Illinois A.G. asks feds to investigate Ameren, ComEd

By Kevin McDermott

POST-DISPATCH SPRINGFIELD BUREAU
03/15/2007

SPRINGFIELD, Ill. _ Illinois Attorney General Lisa Madigan today alleged there is evidence of bid-fixing, collusion and other Enron-like schemes behind the state’s skyrocketing electric rates, and she formally asked a federal regulatory agency to reverse those rates and investigate the power suppliers of two major utilities.

In a 31-page complaint filed with the Federal Energy Regulatory Commission, Madigan lays out what she says is evidence that last year’s power auction involving Ameren and ComEd may have been fixed to ensure that specific wholesale suppliers got the most lucrative parts of that business _ at the expense of rate-payers who ended up with bills some 40 percent higher than they should be under a competitive market.

The complaint asks that the federal commission suspend the new electric rates, require refunds from the wholesalers for the amount of the increased prices, and investigate ``evidence of price manipulation’’ between the utilities and their power suppliers.

``The wholesale suppliers are charging prices that are at least double the marginal cost of generating electricity,’’ the complaint alleges. It goes on to allege that ``there is evidence that some of the wholesale (power) suppliers manipulated prices in the auction,’’ possibly with secret side-agreements among the suppliers.

The complaint states that ``quid pro quo arrangements’’ are a ``likely’’ explanation for unexpectedly high power rates that resulted from the reverse auction, which was ostensibly designed to ensure that Ameren and ComEd got the cheapest possible power supply contracts from competing wholesale electricity providers.

It is ``possible’’ that ``departing bidders’’ were rewarded with side-agreements that their power would later be purchased ``at favorable prices,’’ the complaint states. It cites a similar ``market manipulation scheme’’ that was uncovered in the Enron corporate scandal.

Those wholesalers bidding on the contracts included the parent companies of the two utilities.

Ameren spokesman Leigh Morris said Thursday the utility was still studying the FERC filing, and ``there will be no comment today.’’

Illinois lifted its nine-year rate freeze Jan. 2 and allowed the state’s two biggest utilities, Ameren and ComEd, to raise their rates. Resulting dramatic rate hikes prompted public outrage and a legislative campaign to re-regulate the industry.

Ameren and ComEd say their higher rates were driven by the realities of the power market, after almost a decade of artificially low rates. But critics say those markets are still not competitive, and that the resulting higher rates — from around 30 percent to more than 50 percent in some areas of the state — were unjustified.