CHICAGO – Oct. 4, 2005 – Standard & Poor’s, one of the world’s premier independent credit ratings providers, said Monday it had lowered its corporate credit rating on Exelon Corp., Ameren Corporation and their subsidiaries that supply electricity in Illinois.  Standard & Poor’s announcement comes on the heels of the news Friday that Moody’s Investors Service had placed ComEd under review for a possible credit downgrade because of recent actions by Illinois Gov. Rod Blagojevich. 

“The rating action for Exelon and its affiliates recognizes the heightened adversarial regulatory environment in Illinois,” Standard & Poor’s wrote.  Standard & Poor’s further noted, “…the ratings on the Exelon companies had borne negative outlooks precisely for the regulatory uncertainties facing Commonwealth Edison in 2007, when the rate freeze expires and rules for the new rate structure and power procurement process are needed.”

Standard and Poor’s used the same language in explaining its downgrade of Ameren and its affiliates.

“This action from Standard & Poor’s is exactly the kind of bad news that creates an unfriendly business environment in Illinois,” said Jerry Roper, president and CEO of the Chicagoland Chamber of Commerce and a CORE member.  “Sound long-term energy policy should be made by experts, not politicians with short-term agendas.”  

Monday’s downgrade will raise costs for ComEd and Ameren, making it more expensive for the utilities to borrow to purchase power, build out the transmission and delivery system, and maintain reliability.  These added costs could result in higher costs for consumers or further undermine the company’s financial stability and lead to bankruptcy, creating a situation fraught with peril for Illinois electricity customers.

In California in 2000, officials failed to allow local utilities to enter into long-term power purchase contracts.  Utilities were forced to buy power on the spot market at a time when the legislature artificially froze utility rates.  The result was utility bankruptcy that required a $10-billion taxpayer bailout, power disruptions that cost California businesses $21-billion, and an estimated loss of 135,000 jobs.  If Illinois officials fail to provide its local utilities – which no longer produce their own power – a means to secure long-term power contracts at reasonable rates, the California debacle could happen here.

Under Illinois law, utilities must buy energy in the open market beginning in 2007.  Most of the key players in Illinois’ energy industry -- as well as the staff of the Illinois Commerce Commission (ICC) -- support a competitive bidding process as the best way for ComEd, and others, to buy energy.  Under this process, multiple companies would compete to sell power to the utilities at the lowest possible price.

Gov. Blagojevich opposes the competitive bidding process but has offered no alternative plan.  As a result, how ComEd and Ameren will procure power in 2007 remains unclear. Consumers Organized for Reliable Electricity (CORE) has called on Gov. Blagojevich and other Illinois lawmakers to let the ICC do its job of determining the best way for Illinois electric utilities to buy energy beginning in 2007.

“Standard & Poor’s, like Moody’s last week, simply reviewed the facts and made an informed decision,” said Barnaby Dinges, executive director of CORE.  “I hope that the politicians in Springfield will allow the ICC to do the same.”

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.

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

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