CUB asks ICC to fine Nicor Gas $27 million

The
A publication of the Citizens Utility Board
Volume 18, Number 1
Protecting Illinois Consumers for 19 Years
www.CitizensUtilityBoard.org
Spring 2003
CUB asks ICC to fine Nicor Gas $27 million
Documents show company
lied to ICC about rate plan
CUB has asked the Illinois Commerce Commission (ICC) to slap Nicor Gas with a $27
million fine for lying to state regulators to cover
up a scheme that defrauded consumers while
they were paying record-high gas prices.
CUB cited the company’s actions in promoting its performance-based regulation (PBR)
plan, which was approved by the ICC in 1999
and discontinued on Jan. 1 of this year in the
wake of an accounting scandal.
“Nicor Gas lied again and again,”CUB
Executive Director Martin R. Cohen said. “This
is the first time a utility has been caught in this
kind of scheme, and state regulators should
send all utilities a message by hitting Nicor
with a heavy fine and ultimately ordering
refunds to consumers.”
Nicor’s wrongdoings were exposed last summer, after a company whistleblower sent CUB a
CLIFF WIRTH
14-page memo detailing how Nicor had used
accounting tricks to overcharge customers. The
ICC was then reviewing the Nicor plan, which
CUB had opposed, and considering whether it
should be renewed.
Under traditional regulation, utilities buy
natural gas on the open market and pass the cost
on to consumers with no mark-up. Under the PBR
plan, Nicor’s gas purchasing was measured
against a “benchmark”price, with any savings or
additional costs shared equally with consumers.
Nicor argued that the PBR plan motivated it
to seek cheaper natural gas for its customers.
However, CUB’s evidence shows Nicor always
intended to use the plan to make more money
for itself at consumers’expense.
Nicor’s internal investigation of the scandal
concluded that it had not lied to the ICC, but new
evidence flies in the face of that claim. For example, Nicor repeatedly denied it had done any
projections or analyses of how it planned to
generate profits under the PBR plan. Yet, CUB
recently obtained a 1998 Nicor report that recom(Continued on page 4)
CUB Senior Policy Analyst Dave Kolata sits
next to a 100,000-page mountain of Nicor
documents, which shows how the company lied
to state regulators to cover up a scheme to
defraud customers.
Natural gas prices skyrocket
CUB fighting Ameren’s proposed rate hike in central, southern Illinois
“Sorry, ma’am. This is the best we
can do right now.”
Illinois natural gas rates are up about 53
percent, on average, over last winter, as consumers face frigid weather, a lagging economy
and corporate scandals that cast doubts on the
integrity of energy companies.
If that isn’t bad enough, consumers in central
and southern Illinois face proposed rate hikes of
between 19 and 79 percent from the Ameren
Corp., which runs three utilities serving about
390,000 customers. These increases would be for
the delivery of gas by the utilities, and not for
the gas itself, the price of which already has
skyrocketed this winter.
The average price of gas among five major
utilities in Illinois has been about 53 cents per
therm from October 2002 through March of
2003, compared with about 35 cents per therm
in the same period last winter. The only protection customers have is to join their utility’s
budget plan, which won’t reduce gas bills but
will even them out over the year to prevent wild
month-to-month fluctuations.
“Given all the scandals in the energy industry, it’s no wonder consumers question the
claims of gas companies that the high prices are
simply caused by the normal forces of supply
and demand,”CUB Board President Randy
Fritz, of Williamsfield, said.
Illinois gas utilities are required by law to
pass the cost of gas on to their customers, with
no mark-up, but they have come under suspicion in the wake of a state investigation into
whether Nicor Gas used improper business
(Continued on page 4)
From the desk of...
Life, liberty...and the
pursuit of telemarketing?
...Martin R. Cohen
Maybe I wasn’t paying attention in 8th
grade when we studied the part of the
Constitution that gives telemarketers an
inalienable right to interrupt your dinner.
But the telemarketing industry believes it’s
in there somewhere, and it’s gearing up to
fight the recent announcement by the
Federal Trade Commission (FTC) of a
national “Do-Not-Call Registry,”a list of
phone numbers that telemarketers would be
prohibited from calling.
Signing up for the registry would reduce,
though not eliminate, those annoying calls
to your home, which have gotten even more
annoying in recent years with the widespread use of “predictive dialing technology.”
To make sure callers never have a moment
when they’re not making a sales pitch, the
telemarketers’computers dial a lot more
households than they can actually talk to.
So if you pick up the phone at a moment
when there’s no caller available, you get
dead silence on the other end and an eventual hang-up. Back in 8th grade we used to
call these “phony phone calls”and they were
tools of juvenile harassment. They still are,
but today it’s a multibillion dollar industry.
You’d think the telemarketers would like
the idea of the government providing them a
list of people who have gone to the trouble of
informing them that they don’t want these
calls— and presumably aren’t going to buy
whatever they’re selling. But that’s not the
way the telemarketers see it.
The likely court battle over the national
registry could stall its implementation for
years. Meanwhile, in Illinois the legislature
created a statewide no-call list that will be
up and running by July. It contains too
many exemptions— real estate agents,
insurance agents, nonprofit groups, politicians, and phone companies— but it covers
the credit card companies, home remodelers,
debt-reduction specialists, mortgage
refinancers, stock brokers, magazine sellers
and everybody else.
The registry won’t be completely effective,
but it will help. Unfortunately, consumers
will have to pay $5 to get on the list. That
may not seem like a lot of money, but we
don’t think consumers should have to pay to
protect their privacy.
CUB will continue to advocate that the
telemarketers themselves pay the entire cost
of maintaining the state list. Still, I’ll be one
of the first in line to sign up.
2
We’ve got mail
Frequent questions for CUB’s Consumer Rights Counselors
Q. If Illinois is developing a “no-call” list,
Q. I’m an SBC/Ameritech customer who
does that make SBC/Ameritech’s “Privacy
calls friends in a nearby Verizon service
Manager” obsolete?
territory. How expensive are such calls?
A. SBC/Ameritech’s “Privacy Manager”interA. If you’re an SBC/Ameritech customer who lives
cepts calls not listed on Caller ID, asks callers
near the boundary of another local phone company’s
to identify themselves and then gives you the
geographic service territory and you call someone in
option to reject the call— for a monthly fee of $4
that territory, it costs 12 cents a minute— even if
plus a $5 installation fee. Because the service
you’re just calling across
doesn’t work without
the street. These hefty
Caller ID with Name, you
rates only apply to SBC
Tip of the Month
also have to buy that, for
local and local toll calls
If you are disputing a charge on your gas or
$5.95 a month plus a $5
that end in the service
electric bill, first contact the utility and tell
installation fee. In all,
territory of another
it you are formally disputing the charge and
that costs you more than
“incumbent”phone
won’t pay it until the complaint is resolved.
$100 per year.
company— one of Illinois’
Remember, you can’t be disconnected for
On the other hand, for
original local phone
nonpayment as long as you pay the greater
a one-time $5 fee you will
companies, such as
of these two options: the undisputed portion
be able to add your name
Verizon, which has its own
of your bill OR an amount equal to last
to Illinois’no-call list,
geographic service territoyear’s bill for the same month.
which is set to begin this
ries. However, these rates
summer. Most telemarketers will have to buy
DON’T apply to calls to customers of competing
the list— and they will pay a fine for calling
phone companies, such as AT&T and MCI, as long
anybody listed.
as those companies are operating within SBC’s
Although this is a less-expensive option than
territory. Such companies don’t have service territo“Privacy Manager,”it won’t eliminate all
ries. Instead, they use the incumbent companies’
telemarketing calls. However, “Privacy Manlocal networks. SBC customers who make a lot of
ager”also has its loopholes. The system only
calls to another company’s service territory should
blocks unidentified calls. For other calls, you’ll
see what competing companies charge for such calls
have to check your caller ID.
or if any of SBC’s packages offer cheaper rates.
State tightens phone service standards
But ICC fails to reduce rates as
CUB, other consumer reps wanted
SBC/Ameritech will be held to stricter service
standards and face tougher penalties for any
decline in service, under a ruling passed by
state regulators.
The ruling, issued by the Illinois Commerce
Commission (ICC) in December, resolves the
agency’s four-year review of Ameritech’s alternative regulation plan. The ICC began the
review in 1999 and concluded it in 2002, but
didn’t issue an order until late last year.
Although the ICC failed to reduce rates as CUB
and other agencies had requested, it adopted
several modifications to the plan that should
benefit consumers. The ICC adopted new service
standards, increased the penalties for missing
those standards and clarified how SBC should
report service data in the future.
In February, SBC asked the ICC to reconsider
the new service standards, but the commission
rejected that request by a vote of 2-2. A proposal
must gain three votes to pass the ICC.
The new standards come at a critical time.
Two SBC/Ameritech workers on the job. CUB
fought for and won stricter service standards for
SBC, including increased penalties if the company
doesn’t meet those standards.
“SBC is planning significant job cuts and
those layoffs could lead to a deterioration in the
quality of phone service,”CUB Board Representative Jeff Coates, of Urbana, said. “The tougher
standards and increased penalties adopted by
state regulators should make SBC think twice
before it does anything to cut back on service.”
The CUB Voice
Phone bills’USF confuses consumers
Since the early days of the telecommunications
industry, universal service— or telephone service
for all— has been the nation’s goal. And that goal
is getting closer to attainment. According to the
Federal Communications Commission (FCC), at
the end of 2001 nearly 95 percent of the country’s
households had access to local telephone service.
That high rate of telephone usage is the result
of a complicated system to subsidize phone service
in parts of the country where the cost of providing
service is prohibitively expensive. The system,
known as the Universal Service Fund (USF), also
helps fund phone service for low-income consumers and rural health facilities and Internet
connections for schools and libraries.
Most consumers are only vaguely aware that
they pay a monthly fee, sometimes called a
“Universal Connectivity Charge”or “USF Fee,”
on their local and long-distance phone bills. Few
understand the purpose of this surcharge.
In addition to the federal USF, consumers also
pay a state USF, which is used exclusively to keep
phone service affordable in rural areas of Illinois.
The amount a phone company must pay for the
state USF is determined each year by a fund
administrator, who adjusts the percentage taken
according to the company’s in-state revenue.
In the case of the federal system, phone
companies are required to contribute a percentage of their revenues into the USF. The percentage changes each quarter, depending on the
need for the funds and the revenues of the
phone companies.
Phone companies serving high-cost areas,
primarily rural communities, apply to the fund for
Stay tuned to changes with USF
There’s good news and bad news about the federal Universal Service Fund (USF) surcharge.
The good news is that as of April, telephone companies will no longer be able to mark up the fee
beyond the amount that they actually are required to contribute to the federal fund. The bad news
is that the required contribution rate is expected to rise during the coming year and the USF
surcharge could nearly double on wireless plans.
Some companies charge the USF as a flat fee, while others charge it as a percentage of state-tostate and international calls on a customer’s bill. The money goes to a fund that helps pay for,
among other things, phone service for rural customers.
Currently, companies can charge you a higher percentage than what the government requires— and
pocket that difference. For example, companies now must contribute about 7.3 percent of their interstate and international revenue, but AT&T and MCI both add an 11 percent fee to consumers’bills.
However, as of April, telephone companies won’t be able to levy a fee greater than the contribution percentage multiplied by the dollar amount of a caller’s interstate and international usage.
Unfortunately, the new rules do not prohibit telephone companies from adding other line items to
recover costs, so watch for any new fees.
The universal service fee on wireless plans is likely to go up because the Federal Communications Commission has changed the way wireless companies are supposed to calculate their contributions to the fund. Look for those companies to pass the cost increases on to consumers, too.
grants to subsidize their costs. Phone companies
also get USF money to pay for the Lifeline and
Link Up programs, which help low-income callers
get and maintain phone service.
Although phone companies are not required to
pass the costs of the program on to consumers,
most of them do, recovering every nickel— and
then some— they contribute. (See story above.)
In 2001, the USF collected $4.7 billion, according to the Universal Service Administration
Company, the nonprofit organization that manages the fund. Of that amount, $2.6 billion
subsidized phone service in rural areas, while
$584 million, about 12 percent, was given to lowincome programs. In addition, about $1.5 billion
went to schools and libraries and another $7.9
million to rural health care facilities.
Society benefits from the fund, because without
it, many parts of the nation would not have access
to affordable phone service. However, the phone
industry itself is perhaps the biggest beneficiary.
Phone companies get a large chunk of the
USF money and they benefit from having an
expanded customer base to which they can
market new products and services. Yet, consumers pay all of the costs of the program.
Big changes blowin’in Illinois’energy market
The wind is a low-cost source of energy that,
unlike other sources, is getting cheaper all the
time. That, along with a plentiful supply in
many parts of the country, is driving its recent
success in the United States.
The cost of a kilowatt-hour of wind generation
was 20 cents in the mid-1980’s, but today it’s less
than 4 cents per kWh for modern wind farms in
Illinois. At the same time, traditional energy
sources are getting more costly.
Coal plants require expensive pollution
controls to operate safely, natural gas prices are
going through the roof as supplies fail to meet
demand, and nuclear costs are increasing with
heightened concerns about terrorist attacks.
However, cost isn’t the only reason for wind
power’s popularity. It also offers economicdevelopment opportunities. A typical modern
wind farm has 30 to 100 turbines, each standing
about 100 yards high, generates enough power
for 500 homes (1.5 megawatts), costs $1.5
Spring 2003
A giant wind turbine blade sits next to a barn
in Kansas. (Photo courtesy of FPL Energy.)
million, provides rural landowners with $5,000
in annual royalty income, and generates $6,000
to $9,000 in local property taxes.
One barrier faced by Illinois’wind industry is
that it needs long-term power contracts. Wind
energy has no fuel costs, but construction costs
must be borne up-front, which means developers
need 20-year power-purchase contracts to make
the numbers work. And electric utilities are sorely
lacking in 20-year vision.
That’s why state Sen. Pat Welch, of Peru,
proposes to require Illinois power companies to
generate 5 percent of their power from renewable energy resources by 2010 and 15 percent by
2020. The legislation, supported by CUB and
environmental groups such as the Environmental Law & Policy Center, can open the doors to
renewable energy in Illinois.
The article’s author, Hans Detweiler, is a
Policy Advocate for the Environmental Law &
Policy Center. To learn more about the Renewable Energy Standard legislation, call him at 312673-6500 or log on to www.elpc.org/energy/
ILRPS/index.htm.
3
A look at the ICC: The people who regulate your utilities
The five people on the Illinois Commerce
Commission (ICC) regulate the utilities that
operate in the state, and have a big say about
many of the rates you pay to those companies.
ICC commissioners and the chairman are
appointed by the governor to serve five-year
terms. The salary for a commissioner is $99,414
or $95,554, depending on when he or she was
appointed, and for the chairman it’s $117,136.
The ICC deals on a daily basis with complicated utility issues that require an understanding of complex economic ideas and practices in
the industry, yet many commissioners have no
previous experience working on such issues.
The face of the ICC is changing, coinciding
with changes in Springfield. It started in
September, when Gov. George Ryan replaced
ICC Chairman Richard Mathias with the
governor’s former chief of staff, Kevin Wright.
This year, Gov. Rod Blagojevich named Commissioner Edward Hurley as the new chairman
and replaced Commissioner Terry Harvill with
Commissioner Lula Ford.
At press time, the governor had yet to name a
replacement for Commissioner Ruth
Kretschmer, who retired in December. CUB has
been pushing for an experienced consumer
advocate to be appointed for that seat.
Look on page 5 to see how each commissioner
voted on cases CUB fought for consumers.
Edward Hurley, Chairman
Appointed: 2000, by
Gov. George Ryan
Term Ends: January
Term Ends: January
Gov. George Ryan. Appointed chairman in
February of 2003
Previous Experience: Was general
counsel for Custom Coffee Service Corp.
Before that, was an Illinois Commerce
Commission (ICC) hearing examiner and an
assistant attorney general.
Previous Experience: Served on
Sangamon County Board from 1984-2000,
including five years as chairwoman. Also
was director of legislative and intergovernmental affairs for the ICC.
Kevin Wright
Lula Ford
Appointed: 2002, by
Gov. George Ryan
Term Ends: January
2007
Previous Experience: Served as Gov.
Ryan’s deputy chief of staff, and was his
deputy chief of staff and director of legislative affairs when Ryan was secretary of
state.
Blood-boiling Gas Bills
From October through March, the price per therm for gas from five major utilities in Illinois was
up by about 53 percent, on average, compared with last winter.
Nicor Gas
Avg. price
Winter 2001-02
25 cents/therm
Avg. price
Winter 2002-03
55 cents/therm
Peoples Gas
30 cents/therm
51 cents/therm
AmerenCILCO
34 cents/therm
50 cents/therm
Illinois Power
40 cents/therm
53 cents/therm
AmerenCIPS
44 cents/therm
54 cents/therm
(Continued from page 1)
practices to rob its customers of savings. Peoples
Energy also is being investigated for its dealings
with a company it jointly owned with Enron. And
Dynegy, the company that owns Illinois Power,
has seen five of its gas traders indicted for illegally
manipulating the gas market.
To make matters worse, three utilities are
trying to increase their rates for the monthly
4
2005
2004
Gas bills go up— so does frustration
Gas
Company
Mary Frances Squires
Appointed: 1999, by
customer charge and the distribution charge,
which covers the cost of delivering gas to homes.
AmerenCIPS proposes a $16.4 million overall
increase, or a 29.5 percent hike for residential
customers. AmerenCILCO is pushing for a $14
million increase, or 16.8 percent for residential
customers, and AmerenUE proposes a $3.7 million
increase, or 79 percent for residential customers.
CUB is fighting all three proposed rate hikes.
Appointed: 2003, by
Gov. Rod Blagojevich.
Term Ends: January
2008
Previous Experience: Served as assis-
tant director of the state’s Central Management System. Before that, was teacher,
principal and an assistant superintendent of
Chicago Public Schools.
Mountain of documents
exposes Nicor’s plot
(Continued from page 1)
mended implementing a PBR plan to “capture”
the benefits of extremely cheap gas the company
held in storage— benefits that, absent the plan,
would have flowed entirely to ratepayers.
In 2002, during an ICC review of the program,
Nicor again lied to state regulators, claiming it
saved $54 million but denying that it had quantified where those savings came from. Internal
documents obtained later show that Nicor had in
fact done such an analysis— and that most of the
“savings”came from overcharging customers
through the sale of that inexpensive gas.
Yet another company memo, written in 2000,
discusses how Nicor could conceal from the ICC
the profits it was gaining through these improper methods. “We will need to be careful to
not highlight [that] benefit,”the memo says.
The amount of the proposed fine is based on
Nicor’s claim that the PBR plan garnered the
company $27 million in profits. CUB also will
ask for refunds to consumers of all the money
they were overcharged. Nicor estimates that
it owes customers $15 million because of the
scandal, but CUB believes the harm to consumers was much greater.
The CUB Voice
The Votes Behind the Rates You Pay
The chart lists the cases CUB fought on behalf of consumers in 2002 and early 2003. A “+”indicates a vote in support of consumers. A “— ”indicates a
vote against consumers. A “-/+”represents a vote that was a mixed bag for consumers. An “A”indicates the commissioner was absent for the vote. An
empty box means the commissioner was not part of the ICC at the time of the vote. Chairman Mathias left the ICC in September 2002 and was replaced
by Chairman Wright, who retains a seat on the ICC but was replaced in the chairman’s seat by Commissioner Hurley in February. Commissioner Harvill was
replaced by Commissioner Ford in January. Commissioner Kretschmer retired in December 2002. At press time, her successor had not been named, leaving
the ICC with four members.
Case
Mathias Kretschmer Harvill
Allowed expansion of Nicor Customer Select program despite consumer
complaints. [Docket #00-0621, 1/30/02]
_
_
Ordered audit of ComEd distribution costs. [Docket # 01-0664, 2/6/02]
+
_
Hurley Squires Wright Ford
_
_
A
_
A
+
_
+
_
+
_
_
_
_
_
_
_
_
_
_
_
Restructured Illinois Power’s delivery rates in a way favorable to residential consumers. [Docket # 01-0432, 3/28/02]
+
+
+
+
+
Approved $315 million interim increase in ComEd delivery rates. [Docket
01-0423, 4/10/02]
A
_
_
_
_
Rejected Geneseo Telephone’s request to eliminate EAS rates. [Docket # 990412, 4/24/02]
A
+
+
+
Adopted rules to compensate customers for poor phone service. [Docket #
01-0485, 6/19/02]
+
+
+
_
+
+
Refused to dismiss case on new area code plan in 312/773. [Docket # 020093, 7/10/02]
_
_
_
_
Voted to protect confidentiality of Nicor whistleblower. [Docket # 02-0067,
8/13/02]
+
+
+
_
_
Approved $224 million consumer credit negotiated by CUB and others for
Ameritech customers. [Docket # 01-0128, 8/13/02]
+
+
_
+
_
+
_
+
_
+
+
+
_
Approved ComEd request to deregulate rates for largest industrial users.
[Docket # 02-0479, 11/14/02]
+
+
_
+
_
+
Certified Santanna Energy as a gas suppler, despite evidence of company
misconduct. [Docket # 02-0441, 11/7/02]
+
_
_
+
_
Approved utility plan for credit scoring, but adopted some consumer
protections. [Docket #01-0644, 12/4/02]
-/+
A
-/+
-/+
-/+
Approved tougher service standards for Ameritech, but rejected CUB’s
request for rate cut. [Docket #00-0764, 12/30/02]
-/+
-/+
-/+
_
-/+
-/+
+
+
Approved Peoples Gas Choices for You plan over CUB’s objections. [Docket
# 01-0470, 3/5/02]
Approved North Shore Gas Choices for You plan over CUB’s objections.
[Docket # 01-0469, 3/5/02]
Approved increase in CILCO’s delivery service rates. [Docket # 01-0637,
3/8/02]
Approved $2.2 million gas rate increase for MidAmerican. [Docket 01-0696,
9/11/02]
Adopted new service-quality standards for phone companies. [Docket # 000596, 10/23/02]
Rejected Ameritech request to reconsider tough, new service standards.
[Docket #00-0764, 2/14/03]
Spring 2003
+
_
_
5
z
t
i
b
B
CU
Puttin’on the Ritz...While Illinois consumers shivered through another winter of
high heating prices, utility executives lived it
up at the posh Ritz Carlton in New Orleans.
The “Credit & Collections for Utilities”
conference in February gave utilities tips on
getting their customers to pay up. As one
advertisement said: “With the recent downturn in the economy, utilities are faced with
greater-than-usual problems in collecting
revenues.”You don’t say? Consumers surely
could have given utilities an earful about
their “greater-than-usual problems”paying
gas bills this winter— but they weren’t invited
to the party.
Seems like old times...The Associated
Press reported recently that WorldCom
Inc.’s CEO, Michael Capellas, received
judicial approval of a $20 million pay
package— just weeks before rate increases of
up to 80 percent went into effect. Another
round of rate increases took effect in January. Scandal-ridden MCI may be “reforming”itself, but from the customers’point of
view, it looks like business as usual.
Cash and Carrie...Familiar names
dominated the list of businesses and groups
that gave more than $1.25 million to pay for
Gov. Rod Blagojevich’s inauguration bash.
SBC Communications and ComEd parent
Exelon were two of the biggest givers, each
throwing in $100,000. But SBC Illinois
President Carrie Hightman said she doesn’t
expect to get special treatment for the
donation. “This is not political in any way.
It is social,”she told The Associated Press.
It’s probably just a coincidence that among
the governor’s first big tasks was appointing two new members to the Illinois Commerce Commission, which regulates utilities like SBC/Ameritech.
Peddling warmth...How high are heating
costs these days? So high that Peoples
Energy is offering gift certificates. The “Gift
of Warmth”card is available in denominations of $20 to $100. The utility says it’s “an
exciting new way”to help friends and
relatives stay warm. It’s a sign of the times:
The heat we need to survive the winter is
becoming a luxury item. What’s next— a
wedding registry at ComEd?
6
From the Front Lines
Highlights of cases at the ICC and in the courts
ComEd Audit Settlement
ComEd will contribute more than $40
million to fund programs to boost
energy efficiency for residential consumers and government buildings, under an
agreement the utility reached with
CUB and other consumer agencies. The
agreement, which must be approved by
the Illinois Commerce Commission
(ICC), settles litigation over ComEd’s
rates, which are frozen by law until 2007. The
settlement offered CUB a way to guarantee
immediate money for consumer-friendly programs while avoiding years of litigation that, at
best, would have led to customer savings of only
18 cents per month.
Number Portability
CUB has filed comments with the
Federal Communications Commission
to stop wireless carriers from delaying
an order to implement “number
portability,”a technology that would
allow cell phone users to keep their
current phone number if they change
companies. Cell phone companies have
delayed the deadline three times since
1999. The new deadline is Nov. 24, but a
petition filed by the Cellular Telecommunications & Internet Association would delay it
again. In opposing the petition, CUB called the
lack of number portability in the wireless
industry “an anti-competitive hurdle.”
Illinois-American Water Co. Rate Hike
Illinois-American has asked for a $36.2
million increase in water rates for its 293,000
customers across Illinois. That’s an average
25.9 percent increase, but in some communities the rate hike could be as high as 51
percent. An analyst hired by CUB to review
the company’s request found that expenses
were overstated by more than $20 million.
CUB filed the results of that study with the
ICC in February. Hearings on the rate hike
will be held later this year.
Phone Customer Compensation Rules
Last year, the ICC passed rules that require
phone companies to give credits to customers
when they fail to meet the service and installation standards mandated by state law. The
phone companies objected to many provisions
of the rule and sought an exemption from it in
the event of a strike or work stoppage by their
employees. CUB is opposed to such an exemption and is urging the ICC to reject it and
keep the current rules in place. A final ruling
from the ICC is expected at any time.
CUB helps ComEd customers get ‘smart’
Experimental program to test value of “real-time” electricity rates
CUB members who live in the ComEd service
territory are invited to participate in an experimental electricity-pricing program called the
“Energy-Smart Pricing Plan.”
The program, developed by CUB and the
Community Energy Cooperative, is designed to
test whether residential customers can benefit
from electricity prices that fluctuate throughout the day, and thus employs a special
ComEd rate.
Under ComEd’s standard rates, consumers
pay a fixed amount for each kilowatt-hour of
electricity used, regardless of when they use it.
However, under the “Energy-Smart Pricing
Plan,”participating consumers will pay a
variable rate that reflects the actual market
price for electricity at the time of use.
That means the price is likely to be higher in
peak periods when demand for electricity is
high, such as a hot summer afternoon, and
lower in non-peak periods when electricity
demand is low.
While there’s no way to predict exactly what
future electricity prices will be, the average
customer would have saved about 10 percent on
this program had it been in effect last year.
But, of course, in the event that electricity
prices in Illinois go way up for an extended
period of time, there is some risk of higher bills.
CUB is participating in the “Energy-Smart
Pricing Plan”because it is important to test the
opportunities available to residential customers
in a competitive electric market. Taking advantage of lower prices for off-peak electricity is one
way consumers may be able to save money.
Moreover, reducing peak electricity demand
should result in lower prices and more reliable
service for everyone in the long run.
The “Energy-Smart Pricing Plan”is entirely
voluntary. Initially, the number of households
that will be allowed into the program is limited
to 1,000, selected on a first-come, first-serve
basis and according to certain requirements.
While the program is intended to produce
lower electricity bills, it is important to keep in
mind that there is no guarantee of savings.
ComEd customers interested in participating
should contact the Community Energy Cooperative by March 31 at 877-655-6028, or go to
www.energycooperative.org to check on eligibility.
The CUB Voice
Meet the CUB Board
Derek McNeal, who represents
the 1st Congressional District,
joined the CUB board in the
summer of 2001. The district
covers the southern part of
Chicago, including the neighborhoods of Crestwood, Palos
Heights, Oak Forest, and parts of
Tinley Park and Orland Park.
Background: McNeal is a
certified public accountant
(C.P.A.), who has represented
individuals and small businesses
before the Internal Revenue Service and the
Securities and Exchange Commission. He
also buys, manages, and sells real estate in
Chicago. McNeal, who has an accounting
degree from DePaul University, also is a
licensed insurance broker and an investment advisor.
On Working With CUB: McNeal’s experi-
ence in the real estate industry
and his work on a WKKC-FM
talk show called the “Consumer’s
Eye”got him interested in
telephone, natural gas, and
electricity issues. “Utilities will
put you out of business if you
don’t understand the rules and
how to deal with the personnel of
the company,”McNeal said.
CUB is an organization that can
explain utility issues to consumers and fight for lower rates and
better service, he said.
Interests: In addition to his involvement
with the “Consumer’s Eye,”a radio talk show
that covers many of the same issues as CUB,
McNeal also enjoys swimming and boating.
McNeal once was a professional drummer who
played jazz, swing, rock and disco, and he still
hits the drums occasionally.
Coming soon to a computer near you:
CUB’s new and improved web site!
CUB’s web site is getting a face-lift.
The new site will feature improved graphics
as well as a format that allows consumers to
get the information they need quickly and
simply.
The new and improved site is the work of the
Chicago advertising firm of Schafer, Condon and
Carter, which offered to revamp CUB’s site for
free. CUB is grateful for the company’s generosity in helping to build a better web site for
Illinois consumers.
Among other things, the new site will feature:
■ A long-distance rate calculator, which
allows consumers to analyze their personal
calling habits and match them with the right
plan.
■ A guide to choosing a new local calling
plan, which lists all the companies offering local
calling plans along with an analysis of each plan
and worksheets allowing consumers to determine if any plan is right for them.
■ Breaking news on CUB’s battles for lower
utility rates and better service before the Illinois
Commerce Commission (ICC), the agency that
regulates utilities.
■ CUB publications that give consumers
money-saving tips about their telephone, natural gas and electric service.
■ A link allowing consumers to file a complaint against a utility online as well as one to
join CUB online.
CUB will announce when the new web site is
completed. The address will stay the same:
www.CitizensUtilityBoard.org.
CUB Makes a Difference...
Boo! This horror story
has a happy ending
Aaron Samuel has a utility horror story
to tell— and it begins on Halloween.
That was the day the 81-year-old retired
Army Colonel paid Nicor Gas $127 to do
maintenance work at his home in the
township of Crete. But the company gave
him a trick instead of a treat.
Aaron had asked Nicor to install a
pressure regulator, which would allow his
new natural gas generator to operate when
his electricity goes out. A month later, the
job still wasn’t done, so Aaron hit the
phones— for two days.
“Have you ever tried to call Nicor?”the
World War II and Korean War veteran
wrote in a letter to CUB. “I cannot think of
anything more exasperating. Recording
after recording.”
When he finally did get to a live person,
Aaron was told that Nicor had no record of his
payment, and, then, no record of any work
needed at his home. He was told the job
wouldn’t be done until mid-January— in
another six weeks.
Aaron, a CUB member since 1990, had a
typical response to the company: “You’re
crazy.”Then he called CUB.
Consumer Counselor Martin Nava
contacted Nicor, and Aaron soon got a call
from the company saying the job would be
done in a few days.
“I’m happy as a lark,”Aaron said. “I have
to thank CUB without question. It’s the
CUB pressure that made this man call me
and do the work.”
So this Halloween story ended happily,
with a letter Aaron wrote to CUB just days
before Christmas. He closed with a thank
you. “My contribution to CUB was worth
every penny and more,”he wrote.
If you have a question or complaint about
a utility, call CUB’s Consumer Hotline, at
1-800-669-5556, for free help.
Citizens Utility Board
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
William Fritz, President; Valeri DeCastris, Vice President; John Wold, Treasurer; Jac Charlier; Jeffrey Coates; Vaiju Dunung; Thomas S. Gary; Joshua L. Kilroy;
Derek D. McNeal; Lew Meyers; Robert Craig Neff; Judith Rau; Frank Rosen; Richard Zuckerman
Staff
Martin R. Cohen, Executive Director; Patricia Clark, Associate Director; J. Seamus Glynn, Associate Director; Jacqueline Bradford, Director of Administration;
Robert Kelter, Director of Litigation; Sandra Marcelin, Director of Consumer Advocacy; Jim Chilsen, Publications Manager; Cyrius Currie, Technical Support;
Jennifer Gallagher, Consumer Rights Counselor; Clara Glass, Receptionist; David Kolata, Senior Policy Analyst; Julie Lucas, Legal Counsel;
Martin Nava, Consumer Rights Counselor; Karin M. Norington-Reaves, Legal Counsel; Prajakti Shah, Programmer; Yonatan Zamir, Legal Assistant
Citizens Utility Board, 208 S. LaSalle St., Suite 1760, Chicago, IL 60604, 312-263-4282/1-800-669-5556, www.CitizensUtilityBoard.org
Spring 2003
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