I'm sure that many of you have read reports and newspaper articles about the substantial rate increases that are scheduled to take effect January 2, 2007 for consumers of Ameren and Commonwealth Edison (ComEd).  In this article, I would like to provide some background information regarding this issue and assure you as a Cooperative Member, this does not have a direct effect on your Cooperative.

The Electric Utility Deregulation law of 1997 was enacted in an effort to reduce electric rates to Illinois consumers by providing customers with a choice of where their electricity was generated.  During this transition period, this law mandated some rate reductions for residential customers and also "froze" these resulting rates initially through the year 2004.  However, when it became apparent there would be no real choice for residential customers in Illinois, the rate "freeze" was extended through the year 2006. 

This same law also changed the way the state's investor owned utilities (Ameren and ComEd) are regulated.  This law allowed investor owned utilities to sell their generation assets or roll them into subsidiaries.  Both ComEd and the Ameren companies did that and therefore no longer own generation facilities.  This means that their current power supply contracts expire at the end of 2006 and they have had to find a new source for power to sell to their customers.  The Illinois Commerce Commission unanimously approved the holding of power auctions as the means for investor owned utilities to secure a new source for the power to sell to their customers. 

Based upon the results of these power auctions along with other factors, rate increases of approximately 40 percent are predicted for residential customers of the Ameren utility companies.  At the time this article is being written, Ameren and ComEd hope to be granted the authority to phase-in these cost increases over a period of years.  In the event this authority is granted, the phase-in cost would be borne by their customers.

Due to the fact that Cooperatives are not-for-profit entities owned and controlled by the consumers themselves, Cooperatives were treated differently than investor owned utilities under the 1997 deregulation law.  SouthEastern Illinois Electric Cooperative still owns its share of the generation assets at Southern Illinois Power Cooperative in Marion and did not have to secure a new source for power during the power auctions.  Therefore, your Cooperative will not be passing along the substantial rate increases to its members that you are reading about in the newspapers and other reports.

Your Cooperative will implement a 5.5% general rate increase on January 1, 2007.  In addition, your Cooperative will restructure all retail rates to reflect a change in our wholesale power rate structure.  This restructuring includes the implementation of a wholesale power cost adjustment charge that will allow your Cooperative to only pass along incremental increases or decreases that are passed along from our power supplier.  Due to the restructuring of the rates, the actual rate increase experienced by each member will vary somewhat based upon each member's energy consumption. 

See you next month and as always, "We'll keep the lights on for you."