Ameren
spells Òcustomer reliefÓ
By
Mike Kroll
Wednesday morning Ameren Illinois president Scott
Cisel announced an eight-point plan to help ease the impact of the electricity
rate increases that began January 2nd. Cisel's company is offering a initiative
estimated to cost $20 million in customer credits aimed primarily at low-income
residential customers. Chief among these adjustments is an offer to Òeliminate
the 3.25 percent interest rate for customers who enroll in the Ameren Customer
Elect Plan (CEP) for phasing in the higher electricity rates.Ó While not
actually reducing the new higher rate the CEP allows customers to defer payment
for a declining portion of the increase. Additionally, Ameren proposes (subject
to approval by the Illinois Commerce Commission) to provide one-time credits
for residential customers ranging from $40-$300 depending upon their March
electric usage over 2,000 kilowatt-hours. Customers using less electricity that
month would not see any credit.
For many Ameren customers this offer appears too
little, too late. During the later months of 2006 most electricity customers of
Ameren's three delivery subsidiaries in Illinois were warned to expect markedly
higher electric rates beginning January 2nd. Those warnings proved excruciatingly
correct as actual bills jumped not just the official company estimate of around
50 percent but often multiples of that. Some residential and small business
customers, particularly those with electric heating have seen electricity bills
up to three times those of one year ago. And rate-shocked electric customers
have shared their distress with Illinois lawmakers after the Citizens Utility
Board called upon angry ratepayers to contact their state representative or
state senator.
Thousands took CUB's advice and the Illinois General
Assembly held a special hearing on the subject where citizens and lawmakers
alike blasted Ameren for that doubled or tripled since last year at the same
time. There has been a move by some lawmakers to reimpose the rate freeze for
periods ranging from one to three years during which time utility regulations
and rates would be reexamined by the legislature.
The affected utility companies, including Ameren,
claim that such a move will financially ruin them. But there is a distinction
that bears noting here, only the power distribution companies would show poor
financial results under a continued freeze while the parent company and sister
subsidiaries that sell generated power at unregulated rates do quite well
financially. Ameren Corporation posted higher income , earnings, and assets in
financial reports released just over one week ago. The Ameren Corporation stock
price has climbed throughout the ten-year period of the rate freeze and
corporate profits have been impressive.
During a telephone press conference Wednesday morning
Cisel told reporters that Ameren's current rates are on-par with national
averages for electricity but that the rate-shock is the result of implementing
this change all at once. ÒWe are taking this initiative because the sharp
increase in rates has created a significant burden for many of our customers
– a burden that has created a hardship for some customers. While we
acknowledge these proposals will place a financial constraint on the Ameren
Illinois utilities, this comprehensive proposal will be of real benefit to our
customers and provide our utilities with sufficient financial stability to keep
the lights on and the natural gas flowing.Ó
Cisel announced proposals to spend $15 million for
energy assistance and to fund energy efficiency for low-income customers.
Low-income customers would receive $6 million of this in direct energy
assistance while another $4 million would fund a rebate program for the
purchase of high efficiency light bulbs. Residential energy audits and
assistance in paying for improved insulation will cost about $3 million. Ameren
proposes to fund educational programs on energy efficiency to the tune of another million dollars.
The end of the ten-year rate freeze and the resultant
massive rate increases have resulted in massively negative public relations for
Ameren and Commonwealth Edison, Illinois' two principal energy distribution
utilities and re-energized the debate over utility regulation in Illinois.
Surprisingly, Cisel doesn't dismiss offhand talk or re-regulating the electric
generation business in Illinois. ÒWe at Ameren are more than willing to meet
and explore the return to regulation of electricity generation.Ó And Cisel
admitted that Ameren has not handled customer communications well during this
process.
He acknowledged that the estimated rate increase
percentage was based upon an aggregation across all customer classes and
clearly does not represent the experience of certain specific customer groups.
Notably residential and small business customers who heat with electricity.
Coupled with the severity of this winter season it is not uncommon for such
heating customers to see their electricity bill double, or worse.
ÒUnfortunately, the weather weÕve recently experienced has been anything but
normal,Ó noted Cisel. ÒThe cold weather during mid January to mid February has
caused customers to use more electricity than a year ago or during December.
Understandably, the current winter increase is terrifying to many customers. ItÕs creating hardships on family
budgets, business operations and not for profit services. And understandably,
we are being criticized for these very high bills.Ò
When utility deregulation was first discussed in
Illinois it was expected that the newly deregulated electricity generation
business would foster competition and hold down rates. Except for the largest
users this simply hasn't been the case and small businesses, like residential
customers, have felt the new rates severely impact their cash flow. One of Ameren's
proposals is to extend the current ÒBudget BillingÓ alternative to small
businesses allowing them to spread their electricity costs across the year.
Many small businesses are now in fear of the new rates on their air
conditioning bills this coming summer. For many businesses air conditioning is
their biggest electricity usage in the summer. Cisel also said that his company
would work with the ICC to help make it easier for groups of electricity users
to aggregate to make themselves more attractive to alternative electricity
providers that may result in lower rates.
Concluding his testimony Tuesday before the Illinois
House of Representatives Cisel said:
ÒI will close by saying that throughout this entire
process, our Ameren Illinois utilities have simply complied with existing laws
and regulations. However, we have
listened to our customers and to you about the real life impact of the new
electric rates and have come forward to do all we can to assist while still
maintaining our financial credit rating. TodayÕs comprehensive proposal
reflects our commitment to do our part to assist our customers. In total, the proposal presented to you
represents a $35 million pledge. This is in addition to the interest cost that
the utility will incur in waiving the carrying costs associated with the
Customer Elect Plan. I also
commit, we will not seek recovery of these expenses from our customers.Ó
Cisel and his company are hoping that this Òlast best
offerÓ might assuage lawmakers from reimplementing some form of a rate freeze
while simultaneously redefining his company from consumer predator to kindly
Uncle Wilber who just wants to help. As long as Senate president Emil Jones and
governor Rod Blagojevich stand behind the current deregulation legislation it
seems unlikely that House speaker Michael Madigan will be able to force some
changes beyond the House itself.
03/01/07