ComEd: Rate freeze would lead to bankruptcy
October 6, 2006 (WLS) -- Commonwealth Edison officials warn extending a rate freeze will push the utility company into bankruptcy, but some officials don't buy it.
According to ComEd, the electric rates need to go up by 22-percent to pay for the rising cost of providing power. The president, Barry Mitchell, said a failure to raise the rates would push the company into financial ruins.
"If the rate freeze extension is passed, there'd be a very real high probability that we would be forced to declare bankruptcy," said Mitchell.
The power auction is over. At the start of 2007, ComEd will pay more for the electricity it buys. Company officials said if they can't charge customers the average 22-percent increase the auction called for, the utility will face a $1.4-billion loss. That, according to the company, could mean cuts in its ability to purchase power, cuts in manpower and cuts in maintenance.
"Somewhere in that equation, we're going to have to come up with $1.4 billion and that's where I'm suggesting the difficult decisions would be," said Mitchell.
"The notion that they're in financial distress doesn't pass the straight face test. They're doing better than any other power company. This is nothing more than bankruptcy blackmail and scare tactics," said David Kolata, Citizen Utility Board.
Rate hike opponents say electric rates should remain frozen until true competition comes to Illinois-- and they have powerful allies. The speaker of the Illinois House wants a special session to vote on a rate freeze before the election. The governor says he'll call one if the votes are there. But the Senate president, who does not favor a rate freeze, says the issue can wait until after the election.
"I probably agree with the senate president that we should wait until after the election and study it in a non-political type environment and come to a better decision," said Sen. Kirk Dillard, R-Westmont.
There may be the votes in the House for a special session, but the same does not now appear to be true on the Senate side with Senate President Emil Jones saying the issue can wait until the fall veto session.
ComEd's perspective on the issue is not when it happens, but what happens when the general assembly asks the question -- to freeze, or not to freeze.
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