Keeping the lights off
Electric rates will be jumping forty percent at the start of 2007. This comes after the power companies held a reverse auction to set the prices across the state. Some areas will see a fifty-six percent increase.
This comes as a nine-year freeze on electric rates imposed by the Illinois State Legislature expires. The freeze was put into place in hopes to attract competition after electric rates were deregulated. I’m not sure how freezing rates would attract competition, but nine years without an increase sure was nice on my checkbook.
But freezing rates for such a long time is only asking for disaster. Based on inflation alone, the rates should have increased by twenty-five percent. And energy prices have defiantly increased faster than the rate of inflation. Lawmakers are proposing to extend the freeze another three years. Again, it is nice for my checkbook, but not solving the problem. If this passes, look for an even larger increase in three years.
So where does a forty percent increase put us with the rest of the nation? According to my power bill, I pay 8.18 cents per kilowatt-hour. The national average is 9.21 cents and the Illinois average is 7.49 cents. So we are not in a bad place before the increase.
But the forty percent increase will make the rate 11.45 cents per kilowatt-hour. That will put Mattoon’s rates equal with Vermont’s, which has the tenth highest rates in the nation.
Artificially keeping rates low is only postponing the problem. Some say it can lead to an energy meltdown of California proportions. And when the freeze is over, the rates will increase even more. But without competition, power companies are able to charge what they want.
The competition deregulation was supposed to bring has never materialized. Since deregulation, Ameren has bought three smaller electric companies, including CIPS, widening their monopoly. But they also have invested $1.4 billion in infrastructure upgrades without resetting rates to reflect their investment.
This should be a hard lesson to the government, the power companies, and the consumers. You have to let the market set the price. And you have to have competition to keep the prices fair. We have neither. The only way we can keep our electric bill down is to keep the lights off.
This comes as a nine-year freeze on electric rates imposed by the Illinois State Legislature expires. The freeze was put into place in hopes to attract competition after electric rates were deregulated. I’m not sure how freezing rates would attract competition, but nine years without an increase sure was nice on my checkbook.
But freezing rates for such a long time is only asking for disaster. Based on inflation alone, the rates should have increased by twenty-five percent. And energy prices have defiantly increased faster than the rate of inflation. Lawmakers are proposing to extend the freeze another three years. Again, it is nice for my checkbook, but not solving the problem. If this passes, look for an even larger increase in three years.
So where does a forty percent increase put us with the rest of the nation? According to my power bill, I pay 8.18 cents per kilowatt-hour. The national average is 9.21 cents and the Illinois average is 7.49 cents. So we are not in a bad place before the increase.
But the forty percent increase will make the rate 11.45 cents per kilowatt-hour. That will put Mattoon’s rates equal with Vermont’s, which has the tenth highest rates in the nation.
Artificially keeping rates low is only postponing the problem. Some say it can lead to an energy meltdown of California proportions. And when the freeze is over, the rates will increase even more. But without competition, power companies are able to charge what they want.
The competition deregulation was supposed to bring has never materialized. Since deregulation, Ameren has bought three smaller electric companies, including CIPS, widening their monopoly. But they also have invested $1.4 billion in infrastructure upgrades without resetting rates to reflect their investment.
This should be a hard lesson to the government, the power companies, and the consumers. You have to let the market set the price. And you have to have competition to keep the prices fair. We have neither. The only way we can keep our electric bill down is to keep the lights off.
