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Q&A on ComEd and Ameren rate hikes

What happened?20131219_RateHike_fb
On Wednesday, the Illinois Commerce Commission (ICC) voted to give ComEd a $340 million electric rate hike. It also voted to give Ameren a $32 million natural gas increase.

How much are rates going up?
ComEd said the average household bill will see an increase of about $5.50 per month. For Ameren customers, the impact is expected to be less than $4 per month. (Ameren has not yet released any estimates, but earlier this year the company said its original request, for a $50 million increase, would have hit the typical home with $2.50 to $4 per month in higher costs.)

When will the rate hikes take effect?
The increases are scheduled to take effect in January 2014.

What part of the bill is going up?
Both rate hikes affect “delivery” rates. That’s what the utilities charge to deliver gas or electricity to homes. Those charges take up about a third to a half of a bill. The rest is taken up by the price of the actual electric or gas supply.

Did ComEd and Ameren get everything they wanted?
In both cases, CUB and other consumer advocates fought to reduce the increases. ComEd’s original request was $359 million, about $19 million higher than what it actually received. Ameren’s original request was about $50 million, but that amount was reduced to $32 million.

Why are the companies getting rate hikes?
Ameren said it needed the higher rates to “cover its infrastructure investments and the increased costs of delivering natural gas.”

The higher electric rates for ComEd are part of the company’s “formula rate.” Under a state law originally passed in 2011, the “Energy Infrastructure and Modernization Act,” ComEd is allowed to use a formula to determine its delivery rates each year for up to the next decade. The increases will pay for $2.6 billion in “smart grid” system upgrades.

Ameren is both an electric and gas utility. On the electric side, it too charges a formula rate to cover about $600 million in upgrades. But the formula for Ameren will lead to a $45 million rate cut on Jan. 1, 2014, because the utility has yet to launch major upgrades to its power grid.

What is CUB’s response?
CUB is disappointed. A rate hike is never good news for Illinois consumers, and more than 2,000 people used CUB’s Action Network to oppose the ComEd and Ameren increases. In both cases, we plan to file a petition for rehearing, which is an appeal before the ICC, to lessen the damage to consumers. 

Going forward, CUB will work to hold ComEd accountable so that it lives up to its promise of building a more reliable and more affordable power grid. Customers are getting billed for these upgrades, so they deserve the benefits. (And the same goes for Ameren once it begins the electric upgrades!) See the potential benefits of these upgrades.