CUB Not Staying Silent on Electricity Auction

By Matt Wood in News on Sep 18, 2006 7:25PM

The price tag on the Dan Ryan construction project wasn't the only thumping big number in the news this past weekend. True to the predictions that we wrote about a couple weeks ago, ComEd announced the results of their first energy auction late Friday afternoon, translating into a whopping 25 percent increase in monthly electricity bills come January.

You may think that you're out of luck when it comes to such increases, because it's not like you can go bargain shopping at e-lectricityBay.com for a better price. ComEd is the only game in town, and unless we want to risk another tragic house fire living by candlelight, we have to pay whatever they want. But there is someone out there looking out for the little guy, doing they best they can to reign in ComEd's effective monopoly. The Citizens Utility Board is a nonprofit, nonpartisan organization created by the Illinois General Assembly in 1983 to represent the interests of residential utility customers. CUB is expectedly flabbergasted by these recent developments and, along with Attorney General Lisa Madigan, is pushing hard to challenge the auction system.

Chicagoist spoke to CUB Legal Counsel Julie Soderna about the auction and how the price hikes could be even higher than already announced.

(More after the jump)

While she says the auction's results are about what they expected, "[t]he increase will be even more dramatic when compared to two other pending rate increases. At this point, though we know what the price of the commodity will be, we aren't entirely certain of the price of delivery." These "delivery charges" are essentially where ComEd makes their profit, because they have to charge consumers the same wholesale price as they paid. Soderna says the Illinois Commerce Commission is re-hearing proposals for increased delivery charges and transmission rates, and if ComEd wins again your monthly bill will go even higher.

Much of the press about ComEd's auction focused on the fairness of the auction process in regards to soliciting bids, but Soderna says that an auction isn't appropriate in the first place. "We've argued from the beginning that the auction is severely flawed, will dramatically raise rates, and is illegal. Whether the auction was fairly run under the auction rules is largely irrelevant to these points, because the process itself is severely flawed. It is NOT designed to get the lowest market price." She points to New Jersey, where the only other energy auction in the country was held. Their electricity rate jumped 15 percent immediately after the auction, with more increases on the way.

Madigan and CUB filed a lawsuit in January questioning the ICC's power to approve the auction. Madigan contends that ComEd and downstate provider Ameren do not have competition, and cannot be allowed to charge market rates without violating the state Public Utility Act. The case is still pending. Meanwhile, CUB is calling on lawmakers to vote on a bill, HB 5766, that extends the current rate freeze for three more years, or until real competition develops (i.e., waiting for another type of freeze).

What can you do to help your own cause? CUB has a guide to help you contact legislators regarding HB 5766. It may seem futile, but you have to start somewhere, and Chicagoist knows that its readers have never met a grassroots movement they didn't like.