ILLINOIS LEGISLATION OFFERS CHOICE OF ELECTRIC PROVIDERS

Legislation giving consumers a choice of electric power is law in Illinois.

The complex bill, 261 pages, is aimed at breaking up the state's electric monopolies.

Gov. Jim Edgar's approval last week came after he postponed his decision, saying he was concerned deregulation measures could benefit utilities at a cost to consumers.

The bill, which was signed Tuesday, would cut electric rates by 20 percent for most Illinoisans and let residential consumers shop for power beginning in 2002. The legislation will cut electric rates by 15 percent on Aug. 1 for about 3.5 million residential customers of Commonwealth Edison and Illinois Power, the state's largest utilities, and allow them to shop around for the best deal on power, starting in 2002.

For Central Illinois Public Service Co. and Union Electric residential customers in Illinois, Aug. 1 is the effective date of a 5 percent rate decrease. Those customers would have to pay fees to their former utility for switching. Those fees are meant to help utilities pay off costly investments they made under the monopoly system, which would last until 2006.

Edgar's big concern was that with the special financial treatment utilities would receive the ability to sell off large assets like power generators before customers get rate cuts.

Edgar said if someone challenged the law in court after utilities took advantage of the special financial treatment the rate cuts would be stopped and only the utilities would benefit.

But Tuesday, Edgar said ComEd and Illinois Power had given him a written commitment they would not sell or transfer major assets before Aug. 1.

Further rate decreases for CIPS and UE Illinois electric customers may be required in 2000 and 2002 if rates are not below the Midwest average. ComEd and Illinois Power will receive an additional 5 percent decrease in 2001.

Illinois commercial and industrial customers will be allowed to choose electric suppliers in October 1999 while residential customers will be able to choose electric provider May 1, 2002.

Municipal-owned utilities and electric cooperatives are exempt from the law, unless they choose to compete for customers outside their franchise areas.

The legislation carves out continued regulatory authority by the Illinois Commerce Commission, which will regulate unbundling of rates and the development of rules under which electric suppliers will compete.

The ICC will also monitor the economic health of competitive markets and establish a code of conduct to prevent monopoly abuses by investor-owned utilities.

Union Electric did not take a position on the pending Illinois legislation, said UE spokeswoman Susan Gallagher. The legislation had the support of many union, municipal and county officials, and the Citizens Utility Board, a consumer advocacy group.