Zapped!!

Crain's has an article about the unpleasant surprise soon to be lurking in people's mailboxes. It discusses the fact that New Jersey has a power auction very similar to the one recently approved for Illinois to commence in 2007.

And in what it calls "an ominous sign for Illinois electricity rates", it notes that "New Jersey power bills will rise more than 13% this year under a new system that lets power generators bid for the right to provide electricity to the state’s utilities."

Excerpts from the article (emphasis added):

If the results here are similar to New Jersey’s, the hit to local electricity bills could be far higher given that the price of power established in the New Jersey auction was 57% higher than last year’s.

ComEd has pledged to hold annual increases to single digits for three years beginning in 2007 when a nine-year state-mandated freeze on its rates expires. If the prices it charges consumers are below its cost to generators, ComEd insists it should collect the difference, with interest, after the three years.

“The results in New Jersey are really what we expected to see,” a ComEd spokeswoman said.

A ComEd critic concurred with that assessment of the differences between the markets, but warned that the New Jersey results still portend sharply higher prices here.

“The New Jersey auction is a glimpse into the future,” said Howard Learner, executive director of the Environmental Law & Policy Center. “This is not good news for Illinois consumers. Residents and business customers are in for sticker shock.”

The part that I italicized is what really caught my attention. So ComEd agrees to a freeze, but has a safety net that protects it's baseline cost, plus interest? Looks like a good deal for ComEd, not so sure about it's customers.