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Ameren says recovery effort shows need for rate hikes to avoid layoffs

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SPRINGFIELD - Massive power outages affecting more than 230,000 electric customers in Illinois are a reminder of why state lawmakers should not freeze electric rates for another three years, an Ameren Illinois spokesman said Friday.

As crews worked to restore power to homes and businesses left without electricity in the storm's wake, Leigh Morris said the proposed rate freeze would have crippled the utility company's ability to respond to the emergency.

"It would take an awful lot of time to get power back," Morris said. "It's something nobody with the Ameren companies wants to find out."

The company contends that a legislative plan to block Ameren from raising rates by up to 55 percent would result in the need to lay off more than 1,000 employees and contractors, the same workers who are now trying to get electricity turned back on throughout the state.

"This has always been the nightmare scenario we've been dealing with," said Morris. "Thank goodness, we are not facing that right now. But how can you hire people if you're insolvent?"

State lawmakers departed Springfield on Thursday, unable to come to an agreement on a plan aimed at sparing customers of Ameren and Commonwealth Edison from rate hikes that will range from 22 percent to 55 percent.

The current rate freeze, which affects most Illinois residential customers, was part of the state's electricity deregulation law of 1997. It is set to expire Jan. 1, with the new, higher rates kicking in after midnight Jan. 2.

House Speaker Michael Madigan, D-Chicago, and Gov. Rod Blagojevich are backing an extension of the freeze.

Ameren contends it already has contracts in place to purchase power after Jan. 1, and an extension of the current rate freeze would force the company into bankruptcy because Ameren would have to pay more for power than it will be able to charge customers.

As an alternative, the company has filed a plan with state regulators to phase in the rate hikes over three years. But customers opting for that plan, which would mean a smaller, 14 percent increase, would have to pay interest charges of up to 6.5 percent.

The plan is pending before the Illinois Commerce Commission, and Ameren Illinois CEO Scott Cisel said the company is considering some revisions, including the possibility of lowering the interest charge to customers to 3.25 percent.

State lawmakers in much of the area affected by the first major winter storm of the season left Springfield on Thursday convinced that lawmakers need to find some middle ground to avoid creating problems for Ameren and its customers.

"That compromise has got to happen," said state Rep. Chapin Rose, R-Mahomet.

State Rep. Dan Brady, R-Bloomington, said a rate freeze isn't the answer.

Rather, he suggests legislative leaders craft a measure that would protect customers but still allow the utility companies to phase in an increase that is "justifiable."

What we got was nothing," said Brady as lawmakers left town until Jan. 7.

As for Ameren and the ongoing recovery from the icy storm, Morris said crews likely will be working throughout a long, cold weekend to bring power back to homes and businesses.

"It's not a lack of resources on our part," Morris said. "It's just the extent of damage."

Kurt Erickson can be reached at kurt.erickson@lee.net or 789-0865.

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