the current edition - Citizens Utility Board

Winter 2005-2006 A Publication of the Citizens Utility Board www.CitizensUtilityBoard.org
$196 million refund deal makes history
CUB detective work over ill-gotten Enron deals key in getting Peoples Energy to pay up
From right, Chicago Mayor Richard Daley, Ald. Ed Smith, Attorney General
Lisa Madigan, and CUB Executive Director David Kolata announce
the historic $196 million refund package for Peoples Energy customers.
Sitting Pretty
Despite a 1997 state law that cut
ComEd rates by 20 percent and
froze those rates for a decade, parent
company Exelon has since enjoyed a
rise in stock value that is six times
the value of customer savings.
$18 billion
Rise in Exelon
Stock Value
$3 billion
Customer
Savings
Exelon pushes big rate hike
despite monstrous profits
CUB study: Exelon profit giant, even with rate freeze
Although Exelon claims it needs
to raise power bills by 39 percent to
remain financially healthy, ComEd’s
parent company has been wildly successful—even
under a rate freeze—
enjoying an $18 billion rise in its
stock price, a CUB study shows.
CUB and other groups, including
AARP and the Service Employees
International Union, are fighting
the proposals that would raise typical
bills by $280 per year. (See “Ratehike
Roundup” on p. 3.)
Despite healthy profits, ComEd and
Ameren, which combined serve about
4.8 million customers, are claiming
“Far from suffering under
sensible regulation, ComEd’s
parent company has been a
profit juggernaut.”
-David Kolata
CUB executive director
that they could go bankrupt and Illinois
could face crippling blackouts if
state regulators don’t allow them to
buy power through an “auction” system
after a rate freeze ends in 2007.
At press time, state regulators
were set to vote on the auction pro-
Continued on p. 3
Peoples Energy has agreed to give
its customers a historic $196 million
refund package, three years after CUB
dug up evidence of a scheme that enriched
both the company and Enron
Corp. at the expense of consumers who
paid record-high heating bills.
“Not only is this the biggest refund
of its kind in state history, but it’s
also one of the best rebate packages
ever seen in Illinois, period,” said David
Kolata, CUB executive director.
The settlement, which requires
approval by the Illinois Commerce
Commission (ICC), features a $100
million customer refund. Peoples also
has agreed to restore service for nearly
12,000 disconnected customers, to
waive their debt, and wash their credit
histories of that debt. An additional
$52.3 million in bad debt, a cost typically
recovered in customers’ rates,
would be erased, under the deal.
Peoples also will contribute $30
million to a weatherization fund,
creating one of the largest such programs
in the nation. Experts say
consumers achieve at least $3 in
savings on their natural gas bills for
every dollar spent on weatherizing
their homes.
Three years ago, working on a
hunch, Kolata looked through thousands
of Enron e-mails and uncovered
an illegal profit sharing scheme with
Peoples that led to the company overcharging
customers in the winter of
2000-2001.
The revelations sparked lawsuits
Continued on p. 5
CUB Quips
Who‛s next?

From the desk of...
Natural gas industry should make a few New Year’s resolutions
David Kolata
When oil executives
appeared
before Congress
to answer questions
about skyrocketing
gasoline
prices—and their
skyrocketing profits,
they might as well have been
speaking about the outrageous
heating prices.
Those same oil barons also are
making a killing off the recordhigh
natural gas prices.
Collectively, the five companies
that were paraded before Congress
by some PR-savvy politicians in
November made about $30 billion
in the third quarter alone. Of that,
Exxon Mobil’s $9.9 billion set an
American record.
Despite those lofty profits, the
executives didn’t leap at a bipartisan
suggestion that they donate 10
percent of their profits to an anemic
federal fund that helps low-income
people pay for winter heat.
Not surprising from the gang
that gives the same, tired “supply
and demand” excuse for high pric-
es in the energy industry.
Of course, there’s a convenient
twist this year to that old line: the
hurricanes. Yet, while Katrina and
Rita had a devastating impact along
the Gulf Coast, where about 20 percent
of the nation’s natural gas is
produced, the prices had been climbing
for years and reached record levels
before those twin tragedies hit.
In Illinois, the utilities that buy
the natural gas produced by the big
producers and marketers also wash
their hands of the high prices. True,
under state law utilities like Ameren
and Nicor Gas aren’t supposed to
profit off the high prices, but Illinois
residents can be forgiven for their
skepticism.
Both Nicor and Peoples Energy
have been caught in schemes that
overcharged customers during the last
high-priced winter five years ago.
Northern Illinois residents could
choose a company other than Nicor
or Peoples to supply them with gas,
but that’s likely to be a bad gamble.
A CUB study found that consumers
were more likely to lose money with
these alternative suppliers, and, as
prices shot up, at least one company
Round 3! SBC has new
phone deregulation plan
For the third time in four years,
SBC is pushing to deregulate local
telephone service and open the door
for unlimited rate hikes on basic residential
phone service.
In November, SBC declared the
Chicago phone market, a 123-mile
area in northeastern Illinois, “competitive,”
which means, under state
phone rules, that it can raise rates
for basic phone service as high as it
wants. At press time, CUB planned
to challenge that declaration before
the Illinois Commerce Commission
(ICC), and argue that the move would
hurt typical phone callers who rely on
SBC’s standard, regulated rates.
SBC claims there’s no need for
state regulations to keep phone rates
down, since there’s plenty of competition.
The company complains that
Continued on p. 6
2
SBC’s Standard Rates
CUB wants to stop SBC in its push
to declare Chicago’s phone market
“competitive,” which would allow
it to raise its standard rates without
state approval. For most SBC
customers those rates are the best
deal—along with another company’s
long-distance/local toll plan
for 5 cents a minute or less.
Line charge of $2.55, $5.53, or
$9, depending on where you live.
Federal Access Charge of $4.50.
3 cents per local call (0-15 miles
away).
Local calls capped at $10.11 per
month (337 calls).
has bailed out of its supposedly airtight
deal offering a “fixed rate.”
Yes, the natural gas industry is
quite a mess. Just ask a working
mother and father trying to pay home
heating bills AND afford their daughter’s
braces—or a retiree on a fixed
income who has to budget for food,
prescription medicine, and utilities.
They’d love to hear some New
Year’s resolutions from the gas industry.
First, the utilities should aggressively
promote their “budget” plans,
which even out gas bills on an annual
basis. They also should offer a
percentage-of-income payment plan
that would allow low-income customers
to pay what they can afford each
month and reduce the number of
customers who default on their bills.
Plus, it would be nice to see the utilities
offer a lower, alternative “fixedrate”
for gas.
Add to that an emergency federal
income tax credit for people struggling
to pay their bills and a wellfunded
weatherization program,
complete with discounted programmable
thermostats or water-heater
covers at big hardware chains.
Also, the Illinois Commerce Commission
(ICC) should immediately
launch an investigation to determine
the best hedging practices—or
gas-buying strategies designed to
protect consumers from rate shock.
While they’re at it, the ICC should
probe the troubling price disparity
between utilities. Just why was there
a 12-cent difference in the November
per-therm price of Nicor ($1.19) and
AmerenCILCO ($1.07)?
These are just initial steps. Our
biggest wish is for a total overhaul
of the gas industry with federal regulators
taking a much more active
role in policing the business and
preventing market manipulation.
That would take years of brutal
policy debates and a federal government
willing to stand up to the
companies that are profiting from
the current system.
Improbable, perhaps, but how
long will this chaos be business
as usual in the gas industry? The
current laissez-faire system only
benefits the Exxon Mobils of the
world—whose executives can jet off
to a warm-weather paradise if they
ever need to escape the winter cold.
Former Rockford mayor
named new ICC chairman
CUB applauds governor’s new pick
Chairman
Box
commissions, including the Illinois
Children’s Healthcare Foundation.
“It is key that the ICC chairman be
a leader with a firm grasp of the law
and a firm grasp of the interests of all
Illinois residents, not just utility executives,”
CUB Executive Director David
Commission
Kolata said. “Chairman Box has all of
those qualifications as he prepares to
tackle the difficult cases ahead.”
Among the problems facing Illinois
consumers, natural gas prices are at
record levels and electric utilities are
seeking hundreds of millions of dollars
in rate hikes.
In January, the governor named
Cohen his first director of consumer
affairs. He will advise the governor
on consumer issues ranging from energy
policy to privacy protection.
The CUB Voice
Gov. Rod Blagojevich
has nominated
former Rockford
Mayor Charles Box
to be the chairman
of the Illinois Commerce
(ICC).
The move came
two months after
utility companies blocked the governor’s
first pick, former CUB Executive
Director Martin Cohen.
In November, Cohen became the
first nominee ever to be rejected by
the Illinois Senate. Box still must get
confirmed by the Senate.
Box, Rockford’s first black mayor,
from 1989 to 2001, is an attorney
who serves on several boards and

CUB study: Exelon a profit giant now and in the future
Continued from p. 1
posal. CUB will appeal any vote
against consumers.
A wide spectrum of critics—from
Gov. Rod Blagojevich to a former Reagan
Administration economist—have
said an auction would lead to unreasonably
high rates. After conducting
similar auctions, New Jersey’s rates
increased by 28 percent and Ohio
was so unhappy with the outcome
that it did away with the system.
Although Illinois law mandates that
utilities buy power at the least cost
possible, the consultant who designed
the auction for Exelon admitted in testimony
before the Illinois Commerce
Commission (ICC) that producing the
lowest price isn’t an auction goal.
In fact, the auction would all but
end the authority of Illinois regulators
to ensure that rates are fair, opening
the door for unlimited rate hikes.
Yet, under current regulation, Exelon
has been a profit giant—even
with a 20 percent rate cut and freeze
implemented by the 1997 state law
that restructured the power industry,
a CUB study found.
Study author Edward Bodmer, a
Take Action
former ICC staffer and vice president
of the First National Bank of Chicago,
found that Exelon’s stock value
has jumped by $18 billion since 1997,
and its 21 percent return on investment
beats all other major utilities
across the country.
In fact, the utility has outperformed
the S&P 500, a stock market barometer,
by more than 1,500 percent.
The future also looks bright for Exelon.
Even under a rate freeze or cut,
its profit rate would remain far above
the average return on equity of about
10 percent allowed for electric utilities
by other regulatory commissions.
Under a rate freeze, Bodmer projects
Exelon’s profit rate would hover between
18 and 19 percent through 2012.
With a 5 percent rate cut, the profit rate
would be around 17 percent.
“Far from suffering under sensible
regulation, ComEd’s parent company
has been a profit juggernaut,”
CUB Executive Director David Kolata
said. “Simply put, Exelon wants
ComEd to become a deregulated
monopoly—making obscene profits
while wiping out meaningful regulation
in Illinois.”
Rate-hike Roundup
A summary of the three Exelon/ComEd rate-hike proposals—totalling 39
percent—before state or federal regulators.
Potential
Rate Hike
Case
(39% total) Update
Delivery rate hike.
(Dispute over what ComEd
should charge customers to
deliver power.)
Auction case.
(Dispute over how ComEd
will buy power in 2007.)
Federal rate hike.
(Dispute before federal
regulators over plan to
raise wholesale rates.)
6% CUB and the Illinois Attorney General’s
office filed testimony with Illinois Commerce
Commission (ICC) to wipe out
proposed increase—and give customers
a rate cut of at least $115 million. An
ICC ruling is expected by end of July.
16% At press time, a ruling on the case was
expected by end of January. CUB will
appeal any anti-consumer ruling.
17% CUB has joined with consumer advocates
to argue against wholesale rate
increases before the Federal Energy
Regulatory Commission (FERC). Federal
ruling expected by end of 2006.
Breaking news: Rate-hike plans revealed
ComEd and Ameren propose hundreds
of millions of dollars in rate
hikes—on top of the increases their
“auction” plans would bring.
The proposed increases are to “delivery-service
tariff” (DST) rates—
what utilities can charge customers
to deliver power to their homes.
ComEd proposes a $350 million
Fact vs. Fiction
Your guide to ComEd’s claims
CUB Executive Director David Kolata
announces an ad campaign to answer
ComEd’s misleading claims.
In hopes of securing nearly $1
billion in rate hikes, ComEd and its
parent company, Exelon, have been
spreading misinformation through
a front group called CORE and a
$4 million TV campaign.
What follows is an analysis by
CUB of arguments made by ComEd
over the past several months to justify
a 39 percent increase in power
bills.
ComEd Claim: If we don’t get
a rate hike, we could go bankrupt
and Illinois could suffer widespread
power outages, similar to
the crisis California endured several
years ago.
CUB Analysis: Illinois has so
many power plants that we export
electricity to other states. Talk of
ComEd bankruptcy ignores the
fact that its parent company, Exelon,
had a record profit of $1.9 billion
in 2004, and analysts predict
it will continue to flourish even if
rates are frozen. While Exelon says
it absolutely needs higher rates in
Illinois, it sings a different tune in
Pennsylvania, where it locked in a
$120 million rate cut through the
increase in DST rates. Ameren—
the parent of AmerenCILCO, AmerenCIPS,
and AmerenIP—proposes
three separate “DST” rate hikes totalling
$200 million.
CUB has proposed wiping out
Exelon’s rate hike, and the consumer
group is studying the Ameren
proposal.
end of the decade.
ComEd Claim: Our rates are the
same today as they were in 1995.
No company can be expected to go
so long without raising prices.
CUB Analysis: Just because
ComEd hasn’t had an increase
doesn’t mean it automatically deserves
one. Its customers used to
pay some of the highest rates in
the nation, before a 1997 state law
ordered a 20 percent rate cut. It
took a record rate cut just to get
ComEd’s prices at roughly the Midwest
average, and yet the company
still is raking in record profits.
ComEd Claim: Our “auction”
plan does NOT limit state oversight
of the power industry.
CUB Analysis: ComEd’s plan
is a radical departure from current
law, which requires the Illinois
Commerce Commission (ICC)
to ensure that rates are “just and
reasonable.” The proposal would
strip the ICC of any meaningful
power to make sure consumers are
charged a fair rate.
ComEd Claim: Consumer
groups that oppose an “auction”
system have not proposed any alternatives.
CUB Analysis: Consumer
groups have said all along that
ComEd can have its auction, or
any other power-buying system it
wants, as long as Illinois regulators
retain the authority to assure
fair rates. ComEd’s auction is just
a clever way to lift reasonable regulations
that for years have allowed
the company to earn a healthy
profit while protecting consumers.
Contact your state legislators and urge them to take consumer-friendly positions
on utility issues. To be connected directly to your legislator’s office,
call AARP’s electrical advocacy hotline, 1-800-719-3020, or log on to www.
StopComEdRateHike.com. Ameren has similar proposals. Find out more at
www.StopAmerenRateHike.com.
Winter 2005-2006 3

Historically bad—again
Natural gas industry in 2005 broke
price records for third straight year
Steady rise
The natural gas industry likes to
blame the high prices on Hurricanes
Katrina and Rita, but the
average monthly per-therm price
offered by five major Illinois utilities
was at record levels long before
those twin tragedies in 2005.
32¢
47¢
Tips on avoiding a few natural gas nightmares
Malinowski
Record!
Record!
52¢
43¢
Record!
62¢
68¢
84¢
1999
’00 ‘01 ‘02 ‘03 ‘04 2005
Source: This decade’s average monthly prices
for AmerenCILCO, AmerenCIPS, AmerenIP,
Nicor Gas, and Peoples Gas.
The Nightmare:
Colleen and Steven
Malinowski’s gas
company doesn’t read
the meter for months
at a time. The utility
once sent the Elmwood
Park family a
$1,500 make-up bill after underestimating
gas usage for months. Another
time it sent a $1,600 make-up
bill. “How many times do you have
to call and wait for them to come before
you just give up,” said Colleen,
a mother of three. The utility had
failed to make about 15 meter-reading
appointments, she said.
Tip:
Read each bill to see if it is based
on an “actual” or “estimated” meter
reading. If a bill hasn’t been read for
two straight months, call the company
to find out why. Be persistent.
Call your utility and ask if it allows
customers to do their own readings.
4
For the third consecutive year, Illinois
consumers endured the worst
natural gas rates in state history,
and they are bracing for punishing
prices the rest of the winter.
Five major utilities—AmerenCIL-
CO, AmerenCIPS, AmerenIP, Nicor
Gas, and Peoples Gas—beat price records
in at least eight months in 2005.
The average monthly price for
those utilities was the highest in Illinois
history. Meanwhile, gas producers
and marketers made huge profits.
(See CUB Executive Director David
Kolata’s column on p. 2.)
At press time, the prices were still
at record levels, with an average January
price of $1.10 per therm.
CUB has asked state regulators
to consider several actions, including
allowing low-income customers
to pay a certain percentage of their
bills, according to their income, to
survive the record prices without
getting their heat turned off.
CUB also asked regulators to probe
why there are sometimes wide price
differences between the utilities.
The Nightmare:
Russell Ponder, of
Homewood, thought
he could save money
on Nicor’s “Fixed Bill”
program. But CUB has
found that the fixed
Ponder
monthly bill offered to
customers contains such a large markup
that they’re likely to pay much
more than on standard rates. Ponder
overpaid by hundreds of dollars, CUB
found. “There’s no free lunch,” he said.
Tip:
Beware of any plan that seems to
promise savings. Join your utility’s
“budget plan,” which is different from
the “Fixed Bill” plan. A budget plan estimates
your usage for the next year
and evens out monthly bills. At the
end of the year, the utility credits your
account for overestimating your usage,
or charges you for underestimating it.
With the “Fixed Bill” plan, you’re simply
out the money you overpaid.
Just how bad is bad?
The average monthly prices charged by major Illinois gas utilities were
at all-time highs in 2005, marking the third straight year the companies
smashed records.
Nicor Gas
2005—85.4 cents/therm
2004—64.6 cents/therm
Peoples Gas
2005—86.8 cents/therm
2004—67.6 cents/therm
AmerenCILCO
2005—79.9 cents/therm
2004—63.8 cents/therm
AmerenCIPS
2005—87.6 cents/therm
2004—73.6 cents/therm
AmerenIP
2005—79.6 cents/therm
2004—69.5 cents/therm
Ariel
The Nightmare:
Glen Ariel said he
didn’t realize he was
paying for something
he didn’t need. Nicor’s
$4 per month “Comfort
Guard” plan covers repairs
to exposed gas
pipes, including the connector that
links appliances to the main gas line.
But it doesn’t cover many other repairs,
and renters probably don’t need
it, since landlords should handle such
problems. Ariel was refunded the $94
he had spent on the program, after
CUB helped him argue that he didn’t
need it since his gas stove had a new
connector. “I’m not a senile old goof,”
the 74-year-old Ariel said. “I couldn’t
even begin to guess how many seniors
are being scammed by this thing.”
Tip:
Read your bills carefully. Beware of
strange charges, and call CUB for an
explanation of the different fees.
% increase
32%
28%
25%
19%
15%
The Nightmare:
John Zager, of Chicago
Heights, said the
man at the door gave
the impression that
he was from Nicor
Gas. The man asked
Zager
for his bill to see if the
68-year-old retiree was eligible for any
savings. Then he asked Zager to sign a
form. “Wait a minute. I’m not signing
anything,” Zager said. The man wasn’t
from Nicor. Other companies are allowed
to compete with Nicor through
the “Customer Select” program, which
allows customers to choose a gas supplier
other than their utility. Call CUB
if you have complaints about the sales
tactics of these suppliers.
Tip:
Never give personal information to
anyone who claims to be from the
“gas company.” Don’t sign anything
until you identify the company and
carefully read its “deal” in writing.
The CUB Voice

Pop Quiz!
So how well do you
know your gas bill?
Quiz
Class: Gas Bill 101
Teacher: Mr. Kolata
Name:
Homeroom:
It’s not just for
‘tree-huggers’
Getting the natural gas bill
Section I: Multiple Choice 2. Which charge makes up most of
is kind of like getting slapped 1. What does “EST” mean on your your gas bill?
Julia Ortiz, a 42-year-old factory
with one of those pop quizzes
we used to endure in high
er of two, is always looking to save as
bill?
A. Purchased Gas Adjustment (PGA)
worker from Cicero and single moth-
A. Established Account
B. Monthly customer charge
B. Estimated Reading
C. Distribution charge
much money as possible.
school: they’re filled with a lot C. Environmental Systems Therm Fee D. Environmental Recovery Cost
D. Energy State Tax
“My bills are too high,” said Julia.
of confusing words and numbers—and
they’re never wel-
3. Natural gas usage is billed by cleaning up pollution at old gas
I’m scared of what is going to hap-
4. This charge covers the costs of
“I’m afraid to open my mail because
come. Well, here’s a relatively what unit of measurement?
manufacturing sites.
pen.”
A. The kilowatt-hour
A. Environmental Systems Therm Fee
painless pop quiz to help you
The average American household
B. Cubic feet
B. Environmental Recovery Cost
spends $1,500 annually on energy
better understand those bills. C. The therm
C. Distribution Maintenance Charge
D. The decatherm
D. Monthly customer charge
bills, a number that could increase by
Don’t worry, we supply the answers
on p. 7—and you won’t be Section II: True or False
federal government. Because half of
50 percent this year, according to the
sent to the principal’s office for
5. The customer charge (a.k.a. basic 6. The amount you pay for distribution
costs changes from month to
those costs go toward heating and cooling
homes, basic home improvements
service charge or account charge)
peeking.
changes from month to month, depending
on how much gas you use. you use.
and more efficient equipment can lead
month, depending on how much gas
to lower costs.
Section III: Matching
Julia called CUB to learn how she
7. Natural gas and oil producers made huge profits in the third quarter of could make her home more energy
Grade your Performance
2005, while consumers paid record-high gasoline and heating prices. Match efficient. With natural gas prices at
0-3 Correct—Don’t worry, you’re
the company to the third-quarter earnings.
record highs and December temperatures
at record lows, CUB is showing
not alone. Call CUB for a free
BP Plc.
$9 Billion
copy of “Making Sense of Your
consumers how to save energy and
Gas Bill.”
Chevron Corp.
$6.5 Billion
reduce their heating bills.
4-5 Correct—Not bad, but
One of the most effective ways to
there’s room for improvement.
ConocoPhillips
$3.6 Billion
save energy is to prevent warm air
6-7 Correct—Impressive! You’ve
from leaving the house. Weatherstrips
and insulation should be add-
mastered that mysterious language
Exxon Mobil Corp.
$3.8 Billion
called “Gas Bill-ese.”
Royal Dutch Shell Plc.
$9.9 Billion (American Record!)
ed to an attic hatch or door. Holes
from ducts and plumbing or electrical
runs that lead to the attic should
be sealed. Doors and windows should
Road to $196 million refund
be caulked. Insulation can be added
Historic Refund
in the walls and ceiling to prevent
A breakdown of the $196 million refund
package for Peoples Gas and The furnace filter should be re-
heat loss.
package began with CUB
Continued from p. 1
North Shore Gas customers.
possible choice between heating or
placed regularly because a dirty air
from the City of Chicago and the Illinois
Attorney General’s office. They or Richard Daley and Attorney Gen-
Customers will receive a $50 credit unit work harder, wasting energy
eating,” Kolata said. “Thanks to May-
$100 Million Credit.
filter reduces airflow and makes the
also joined CUB in asking the ICC to eral Lisa Madigan, this settlement as early as March and an additional
$50 credit within 12 months. Set the water heater to the warm
and money.
order a big refund.
will give consumers
some relief.”
setting, 120 degrees. Cover the wa-
However, any “Too many customers face
relief ordered by the impossible choice between
heating or eating....
Under the proposed
agreement, Customers save at least $3 for every an insulating blanket, which will
$30 Million Weatherization Program. ter heater, not the thermostat, with
a civil court or
the ICC was likely
to be delayed
average about the value exceed the funding. if your utility company will pro-
the credits, which $1 spent on weatherization, making pay for itself within the year. See
This settlement will give
for months, even
consumers some relief.” $100 per household,
would go to
vide these at a discount or offer a
years, by legal -David Kolata
$14 Million to Turn on Gas. rebate.
challenges. CUB executive director Peoples Gas and
Customers disconnected for nonpayment
will have their debt forgiven than 68 degrees during the day and
A furnace should be set no higher
The $196 million
North Shore Gas
settlement gets substantial benefits customers in two installments. The
and their reconnection fees waived. 62 degrees at night. Consumers can
to customers quickly, before the end first $50 credit would come within a
save two percent of their heating
$52 Million to Forgive Bad Debts.
of a winter heating season that has month of being approved by the ICC.
bills for each degree they turn down
This amount, usually built into
seen record-high natural gas prices. The second would come within a year
their thermostats. However, senior
consumers’ rates, will be erased.
“Too many customers face the im-
of that.
Continued on p. 6
Winter 2005-2006 5

6
Schadenfreude...If there’s any
doubt about how fearful utility interests
were at the prospect of former
CUB leader Martin Cohen as
Illinois’ top utility regulator, take
a look at how Wall Street partied
on the day of his ouster. Cohen
became the first nominee ever to
be rejected by the state Senate.
ComEd’s parent company, Exelon,
engineered Cohen’s demise—and
was rewarded with a 71-cent jump
in its stock. “Good news,” said one
investment analyst.
Seems like old times…The
judge who broke up phone giant
AT&T 20 years ago died in 2000,
but he still had something to say
about an SBC-AT&T merger. “I’m
surprised that somebody wants to
put Humpty Dumpty back together,”
Judge Harold Greene said in
1997, the first time SBC and AT&T
considered merging. Greene worried
of a “return to monopoly conditions.”
That merger failed, but a
new deal just went through. And
what will the new giant be called?
You guessed it: AT&T.
I owe what?…CUB has heard
plenty of stories about overcharged
customers, but Rose
Mary Cook’s case is one for the
ages. The Mascoutah woman
was accused of using 10 million
gallons of water and billed
$74,000 by the city’s water department.
The culprit? A broken
meter. Cook’s actual bill was
just $32. Cook joked to The Associated
Press that she couldn’t
have been hoarding water, since
where in the world would she
have found all those gallon jugs?
Cost-cutting?...Ameren wants
to cut expenses by $65 million, so
why is CEO Gary Rainwater—
who made $1.2 million in salary
and bonus in 2004—slated to get
a 13 percent salary increase?
Well, Ameren says he receives
below-average pay. Plenty of Illinois
consumers would gladly
settle for Ameren’s definition of
“below average.”
Water torture!
Illinois American customers angered by suddenly outrageous bills
CUB Lawyer Melville Nickerson
is investigating a monstrous jump
in Illinois-American Water bills.
As if high heating bills weren’t
enough, some Illinois consumers
also face skyrocketing water bills,
creating an even deeper dent in their
pocketbooks.
“I can add my gas and electric bills
together and my water bill is still
higher,” said Sandra Walters, an accountant
and long-time resident of
Orland Park. “I would rather pay my
gas bill twice than have to pay my
Continued from p. 5
citizens or those with health conditions
should consult their doctors.
Never turn off the heat. It will lead
to frozen pipes.
Don’t crank up the thermostat
thinking it will warm up the house
faster. The house will heat up at the
same rate, but more energy will be
water bill, and that’s saying a lot.”
Consumers living in Homer Glen,
Orland Township and other areas
southwest of Chicago saw astronomical
increases in their water bills after
Illinois American Water installed new
meters over the summer. Complaints
about the high bills started pouring
into CUB in late August and continued
through the end of November.
Summer bills that typically showed
usage of 10,000 to 25,000 gallons
each month suddenly ballooned to
50,000 to 100,000 gallons.
Walters was billed $400 for using
49,000 gallons—more than triple her
typical usage and enough to fill a
500-square foot pool twice over.
Walters insisted there was a mistake,
but Illinois-American stood by
its reading, and, amazingly, claimed
the high bill may be due to overzealous
lawn watering during a dry summer.
“We found the grass was very green,”
Continued from p. 2
those regulations prevent it from
effectively competing against companies
that offer cell phone plans or
a new technology that carries calls
over the Internet.
However, none of these options can
compete with SBC’s standard, regulated
rates, which charge just 3 cents per
call within 15 miles and are capped at
$10.11 a month. A CUB review found
that typical competing offers were
about double the price for a caller who
makes 120 local calls, wants one calling
feature, and uses a low-cost plan
from another company to make about
25 long-distance calls a month.
“I have to watch every single dollar
that I spend,” said D. Smith, a
Hot tips: Save energy, save money
used, inflating bills.
When buying new home products,
look for ones with an Energy Star
rating. The federal government uses
this label to clearly identify products
that combine high performance
standards with energy efficiency.
Heating and cooling products with
an Energy Star save consumers
the company said in a letter.
Illinois American has given other
excuses for the jump in bills, blaming
customers for leaks inside their homes
and saying that newly installed meters
are much more accurate.
Still, for many customers, the increase
is well beyond what is considered
typical monthly usage (about
10,000 gallons) by the American Water
Works Association.
CUB Legal Counsel Melville Nickerson
is working with the Illinois
Commerce Commission (ICC), Illinois
Attorney General Lisa Madigan’s office,
local governments, and residents
to determine if Illinois American Water
violated any laws. Nickerson plans
to file a complaint with the ICC.
In a related development, Rep. Renee
Kosel, of Mokena, has proposed
legislation that would require water
meters to be checked and certified by
an ICC-approved inspector.
SBC pushes to deregulate local phone service
SBC customers, here at a CUB
phone-bill clinic, could pay
higher rates if the company is
successful in declaring the Chicago
market competitive.
Chicago-area SBC customer. “If
they change the rates I won’t like
it. I think the whole thing stinks.”
Despite claims of stiff competition,
SBC is still the giant in Illinois.
It has devoured its major
competitor (AT&T), and it owns 60
percent of Cingular, the nation’s
largest cell phone company.
In 2001 and 2005, CUB helped
block SBC’s efforts before state legislators
to deregulate phone service.
Now, the battle is before state regulators,
where CUB will argue that the
market isn’t sufficiently competitive.
“When it comes to SBC’s standard,
regulated rates, there’s no
competition,” CUB Associate Director
Pat Clark said.
7 percent to 30 percent more than
standard products.
For more tips on energy efficiency,
visit CUB’s website, www.CitizensUtilityBoard.org,
and check out the
“Winter Energy-saving Tips” guide
on the “Natural Gas” and “Electric”
pages. You can also call CUB at 1-
800-669-5556 to request a copy.
The CUB Voice

The answers to CUB’s gas-bill pop quiz
1. B, Estimated Reading. Some
utilities use the letter “E” or the full
word “estimated” to signify that they
did not actually read your gas meter
for this bill, but estimated the usage.
The estimate is based on your usage
for the same month in the previous
year, adjusted for weather. A utility
could overcharge a customer based on
a bad estimate, or underestimate usage
and later demand a big payment.
Call your utility if it hasn’t taken an
actual reading in two months.
2. A, Purchased Gas Adjustment
(PGA) (a.k.a. the cost of gas, natural
gas cost, gas supply charge, gas
charge adjustment). The PGA can
make up 75 percent of your bill. It’s
the charge that reflects the current
high gas prices. Each utility announces
what its PGA will be on a monthly
basis, but that rate probably won’t be
reflected on your bill. That’s because
your billing period is likely to cover
Ameren and Exelon/ComEd say they need rate hikes totalling nearly 40
percent to remain financially healthy. However, such claims ignore the
fact that both companies are incredibly wealthy—so wealthy that they
have given their CEOs astronomical raises from 1998 to 2004, even while
operating under a state-imposed rate freeze.
Ameren CEO
Gary Rainwater’s
salary/bonus
increase
Exelon CEO
John Rowe’s
salary/bonus
increase
Cost of living
increase
1998-2004
Easy Living
1998:
$418,000
1998:
$1.2 million
18%
2004:
$2.9 million
2004:
$1.2 million
141%
177%
Source: U.S. Securities and Exchange Commission, AFL-CIO Executive PayWatch
Database.
Citizens Utility Board
CUB makes a difference...
Iraq soldier’s mom
saved from cell hell
In 1983, the Illinois Legislature established the Citizens Utility Board (CUB) to protect the interests of residential and small-business utility customers. CUB is a nonprofit, nonpartisan
organization, overseen by a board of directors elected by its membership. CUB is funded by its members and by a grant from the Illinois Clean Energy Community Foundation. The CUB
Voice is published four times a year and is mailed free of charge to CUB members.
Board of Directors
Randy Fritz, President; Valeri DeCastris, Vice President; John Wold, Treasurer; Robert Craig Neff, Secretary; Perry Anthony; Sarah L. Bolton-Head; Dorian Breuer; Philip DeMaertelaere;
Terryl W. Francis; John T. Gunn, Sr.; Marty Lazer; Bill Markel; Kris Thomsen
Staff
parts of two different months—and,
thus, two different rates. Also, you
heat your home with a mixture of gas
bought on the spot market, as well as
cheaper gas that’s been in storage or
been bought through long-term contracts.
Utilities are supposed to pass
these costs on to customers, with no
mark-up. However, producers and
marketers in the industry have made
a killing.
3. C, the Therm. Your gas meter
measures the amount of gas used
in cubic feet, which is converted to
therms on your bill. A therm is roughly
the energy equivalent of burning 100
cubic feet of gas. A therm equals the
amount of gas needed to run a typical
residential furnace for an hour.
4. B, Environmental Recovery Cost
(a.k.a. environmental charge, the environmental
activities charge.)
5. False. This fixed fee covers the
basic service costs of keeping you
linked to your utility’s system (i.e.
administrative costs, meter readings).
The amount of this fee must
be approved by the Illinois Commerce
Commission (ICC).
6. True. The more you use, the
more you pay. Your utility multiplies
your usage, in therms, by a set
ICC-approved rate. Some companies
charge a higher rate for the first 20
to 90 therms, and a lower rate for usage
above that amount.
7. Exxon Mobil $9.9 billion
(an American record!)
Royal Dutch Shell $9 billion
BP $6.5 billion
ConocoPhillips $3.8 billion
Chevron $3.6 billion
With her son stationed in Iraq,
the last thing Maria Gonzalez
needed was a collection agency
hounding her about a $1,027 cell
phone bill she didn’t deserve.
“They were warning that they
would mess up my credit,” said
the Midlothian mother of four.
Last June, Maria had signed
up for a Cingular family calling
plan. When she got home that
day, she realized it wasn’t the
deal she thought it was. Instead,
she wanted to stay on the Cingular
plan she currently paid for.
She went back to the Cingular
dealer, and unsuccessfully tried
to resolve the problem over the
next days, weeks, and months—
but got no results.
Then she got a $1,027 bill, including
$600 in cancellation fees
($150 for each of the four phones
in the family plan). In desperation,
she called CUB. Consumer Counsellor
Bryan McDaniel was a welcome
change from Cingular. “He
treated me like a person, like a human,
like a consumer,” Maria said.
About a month later—and almost
five months after the mess
had begun—Maria got a letter
from Cingular saying that nearly
all of the $1,027 debt had been
wiped out. That was one less worry
for a soldier’s mother.
“When there is no hope, there
is a light after the tunnel, and
there is CUB,” Maria said.
If you have a question or complaint
about your utility service,
call CUB’s Consumer Hotline,
at 1-800-669-5556, for free guidance.
David Kolata, Executive Director; Patricia Clark, Associate Director; Robert Kelter, Director of Litigation; Sandra Marcelin-Reme, Director of Consumer Advocacy; Jacqueline B. Scarver,
Director of Administration; Chris Thomas, Director of Policy; Jim Chilsen, Publications Manager; Cyrius Currie, Network Administrator; Shari Currie, Administrative Assistant; Jessica
Falk, Paralegal; Aimee Gendusa-English, Consumer Rights Counselor; Clara Glass, Receptionist; Laura Jaskierski, Communications Assistant; Corina Martinez, Consumer Rights Counselor;
Bryan McDaniel, Consumer Rights Counselor; Anne McKibbin, Senior Policy Analyst; David Mroczkowski, Database and Website Administrator; Melville Nickerson, Legal Counsel;
Larry Rosen, Legal Counsel; Yashoo Singh, Software Developer; Julie Lucas Soderna, Legal Counsel; Lila Walsh, Consumer Rights Counselor
Winter 2005-2006 7

Citizens Utility Board208 S. LaSalle St.Suite 1760Chicago, IL 60604
Nonprofit. Org.
U.S. Postage Paid
Permit No. 6775
Chicago, IL
The CUB VoiceA publication of the Citizens Utility Board
1-800-669-5556www.CitizensUtilityBoard.org
Winter 2005-2006
Printed on recycled paper
“In a moment of decision the best thing you can do is the
right thing. The worst thing you can do is nothing.”
Teddy Roosevelt
Get involved!
Join CUB’s Board of Directors
To run for an open seat in the 11th or 17th Congressional District, call CUB
Board President Randy Fritz at 309-639-4452 after 4 p.m., or e-mail him at
randyfritz@mac.com.