Outrageous!
Bad Bills Pass, Threaten Gas Rate Hikes
Thursday, March 3, 2011—Two bills that threaten higher natural gas rates for decades have been passed by Illinois legislators, despite the fact that the CUB Action Network sent senators more than 6,200 messages against the measures. Here's a rundown of the battle for your bottom lines in the halls of the Illinois Capitol.

What happened?


In one week, the Illinois Senate passed two measures, SB 1927 and SB 3388, that threaten to jack up Illinois natural gas bills by up to $100 or more a year over the next 30 years. The measures now are being considered by Gov. Quinn.

What do the bills do?


*They force Illinois utilities (Ameren, Nicor, North Shore Gas, Peoples Gas) to buy natural gas at higher-than-market rates from two proposed Illinois plants that would convert coal into gas. Those higher rates would be passed down to their customers for decades. An analysis by consumer advocates shows that the bills could increase yearly gas bills by a range of 4 percent to 12 percent. That's $37 to $167 in higher costs each year from 2015, when the plants are slated to be built, to 2024.

*SB 1927 is connected to a planned $1 billion coal-to-gas plant slated to be built by 2015 by Power Holdings of Illinois in Jefferson County. (Jefferson County, which has Mt. Vernon as a county seat, is in the south-central part of the state.) SB 3388 is connected to a planned $3 billion coal-to-gas plant, slated to be built by 2017 by New York-based conglomerate Leucadia National Corp., on Chicago's far South Side. (It's a 140-acre abandoned steel site along the Calumet River at 11600 S. Burley Ave.).

*Combined, the plants would account for roughly 25 percent of all residential gas demand in the state.

*SB 1927, the "Power Holdings bill," would require utilities to enter into 10-year contacts to buy gas from the Jefferson County plant with prices capped at nearly $1 a therm. That’s “more than double the current wholesale cost of natural gas and well above federal projections for gas prices over the next decade,” Crain’s Chicago Business reports.

*SB 3388, the "Leucadia bill," would require Ameren, Nicor, North Shore, and Peoples Gas to enter into 30-year contracts to each buy 25 percent of the proposed Chicago plant’s natural gas output each year, at potentially higher-than-market rates. That means smaller utilities, like North Shore Gas, would be forced to buy a much greater percentage of their total gas supply from the plant, potentially hitting their customers the hardest.

*Leucadia has pledged that its gas will cost between 70 and 80 cents per therm. Those are rates above current market levels, which are hovering around 45 cents per therm.

*In both bills, residential and small-business customers would shoulder the burden because large businesses aren't required to buy natural gas from the utilities. Residential customers in Peoples, North Shore, and Nicor territories also can go with alternative gas suppliers, but most of the offers to date have not saved consumers money, and most customers still get their gas supplied from the utilities.

What can we do?


CUB is asking Gov. Quinn to veto the bills to protect Illinois consumers from the measures, as written. A CUB e-mail campaign sent thousands of messages to the governor.