Power outrage: Quinn slams electric rate hike
ComEd 'should tighten their own belt,' Quinn says

October 16, 2006
BY MAUREEN O'DONNELL AND LORI RACKL Staff Reporters
Robust profits.

And a top exec who pulled down more than $27 million last year.

» Click to enlarge image

Lt. Gov. Pat Quinn, inset, is urging people to fight the electricity hike, citing salaries of those such as Exelon CEO John W. Rowe.
(AP/Sun-Times illustration)

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Hiking up your bill
Reasons for the rate hike
The utility, which hasn't been allowed to raise rates in nearly a decade, said continuing the rate freeze could lead to bankruptcy because ComEd would have to buy electricity at a higher price than it could charge customers, causing it to lose an estimated $1.4 billion. Other repercussions include the possibility of rolling brownouts, slower repairs, layoffs and a downturn in the state's economy. Some say the rate freeze also staves off competition from entering the market, which could eventually lead to lower prices.


Reasons against rate hike
Consumer advocates and some lawmakers argue that ComEd and its parent company, Exelon, are in robust financial shape and that bankruptcy talk is unfounded. Exelon stock is near a record high, the combined total compensation for a handful of the utility's top executives is nearly $47 million a year, and profits have more than tripled during the nine-year rate freeze. They say jacking up next year's rates anywhere from 22 percent to 26 percent -- and much more for bigger businesses -- would be gouging consumers.
Hardly signs of a company on the brink of bankruptcy, according to a growing chorus opposed to ComEd's impending rate hike for its 3.7 million customers.

Lt. Gov. Pat Quinn is urging people to fight the hike, blaming it on "inflated egos with inflated salaries."

"It's hard to get a violin out for anyone who makes $27 million," he said Sunday, deriding the compensation package of John W. Rowe, CEO of Exelon, ComEd's parent company.

ComEd hasn't been allowed to raise electricity rates for nearly a decade. Utility officials say they'll lose about $1.4 billion -- and be headed for bankruptcy court -- if rates don't go up. A recent state power auction, in which power providers bid to supply electricity to ComEd, resulted in the rate hike that will boost the average ComEd customer's bill an estimated 22 percent to 26 percent after Jan. 1.

Gov also objects
The consumer advocate group Citizens Utility Board, or CUB, doesn't buy ComEd's doom-and-gloom scenario.
"When their executives are making as much money as they're making, and when they're spending at least $15 million on television ads trying to convince us they need a rate hike -- it doesn't pass the straight-face test,'' said David Kolata, chief of the watchdog group.

A CUB study says ComEd/Exelon earned $2.1 billion last year, and its profits more than tripled during the nine-year rate freeze. The analysis dubbed Exelon the most profitable electric utility in the country, with Exelon's shareholders getting a 21 percent return on their invested equity -- double the national average. The study also projected that the company would post "extremely high profit levels" through 2012 even if rates were reduced by 5 percent.

"They should tighten their own belt," Quinn said.

In a separate appearance from Quinn, Gov. Blagojevich assailed the rate hike -- which ComEd says would boost the average $60 residential bill to $73. Calling the auction process "a back-door way of trying to get a rate increase," Blagojevich said he would call a special session of the Legislature to extend the freeze "just as soon as we have the votes in both chambers and can get legislators to call the bills."

Getting those votes might not be easy. ComEd/Exelon and its employees have pumped more than $958,000 into state and local candidates' coffers over the last three years.

If the governor calls a special session, he should schedule it before the Nov. 7 election to pressure lawmakers into action, state Treasurer Judy Baar Topinka said through a spokesman. Topinka, the Republican nominee for governor, wants the rate freeze to remain in place "so we can go back to the drawing board and come up with a more equitable system for evaluating rates," said spokesman John McGovern.

Making his point by standing before a stretch limo near Exelon Plaza in the Loop, Quinn attacked Rowe's $27.5 million compensation package.

"Nobody's worth that much, I'm sorry," said Pat Lydon, 61, a legal secretary from Old Irving Park who was visiting downtown Sunday.

Quinn wants the Illinois Commerce Commission, which oversees utilities, to probe compensation for Rowe and four other ComEd/Exelon top execs who received packages of $2.7 million to $7 million last year.

Quinn's complaints about executive salaries are "misleading," said Exelon spokesman Thomas Stevens.

"Exelon senior executive salaries are paid by Exelon shareholders, not ComEd customers,'' the company said in a statement. Further, ComEd executive salaries are set by the ComEd board of directors, "to attract and retain industry leaders so that the company can continue to deliver to customers the reliable service they expect.''

Was in sarcophagus dispute
Under Rowe's leadership, Forbes magazine ranked Exelon as the No. 1 utility company on its 2005 list of the best-managed companies in the United States.
Rowe, 61, has led electric utilities since 1984. The lawyer and University of Wisconsin grad lives in a high-rise on North Michigan Avenue. Rowe could not be reached Sunday for comment.

While Rowe's salary is making headlines, it was one of his prized possessions -- a 2,600-year-old Egyptian coffin -- that catapulted his name into the news earlier this year. After an Egyptian official took issue with Rowe having the sarcophagus in his office, Rowe agreed to put the ancient coffin on indefinite loan to the Field Museum.

Contributing: Art Golab, Steve Patterson


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