Legislative Watch – National and State Issues Affecting Municipal Utilities, IMEA, IMUA and IPEA
In conjunction with its affiliation with the American Public Power Association (APPA) and through its association with the Illinois Municipal Utilities Association (IMUA), the IMEA tracks state and federal legislation and regulations that affect its members, provides regular alerts and engages in timely lobbying efforts.
for the most recent legislative digest, which summarizes actions undertaken by the General Assembly and gives the schedule for legislative actions, including committee schedules with links to bills under consideration.
to see the status of the proposed legislation we are currently following at the Illinois statehouse.
Electric Competition – ARES and Deregulation
DEREGULATION AND ELECTRIC CUSTOMER CHOICE IN ILLINOIS – AN UPDATE
“Why I are my Municipal Electric Customers Getting Calls and Letters from People Claiming they Can save them Money on their Ameren and Com Ed Electric Bills?”
: The Illinois electric deregulation law, originally passed in 1997, phased in the ability of various classes of customers of investor-owned utilities (IOUs) to choose electric suppliers other than their own traditional utility. In the initial years, customer choice was limited to the largest customers (mostly industrial accounts) of the IOUs, primarily because the economics of choosing an alternative supplier of electric energy only worked when very large amounts of energy were being purchased. These customers still pay the incumbent utility a fee for the transmission and distribution of electricity, but the power itself comes from a third party (not the utility).
Now some alternative retail electric suppliers (ARES) are beginning to market to individual residential electric customers in the state. The ARES seek to sign up enough customers of investor owned utilities to knit together a large enough pool of customers to allow the ARES to achieve savings by buying in electricity in bulk, at a lesser price (similar to the way people join buyers clubs to get good deals on groceries and other staples). This is called aggregation
: Also, due to tweaks to the deregulation law, entire units of government are now able to choose to enter into a third-party energy contract on behalf of their citizens. This “opt-out’ approach requires the municipality to pass a referendum then the council to enact an ordinance which allows them to negotiate with a power provider. Citizens are given the option to say no to any city negotiated deal, but those who do not “opt out” will have their power provided by an ARES chosen by the municipality. The power continues to be delivered over their old utility’s transmission and distribution systems and the customers continue to pay for the use of those facilities plus the power from the third-party provider.
Direct advertising to investor-owned utility customers
: There are nine marketers licensed to sell to Ameren residential customers and 25 to customers in the ComEd territory. Marketing mailings and phone calls from these ARES are going to Ameren and ComEd customers. Unfortunately, marketing materials from these ARES have reached customers of cooperative and municipal systems and may be causing some confusion.
Municipally-owned systems are exempt
: The Illinois electric deregulation law exempts cooperative and municipal customers from participating in these so called customer choice aggregation plans. This is largely because lawmakers understand that customers of municipally owned electric systems are already receiving the benefit that these alternative energy suppliers are just now offering Ameren and ComEd customers. That’s because customers of municipally-owned and operated electric systems are already members of an aggregated customer pool. All IMEA member utilities have traditionally provided the benefits being touted by these new, alternative energy providers.
On top of that, customers of municipally owned utilities have several advantages over customers served through ARES and investor-owned utilities. These include:
- Competitive utility pricing – municipal systems are historically among the lowest cost electric providers in the state of Illinois. They have already captured the advantages of aggregation by acquiring bulk power on behalf of all their citizens and delivering it over the electric distribution system that they own and maintain. And municipal systems operate without the need to provide a profit to shareholders, instead plowing those savings and the revenue from the utility back into the community itself.
- Reliability – Not only do municipal systems already acquire low cost power in bulk for their citizens, they employ the maintenance and repair crews that keep the system in top condition. Rather than repair crews having to be called in from many miles away, municipal crews are based in the community and are available on short notice. Residential choice and municipal aggregation will do nothing to improve a community’s system reliability. In addition, more than half of the municipal systems in Illinois operate some form of local electric generation, which provides a back up to power being taken from outside the municipality and yet another layer of reliability.
- Economic development – In a municipally-owned electric system, rate making authority remains in the hands of local electric officials. This provides the community a valuable tool in attracting and retaining commercial and industrial customers for whom the cost of power is a vital concern.
Through a continuing commitment to our citizens, IMEA member utilities pledge to provide outstanding power service to their citizens for many years to come.
Need More information on ARES and Aggregation
Contact Rodd Whelpley (email@example.com
or 217-789-4632) for more information on this issue, including material to use on your Web site, as letters to the editor or as bill stuffers.
Tax Exempt Financing
As Congress looks to shore up federal budgets into the future, there is discussion to significantly limit or eliminate tax-exempt financing options for state and local governments.
Such a move would significantly increase the cost of municipal utility infrastructure projects and any other local government projects that depend on tax-exempt financing. IMUA staff has contacted each congressional office to express our concerns.
Help Save Tax Exempt Financing
You can help by writing to your representative in Washington. Kevin Gaden recently e-mailed sample letters that you may modify and send. Those letters are reproduced below so you can copy and paste them into a word processing document.
The American Public Power Association has a number of tax-exempt financing background and advocacy resources posted to the legislative portion of APPA’s Web site. You can access that material at:
If you want any additional materials on this issue, please contact Doc Mueller (firstname.lastname@example.org
) or Rodd Whelpley (email@example.com
) or call 217-789-4632.
Sample Letters in Support of the Preservation of Tax Exempt Financing
Preserve Tax Exempt
Preserve Tax Exempt
Early in 2010, the United States Environmental Protection Agency adopted new National Emissions Standards for Hazardous Air Pollutants for Compression Ignition Reciprocating Internal Combustion Engines (NESHAP for CI RICE). The rule, as originally published, required units constructed and put into service prior to June 12, 2006 to be retrofitted with catalytic converters in order to meet new emissions standards or else curtail operations.
In the recent years, 21 IMEA member communities have owned and operated some CI RICE (diesel) generation, most of which was under contract to IMEA as a part of its resource mix. Members who discovered their units would not conform to the new RICE emissions standards had to decide whether to retire the units, replace them or retrofit them. The IMEA helped its member agencies make that decision, by commissioning an engineering analysis.
Apart from using RICE units for generation in times of peak demand, some member communities use these units in emergency situations. Early versions of the NESHAP/RICE regulations jeopardized using existing units for emergencies without expensive (and, in some cases, impossible) retrofitting or replacement. IMEA, working through the IMUA and the APPA, sought to have the U.S. EPA amend its rules to allow existing RICE units to generate during planned maintenance outages, during low voltage instances, and for system support in cases of inadequate transmission capacity.
Rule amendments favorable to IMEA’s position were released in June 2012 and were immediately challenged. In August 2012, IMEA, APPA and other Midwestern electric utility associations – as part of the EPA’s commenting process – urged the EPA to retain the favorable amendments. The EPA did retain those favorable amendments in its ruling handed down in early 2013.
Compliance with NESHAP regulations is still set for May 2013. Most IMEA members units will be in compliance by May 2013. But if your utility needs to ask for a one year extension, please contact Doc Mueller (firstname.lastname@example.org
) or Rodd Whelpley (email@example.com
) or call 217-789-4632 for more information on that process.