Commonwealth Edison, the largest provider of electricity in Chicago and Northern Illinois, is pushing for massive rate hikes. The rates are set to increase on Jan. 2, 2007, 10 years after a rate freeze passed in the Illinois state legislature. If implemented, electricity bills could jump by as much as 26 percent in Chicago and 40 percent outside the city. This could mean an additional $275 per month in energy costs for many workers.
ComEd is a subsidiary of the Chicago-based power giant, Exelon Corp. The rate freeze 10 years ago was brought on
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In the 1980s and 90s, utility providers, like Exelon and the infamous Enron, called for deregulation. They argued that deregulation—the removal of government oversight in the handling of company operations—would lead to more open competition and cause prices to drop. Millions of dollars were spent on lobbyists in Washington and throughout the country to defend this position. As a result, many states, including Illinois, eventually did deregulate.
But instead of lowering prices, deregulation allowed utility companies to raise them.
Now, ComEd and Ameren—an energy provider covering Southern and Central Illinois also set to raise its rates—have hired at least 40 lobbying firms in their attempts to stop state lawmakers from extending the 1997 freeze. Some of the hired lobbyists have close ties to Governor Rod Blagojevich and key figures in the state legislature.
The sky is not falling
Critical to ComEd’s case is the claim that any continued rate freeze would put the company at risk of bankruptcy. Yet, Exelon lists its 2005 profits at $2.1 billion and ComEd’s at $527 million—a far cry from being in the red. (Chicago Tribune, Sept. 18)
Big profits, however, do not translate into lower rates for customers. Instead, the money lines the pockets of the capitalist owners and CEOs. John W. Rowe, head of Exelon, gets $51.75 million every five years. Frank M. Clark, ComEd’s CEO, reportedly pulls in $1.76 million each year. His base salary doesn’t include the more than $6 million he has received in stock options. (Forbes.com)
Exelon is perfectly capable of providing electricity to the public at rates much lower than even the currently frozen rates. In addition to ComEd, Exelon owns Exelon Generation, which now owns all of ComEd’s old nuclear power generators. EG uses the generators to produce 90 percent of all electricity purchased by sister company ComEd.
ComEd has also argued that extending the rate freeze might lead to an energy crisis similar to California’s in 2001, which was caused by Enron and others. The California crisis featured rolling blackouts and huge energy price increases for consumers. The working-class was hit the hardest.
ComEd has employed William Massey, former commissioner of the Federal Energy Regulatory Commission during the California crisis, to put forward the company’s line. Massey has warned the governor that Illinois could face the same situation as California if the rate freeze is extended—an odd argument given that Enron and other energy companies have since been exposed for manipulating the market to boost profits.
A coalition of groups, headed by the Service Employees International Union, oppose the end of the rate freeze. They have noted that Illinois has enough power plants to continue providing electricity to in-state residents and also to ship it to other states without causing rolling blackouts.
‘Phasing in’ costs
ComEd has promised to “phase in” the hikes to decrease the immediate pressure on people in Illinois. The “phase in” plan—which has yet to be approved by the necessary state commissions—includes a 10 percent increase in energy costs in 2007, 2008 and 2009.
Although initially less than the 26 to 40 percent increase sought by ComEd, it ends up being the same. After three years, people would be forced to pay back their “debt” to ComEd—the additional increase not covered by the 10 percent increments—in 2010, 2011 and 2012, at an interest rate of 6.5 percent.
The likely increases could force numerous residential and business customers to take out loans just to keep the lights on or face simply going without electricity—a chilling prospect in light of the recent, deadly Chicago apartment fire that took the lives of six children. The fire was caused by a candle used to light the apartment. ComEd had cut off the electricity because the family who lived there could not afford to pay the bills. Click here to read more about the tragic Chicago Fire.
For the residents of Chicago’s working-class neighborhoods, the rate hike news is hard to swallow. The very real prospect of undoing the electricity rate freeze is another part of the coordinated capitalist attack on workers.
Along with rising utility prices, public schools, hospitals and libraries are being closed. Wages are stagnant and housing prices remain high. Meanwhile, hundreds of billions goes to fund the imperialist war against the people of Iraq.
It is still possible that the rate freeze will be extended until 2010. Unions and nonprofits have persuaded some state lawmakers to introduce a bill that would continue the freeze. But its passage is far from certain. And even if it does pass, it would provide only temporary relief.
Building a working-class movement is essential to stop future rate hikes and reverse the utility companies’ greedy plunder of our resources and labor.
