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Muni Competition Gets Utility Discount

Fortnightly Magazine - April 15 1995

The Illinois Commerce Commission (ICC) has approved special discount rate tariffs to help Illinois Power Co., an electric utility, meet ongoing competition from municipal electric utilities within its service territory. The tariffs offer special rates to industrial, commercial, and residential customers located within the corporate limits of municipalities with electric departments as well as to customers located in areas subject to municipal annexation or suitable for bypass service.

The ICC found that the municipalities had competitive advantages, including: 1) the ability to change rates on shorter notice, 2) lack of regulatory oversight, 3) tax advantages, and 4) access to state funds. It also found that the utility might continue to lose industrial, commercial, and residential load to the municipals, which could adversely affect the company and its ratepayers. The ICC rejected claims that the rate discounts are a form of predatory pricing forbidden under federal antitrust laws, adding that it had no authority to consider the impact of the new tariffs on the municipal utilities. Re Illinois Power Co., Nos. 94-0134; 94-0223, Jan. 17, 1995 (Ill.C.C.).

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