22%increase in electricty costs

gotfish8

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The cost of keeping the lights on in northern Illinois will go up about 22 percent next year, based on the results of the state's first auction of electric power.

The rate increase for ComEd customers will take effect Jan. 2, as a nine-year rate freeze melts away. Electric rates were rolled back 20 percent and frozen as a way to ease the transition for customers to a deregulated electricity market.

The price increase for ComEd's 3.3 million residential and small business customers was on the lower end of what was predicted by consumer advocates, who had warned of increases of up to 40 percent.











Watchdog critical of cap option
ComEd wants to give customers a chance to ease into expected rate hikes by capping increases to 10 percent for the next three years. The cost of any increase over that total of 30 percent would be deferred and paid off by customers, with interest, between 2010 and 2012.

The increase cap would be optional for customers and must be approved by the Illinois Commerce Commission. The Citizens Utility Board, a consumer watchdog group, has criticized the program as a high-cost loan, which won't help consumers.

Mary Wisniewski



ComEd has said it could go bankrupt if it's not allowed to recover its costs for buying power. Anne Pramaggiore, ComEd's vice president of regulatory and strategic services, said the auction held earlier this month will result in rates 3 percent lower than what customers paid in 1995 before the rate freeze.

Not so fast, watchdogs say



"The auction resulted in the lowest available price, and a much lower increase than critics predicted," Pramaggiore said.

But the Citizens Utility Board still believes ComEd could have done better, and will ask lawmakers for a three-year extension of the freeze.

"We're looking at a massive increase at a time when Exelon, ComEd's parent company, has record earnings, record profits and a record share price, and is cutting rates in Pennsylvania," said CUB Executive Director David Kolata.

Utilities such as ComEd sold off their power generation as part of state restructuring. ComEd is now responsible only for distribution, and must buy power from suppliers such as Exelon.

The 16 suppliers who successfully bid in the auction held Sept. 5-8 included financial groups such as Morgan Stanley Capital Group and energy companies such as Wisconsin-based WPS Energy Services Inc., a unit of the company looking to buy Peoples Energy.

The Illinois Commerce Commission chose a "reverse auction" process for utilities to buy power. The bids start high, and then descend until the price bid matches with the amount of power required.

The ICC approved the auction process over the objections of CUB and government officials, including Gov. Rod Blagojevich, who said that residential customers weren't ready for a deregulated market because there was no real competition. The prices set by the auction will remain in effect until June 2008.

Attorney General suing



The auction price is better than analysts thought they'd see six months ago, according to Omar Zoheri of Sieben Energy Associates in Chicago. But energy prices have dropped in the past couple of weeks, so it could have been even better if held in the past few days, Zoheri said.

"It's good, but the market has come off a lot in the last two weeks," said Zoheri.

ComEd says its rates in the Chicago area will be 14 percent lower than the average rate for the 10 largest metropolitan areas. But the Illinois Attorney General's office, which is suing to reverse the auction, said Illinois' rates for 2007 are now 25 percent higher than other states in the region.

"If this had been a truly competitive auction, the prices would have been much lower," said senior assistant attorney general Susan Hedman.
 
Lots of things acutally but mostly ComEd and the water company. They keep taking $$$$ out of my pocket.... :)
 
Re: 22%increase in electricty costs

<a href=showthread.php?s=&postid=8158775#post8158775 target=_blank>Originally posted</a> by gotfish8


ComEd has said it could go bankrupt if it's not allowed to recover its costs for buying power. Anne Pramaggiore, ComEd's vice president of regulatory and strategic services, said the auction held earlier this month will result in rates 3 percent lower than what customers paid in 1995 before the rate freeze.

Not so fast, watchdogs say


But the Citizens Utility Board still believes ComEd could have done better, and will ask lawmakers for a three-year extension of the freeze.

"We're looking at a massive increase at a time when Exelon, ComEd's parent company, has record earnings, record profits and a record share price, and is cutting rates in Pennsylvania," said CUB Executive Director David Kolata.

Utilities such as ComEd sold off their power generation as part of state restructuring. ComEd is now responsible only for distribution, and must buy power from suppliers such as Exelon.

The 16 suppliers who successfully bid in the auction held Sept. 5-8 included financial groups such as Morgan Stanley Capital Group and energy companies such as Wisconsin-based WPS Energy Services Inc., a unit of the company looking to buy Peoples Energy.

The Illinois Commerce Commission chose a "reverse auction" process for utilities to buy power. The bids start high, and then descend until the price bid matches with the amount of power required.

The ICC approved the auction process over the objections of CUB and government officials, including Gov. Rod Blagojevich, who said that residential customers weren't ready for a deregulated market because there was no real competition. The prices set by the auction will remain in effect until June 2008.

Attorney General suing



The auction price is better than analysts thought they'd see six months ago, according to Omar Zoheri of Sieben Energy Associates in Chicago. But energy prices have dropped in the past couple of weeks, so it could have been even better if held in the past few days, Zoheri said.

"It's good, but the market has come off a lot in the last two weeks," said Zoheri.

ComEd says its rates in the Chicago area will be 14 percent lower than the average rate for the 10 largest metropolitan areas. But the Illinois Attorney General's office, which is suing to reverse the auction, said Illinois' rates for 2007 are now 25 percent higher than other states in the region.

"If this had been a truly competitive auction, the prices would have been much lower," said senior assistant attorney general Susan Hedman.


gotfish8...You've done some research. Are you in the industry?

I have to admit that although I hate utility rate increases as much as the next person, my opinion on this matter is slightly biased....BUT....make no mistake, Exelon CEO John Rowe is a shrewd businessman, and if ComEd is not prifitable as a stand alone company, he WILL eventually pull the plug (sorry for the pun). We can no longer confuse ComEd and Exelon as one entity. ComEd, as stated above, does not produce our power. They merely deliver it to our homes and businesses. What many fail to realize is that Exelon would be better off without the cumbersome "distribution end" of this business. Despite all the talk of Exelon Corp.'s earnings, ComEd's earnings have been declining since 2003. Without a rate increase, ComEd would be buying power for a higher price than it is allowed to pass on to customers in 2007. This would amount to a potential revenue shortfall projected at $3 million per day. While the Citizens Utility Board and others might see nothing wrong with a financially broken ComEd, such a condition would have profound consequences for consumers. With a ruined credit rating and access to capital more difficult and more expensive, ComEd would be in a weakened position when going to market to buy power. Wholesale sellers of electricity would charge a premium to cover the risk of not being paid. That would make the power that ComEd buys for its customers more expensive. ComEd also would find it difficult to make the needed investments in the delivery infrastructure that brings power to 3.7 million customers.

I guess the bottom line is that just as Mr. Rowe announced recently that Exelon has backed out of the merger plans (buyout) with PSE&G because New Jersey Public officials wanted too many concessions, He will not hesitate to cut ComEd loose and let it flounder on it's own. If it is not profitable as a stand alone company, it only makes good business sense to stop pouring money into the bucket when it's got a hole in it. If that is allowed to happen, we will all see rate increases that we can only imagine.

Jeff
 
The story is from the Sun Times, It just kind of sucks I get my dream tanks set up and it going to cost even more $$$$$$ to keep it going
 
I just love the commercials they're spending a ton of money on to make us feel more comfortable with the upcoming increases.

How about not advertising about how great you are when I don't have a choice as a consumer. Since there is no competition in purchasing electrical service for my residence you don't have to sell me. All that money saved on advertising could help to keep prices down. My only choice is to have electricity or not have it.

Jeff, I appreciate your inside opinion. It just seems to me that you've consumed the proverbial Koolaid.

Adam
 
<a href=showthread.php?s=&postid=8170907#post8170907 target=_blank>Originally posted</a> by adamjr
I just love the commercials they're spending a ton of money on to make us feel more comfortable with the upcoming increases.

How about not advertising about how great you are when I don't have a choice as a consumer. Since there is no competition in purchasing electrical service for my residence you don't have to sell me. All that money saved on advertising could help to keep prices down. My only choice is to have electricity or not have it.

Jeff, I appreciate your inside opinion. It just seems to me that you've consumed the proverbial Koolaid.

Adam

Adam....LOL....I know....I know.....but there's more to every story than meets the eye. Every bit of information we receive in matters like this are skewed a certain way. Once again, it is important to realize that ComEd is merely the means by which electricity gets to our homes. ComEd's portion of your electric bill is roughly 30% and is still regulated. This covers repair, replacement, and day to day maintenence of the power distribution infrastructure as well as administration costs to handle billing. Comed's recent rate request was for $346 million (ask for the world...) but the ICC granted them $8 million. That's about $2.50 increase per ComEd customer total for the year. The upcoming rate hikes are due to the generation portion of your bill. Exelon, the parent company of ComEd (the company that I happen to work for) is one of the largest producers of electricity in the country. In the old days, ComEd produced and delivered the electricity under a regulated environment. ComEd was required to produce and supply it's customers with as much electricity as they could use.....period. With today's deregulated market (after Jan.1st, 2007) , Exelon has no requirement to supply ComEd's customers. They are free to sell their electricity anywhere in the country to whomever pays the highest price. Simply stated, the rate increase that will take effect next year is a result of a "reverse auction" in which major (and in some cases minor) electricity generation companies bid to supply electricity to ComEd's customers. The lowest bid wins.

As for the ads ComEd has been running....well, I can't really say why they do it...I do know it's strictly PR...trying to improve the image, so to speak.

One thing I'm certain of in situations like this....it's easy to b$tch when it comes to rate hikes......"greedy big business"....unless they are related to the means by which YOU make YOUR income.....just a little something to think about. lately, I've been out shopping for a new vehicle for the wife. I saw a new Jeep Grand Cherokee on the showroom floor. The sticker price? $52,000.....for a Jeep. I'm sorry, but THAT seems out of line to me....but probably doesn't to the person making a living building them. It's all a matter of perspective.

Jeff
 
<a href=showthread.php?s=&postid=8172346#post8172346 target=_blank>Originally posted</a> by jgleach
As for the ads ComEd has been running....well, I can't really say why they do it...I do know it's strictly PR...trying to improve the image, so to speak.

Jeff

I know there's always a spin. I am not going to dislike them (ComEd or Exelon) any less because of a PR campaign. If I had a choice I would change. I don't have a choice so stop trying to sell me is all I am saying.

Adam
 
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