State and Municipalities Reaping Windfall from Rate Hike

Everyone is screaming mad about the energy bill increases they are receiving as a result of our Illinois senators' failure to act on Ameren/CIPS outrageous rate hike. Ameren rates have soared 40 to 55 percent. The hike will cost the average Ameren customer $270 to $340 more a year.

Municipalities may not be complaining about the hike as loud as they could because, of course, they get a tasty slice of the hike pie -- all without having to lift a finger. Many municipalities levy a “municipal charge” or franchise tax on gas and electric customers' utility bills. When your utility bill rises, so does the amount of tax revenue received by the taxing authority. The state also imposes its own Gas Revenue Tax and Electricity Excise Tax. Could this revenue windfall help explain why the IL Senate failed to stop the rate increase?

Do the math with me. Examine Carbondale as an example of city benefiting from the rate increase. (Yes, I know the city is also paying the increase for their own power usage.)

Carbondale has 10, 968 housing units. If each household was hit with a $50/month gas and electric bill increase, Carbondale would pocket an extra $150,000 a year from taxes. Then add in the energy bills of all the businesses in Carbondale and I suspect the fugure will soar above $200,000. What is perhaps most disturbing about the tax increase is losing over $4,000,000 from circulating in the local economy of Carbondale. Replicate these calculations for every county in the state and total up the impacts. Then try to tell me that energy management isn't an economic development opportunity!

Imagine what could be done with those funds. 1) Find cheaper suppliers of energy, 2) Build a power infrastructure that replaces old polluting coal fired plants, 3) Implement a wide variety of programs to reduce demand through job-creating conservation programs, or 4) Rebate the funds to consumers.

Sometimes the answers are right in front of you.