Protecting Consumers from Rising Energy Costs: Real Solutions to Help Homeowners and Businesses Reduce Their Energy Bills, This Year and Beyond

Executive Summary

With a projected 71% increase in natural gas heating costs this winter and gasoline at more than $2.00 per gallon, consumers at every income level are spending an increasing proportion of their income to meet basic energy needs. Some families in Illinois will spend nearly half of their incomes to pay their gas and electric bills this winter. Skyrocketing energy prices are taking a toll on Illinois families and on our economy, as more of our earnings go to out-of-state oil and gas companies, and less stays in Illinois to purchase goods and services and create jobs for Illinois workers.

Why are we in this situation? Clearly, the underlying problem is that domestic and worldwide demand for oil and natural gas has been climbing while supplies are beginning to peak. Most experts agree that this is a condition that is likely to persist and worsen over time. At the same time, Hurricane Katrina demonstrated dramatically that our energy infrastructure is vulnerable. Moreover, gas and electric utilities have failed to diversify our energy resources and have failed to invest sufficiently in energy saving technologies, and unfortunately our federal and state policymakers have been unwilling to hold our utilities to a higher standard.

Now is the time for an all-hands-on-deck effort to adopt both short-term and long-term energy solutions. We still have time to lower this winter�s heating bills for residents across the state. However, we need to get ahead of the curve for next summer driving season, and next winter. We have an opportunity and responsibility to make the serious investments that will provide long-term energy security by maximizing investments in cost-effective energy efficiency measures and diversifying our energy resource portfolios, all of which make consumers less vulnerable both at the pump and at their gas and electric meters.

The good news is that there is ample experience from around the nation to draw on from the past two decades, and this experience points us to programs that are tried and true and will produce results. The basic elements are:

1. Reducing the amount of natural gas we need to heat our homes through weatherization, conservation, and efficiency;

2. Reducing the amount of electricity we need to power our homes and businesses. Since a quarter of the electricity we use is generated by burning natural gas, reducing electricity consumption will result in lower wholesale and retail prices for natural gas.

3. Reducing our dependence on oil for transportation use, by improving the fuel efficiency of our vehicles, and promoting transit options, ridesharing and telecommuting.

What follows is a description of seven measures that Illinois policymakers can adopt to help consumers meet their energy needs this year, and to prevent similar crises next year and for years to come. This is far from a comprehensive plan, but by taking the following steps we can begin to chart a course toward a more affordable and stable energy future.