Nuclear Energy Information Service
Illinois' Nuclear Power Watchdog for 25 Years

Illinois Utilities try to Pull Fast One for at Least
$14,600,000,000

PRESS RELEASE

For release: Tuesday, Sept. 29, 1998
For more information: David Kraft, (847)869-7650
Linda Pentz, SECC (202)483-8491

ELECTRIC UTILITY "STRANDED COSTS" CLAIMS AN ILLEGAL RATEPAYER RIP-OFF BIGGER THAN S & L BAILOUT, STUDY SAYS

CHICAGO-- A report exposing the electric utilities' claims for "stranded cost" recovery as illegal and larger than the S & L Bailout of the 1980's was released at a press conference in Chicago today, and Illinois' share of the ratepayer rip-off could exceed $14.6 billion.

"The Great Ratepayer Robbery: How Electric Utilities Are Making Out Like Bandits At the Dawn of Deregulation," was produced by the Safe Energy Communications Council (SECC) of Washington, D.C. SECC is a member of the national utility de-regulation coalition Ratepayers for Affordable Green Electricity (RAGE). Locally, the report was co-released by Nuclear Energy Information Service (NEIS) of Evanston and Illinois Public Interest Research (Illinois-PIRG) group.

The report examines electric utility claims for "stranded cost" recovery in 11 representative states -- including Illinois -- and concludes that these claims are often inflated, inaccurate, stifle true competition, and probably are illegal. Total alleged "stranded costs" that utilities claim ratepayers must pay as the price for allowing competition will exceed the $132 billion paid by taxpayers for the S & L bailout of the 1980s. Illinois' share of stranded cost claims from ComEd and Illinois Power - - both heavily invested in nuclear power plants -- exceeds $14.6 billion.

"The report confirms what consumer and environmental groups have said all along -- that electric utility 'stranded cost' claims are little more than legalized extortion," states David A. Kraft, director of the Evanston-based NEIS. "They held de-regulation and competition hostage in the Legislature unless they got their ransom guaranteed," Kraft notes.

The report shows that Illinois commercial ratepayers rank first and residential ratepayers rank second in the study's 11-state sample in terms of average cost to consumers. Commercial ratepayers with less than 1000 kilowatts of demand are expected to pay $12,314, and residential ratepayers are expected to pay $1,390 during the transition to full competition.

"Why should ComEd and Illinois Power be allowed to rob consumers under the guise of de- regulation? The phone companies and gas weren't allowed this rip-off, and they had sunk costs in their service areas. This is a question that must be put to every candidate for state public office during the coming election season," Kraft observes.

Among other findings of the report important to Illinois: -- ComEd and Illinois Power's estimates of alleged "stranded costs" are 2.9 and 3.3 times greater respectively than estimates done by Moody's Investors Service, calling their validity into serious question; -- the legal basis for utilities' claiming "stranded costs" -- the so-called "regulatory contract to serve" -- does not exist, and the concept of stranded costs may actually violate the Commerce Clause of the Constitution.

These conclusions suggest that Illinois' newly passed utility de-regulation bill may have to be revised, or face constitutional challenge in the courts.

"Numerous consumer and environmental groups in Illinois will not sit idly by and let ComEd and Illinois Power rob ratepayers and stifle competition," Kraft warns. "If it take a constitutional challenge, many organizations are preparing for this fight."

-- elsewhere, "stranded costs" have created an illegal trade barrier to true competition, by creating an artificial advantage to resident utilities, preventing utilities from out of state to come in and compete for service. "This is the exact opposite effect that our de-regulation laws were supposed to have. If they aren't doing what they were intended to do -- foster true competition -- then they must be changed or repealed," Kraft states.

-- "stranded costs" guarantee energy-related environmental degradation, by providing artificial funding for non-competitive, poorly functioning nuclear plants which true competition would have closed, while also permitting utilities to rely more on using dirty coal plants. "Illinois' environmental community will not permit this to happen unchallenged," Kraft warns.

"This Fall, officials and legislators like Sen. Pate Philip, Sen. William Mahar, and Rep. Phil Novak and Vince Persico are going to have to defend the de-regulation laws they gave Illinois before the electorate. They will have to answer why they allowed ComEd's and Illinois Power's "Great Ratepayer Robbery" to go unchallenged in Illinois.

"They will also be asked in the Fall Legislative session to fix problems in these laws, such as inadequate funding for renewable energy and energy efficiency. They had better come up with the right answers this time," Kraft asserts.

Nuclear Energy Information Service (NEIS) and the Illinois Public Interest Research Group (Illinois PIRG) are members of Ratepayers for Affordable and Green Electricity (RAGE), a national coalition dedicated to fighting utilities' claims for alleged "stranded costs."

Nuclear Energy Information Service is an Evanston-based, environmental, energy education organization founded in 1981 to provide the public with credible information on nuclear power and radiation hazards, and viable alternative energy choices to the continued use of nuclear power. "ROBBERY" PRESS CONFERENCE 10TH FLOOR

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Illinois Utilities try to Pull Fast One for at Least $14,600,000,000

PRESS RELEASE

Illinois Utilities try to Pull Fast One for at Least
$14,600,000,000