From The Corner
By Ronald D. Earl
General Manager & CEO

Every generation has their own version of the good old days; a time and place about which you think you can say, "It was better back then".

In terms of cost, electric consumers across this nation may soon be looking back at the early days of this century with that level of warm regard. Because the days of (relatively) inexpensive electricity are slipping away. The causes are many, the results will vary, but the impact will spread wide across the economy.

The customers of the investor-owned systems here in Illinois began their wistful wishing early in 2007 when their power costs became a product of a market-based power auction. The impact on them was well recorded and there is no need to go into it in detail. It is enough to say that the new power costs, which followed a decade of low rates that had been frozen against inflationary pressure and the higher costs developing in the regional transmission organization (RTO) power markets, caused a stir that rattled the highest levels of state government.

And as we begin the new year we see new cost pressures looming. Specifically, Governor Blagojevich is proposing an Illinois-only greenhouse gas reduction plan that could cost electric consumers in the state $1 billion in coming years. That's on top of higher fuel costs and the costs associated with the RTO power markets. And if the state doesn't act, a federal law limiting greenhouse gases seems inevitable.

To date, through many market ups and downs, IMEA has done a great job holding the line on costs for its members. Indeed, over the last decade our wholesale costs have been essentially flat. But while we may be able to insulate our members from the worst of the coming increases, we will not be able to avoid them entirely.

The Agency has been forward looking in securing electric generation  resources that it owns and that can therefore provide wholesale electricity at cost. But market pressures will inevitably seep into what we do. IMEA will continue to need power through contracts beyond our ownership stake. And as old contracts expire or need to be renegotiated there is less reason for power suppliers to sell to us a favorable levels. After all, with the average annual cost of power in PJM and MISO markets over the last year running well above a number of our long-term contracts, why should a supplier sell for less than the market could provide?

We face challenges, certainly, but our competitive position remains and will remain favorable. No one can hold back higher costs forever. What we can do is make certain our members wholesale costs are below those in the market, which will keep them competitive for new load and keep their customers' costs lower than comparable suppliers in the state.

Maybe that's not the happiest news for the new year (and years) but it is pretty good news none the less.