Twenty-two years without a raise—think about it. That would be very hard. However, utilities do not operate at a fixed cost; they operate as a regulated monopoly (like the game) and receive a fixed rate of return. That is, utilities get to spend what is necessary to provide service and seek approval for those costs. Utilities like MidAmerican earn a regulated rate of return (in business that’s called margin) on everything they spend (subject to approval).
So, although MidAmerican-Illinois (MEC) has not increased energy costs during this time, they have spent $289 million on improvements to the electric grid and their generators. If this were all spent as required to provide service, then MEC which earns about 9% rate of return, would earn about $26 million a year in profit.
So after 22 years, an increase of 21% for residential and 13% for business might not seem like a lot, but remember MEC has no competition and earns profit on spending money to provide service.
Can you avoid the rate increase? The short answer is yes.
Illinois customers of MidAmerican Energy can now participate in the Illinois Electric Choice Program. The idea is simple; provide customers the right to buy their electricity directly from suppliers without any additional cost from the local utility. The result has been savings for Illinois consumers—an estimated $37 billion dollars due to electric competition.
Realgy Energy Service is the first energy marketer registered with MidAmerican Energy-Illinois enrolling customers in the Illinois Electric Choice Program. Additional information is available at Service Plans for MidAmerican.