Press Release: Nov 7, 2005 (12:05 pm)

Consumers Organized for Reliable Electricity (CORE) responded to the formation of StopComEdRateHike.org today by calling on the organization to offer a clear and viable plan for how electric companies should purchase electricity beginning in 2007.  CORE also questioned the accuracy of key assertions made by StopComEdRateHike.org and presented a long list of misrepresentations, flip-flops and inconsistencies by CUB, a leading member of StopComEdRateHike.org.

Illinois law, which was passed in 1997, requires utilities to buy energy in the open market beginning in 2007.  Following an 18-month stakeholder review process – led by the Illinois Commerce Commission (ICC) – the ICC’s expert staff and most of the key players in Illinois’ energy industry endorsed a competitive bidding process as the best option for buying energy beginning in January 2007.  Under this plan, multiple companies would be required to compete to sell power to the utilities at the lowest possible price.  

CUB’s Role in Developing a Procurement Plan

Interestingly, most members of StopComEdRateHike.org, including CUB, Citizen Action, Environment Law and Policy Center and IBEW, were part of – or invited to – the ICC stakeholder process.  During this period, the Post-2006 Initiative Procurement Working Group (PWG) met 14 times for a total of more than 52 hours “in the discussion of the various strategies for procuring power following the current transition,” according to the cover letter of the “Final Report to the Illinois Commerce Commission presented by the Procurement Working Group” dated Sept. 23, 2004.

“What amazes me is that CUB actively participated in the process to develop a post-2006 solution, and now they claim to have been railroaded,” said David Vite, CEO of the Illinois Retail Merchants Association and a member of CORE’s founding Advisory Committee.  “I led what I believe was a productive working group that presented a consensus opinion to the ICC.  If CUB had a problem with the findings of the group, they were group members and they should have said so at the time.” 

According to the PWG – of which CUB was a participant – the group agreed that any procurement process adopted through legislative fiat or by Commission rule should include, to the extent possible, the attributes enumerated in its report.  Moreover, in its cover letter of its final report to the ICC, the group suggested that it was providing a “good faith consensus road map for policy makers to consider when making the final decisions on energy procurement policy in the Post 2006 era.”   Yet now CUB is attacking the competitive bidding process.

Contradicting what CUB says today, CUB previously supported the foundations of a competitive bidding process.  For example:

·         During the legislative debate over industry restructuring in 1997, CUB proposed a plan that required electric utilities to “shop for the cheapest power available on the wholesale market.”[1]

·         In 1996, CUB criticized ComEd for attempting to enter into a long-term agreement to purchase wholesale electricity from two power plants, “even if there is less expensive electricity available on the wholesale market.”[2]

·         CUB has described the move to competitive as inevitable.  In 2001, CUB said, “Those (residential customers) who stay with their local utilities will have electric rates frozen until 2005, after which the utilities’ rates will become subject to market forces.”[3] 

CUB’s Warning About a California-Style Energy Crisis

If an agreement is not reached for electric procurement, utilities may have to buy electricity on the ‘spot’ market — the very practice that helped to destabilize the utility industry in California. 

CUB has acknowledged the possibility of a California-style electric crisis in the past.  In a 2001 newsletter CUB said, “California’s deregulation law made this problem much worse by requiring utilities to buy all the power for their customers in the volatile ‘spot’ market.  With electric rates temporarily capped, the result has been a financial disaster for the utilities and customers eventually could get stuck with the tab.”[4] 

Yet, now CUB has attacked CORE for educating consumers about the possibility of a California-style electric crisis.

“What is so perplexing about CUB’s recent complaint about CORE’s public education campaign is their changing views about the California energy crisis,” said Doug Whitley, president and CEO of the Illinois Chamber of Commerce and a member of CORE’s Advisory Committee. “They claim that CORE is ‘fear mongering,’ and yet they raised the same prospect to their own members.”

CUB’s Claim that PJM Proposal Will Increase Rates by 17 percent

CORE is asserting that CUB is deliberately misrepresenting the impact of a proposal under consideration at PJM, a regional transmission organization. CUB claims it would result in a 17 percent rate increase for Illinois consumers.[5]   However, an analysis performed by independent experts showed that the PJM proposal will have a minimal impact on consumers in Illinois — less than one percent over four years.[6]

CUB’s Praise for the 1997 Restructuring Act

CUB is now arguing that the restructuring law that passed the General Assembly in 1997 has not worked.  A CUB spokesman was recently quoted as saying, “The idea behind the 10-year process was to give the Illinois market time to develop. Our complaint is that it hasn't.”[7]  Yet, CUB has been praising the law since its passage and has not used the intervening years to advocate for its overhaul or repeal.  Just look at what CUB has been saying.

·         In their quarterly newsletter three years ago, CUB said, “With total savings of more than $600 million a year, the rate cuts ensured that residential consumers would benefit from deregulation even if a competitive market did not materialize.”[8]  

·         Just one year earlier, in the same newsletter, CUB said, “Other states are restructuring their electric industries, but nowhere are consumers saving as much money as in Illinois.”[9]

About CORE

CORE is a coalition of business, labor, community and energy groups that support the preservation of reliable electricity, the transition of the industry to competition and energy decisions made by the experts at the Illinois Commerce Commission. CORE’s Advisory Committee members represent more than 100,000 businesses and more than one million individuals across Illinois.

For more information, visit the CORE web site at www.illinoiscore.org.

[1] Copley News Service, February 18, 1997

2 Chicago Sun-Times, August 9, 1996

3 CUB Voice, April 2002

4 CUB Voice, April 2001

5 CUB News Release, October 18, 2005

6 The Daily Herald, November 1, 2005

7 Associated Press Newswires, October 9, 2005

8CUB Voice, Summer 2002

9 CUB Voice, December 2001

For more information:

Media Liaison
Avis LaVelle
312-223-0581