities to purchase electricity through wholesale energy suppliers. In doing so, the ICC no longer regulated the price of electricity and instead the state moved towards a deregulated market for electricity. The move was hailed by the right-wing Heartland Institute as "the right thing" that would eventually result in lower electricity rates.
Instead, customers saw drastic increases in their electricity rates, some of whom saw their utility bills triple in just one year. As a result, this week, Governor Rod Blagojevich signed a $1 billion electricity-rate relief package to provide consumers with relief from the large increases. The utility restructuring legislation, SB 1592, also abolished the reverse auction program and replaced it with a new state agency that will purchase power on behalf of the state's two largest utilities. Illinois is just one of many states that is reconsidering their competitive electricity market. In Ohio, stakeholders are negotiating how to end competitive pricing. Virginia's legislature just passed a law to abolish their competitive market and restore the state to full cost-of-service regulation by the State Corporation Commission.
States are beginning to realize the false promise of deregulation. Between 2002 and 2006, prices in regulated markets rose an average of 21%. In deregulated markets, however, prices soared by an average of 36%. In Baltimore, for example, electricity prices rose by a remarkable 50% in June after a 15% jump last year when the rate caps expired. As one expert states, deregulation, "hasn't panned out the way we had hoped."
In addition to providing relief to utility customers, the Illinois legislation also requires energy-efficiency programs that will substantially decrease the growth of electricity use in Illinois. Under current regulations, this mandate will be costly for the utilities whose profits depend on the amount of electricity sold. As we will highlight on Monday, decoupling can break the link between the utility's commodity sales and revenue, giving utilities more incentive to encourage energy efficiency while guaranteeing regular, stable profits.
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