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Electricity rates falling after aggregation

Published: Sunday, Jan. 19, 2014 11:15 p.m. CDT • Updated: Monday, Jan. 20, 2014 3:08 p.m. CDT
Caption
(H. Rick Bamman – hbamman@shawmedia.com)
ComEd linemen work on a project Friday on Maple Avenue in McHenry. ComEd is available to assist cities with providing them the customer information they need to complete the next round of aggregation programs.
Caption
(H. Rick Bamman – hbamman@shawmedia.com)
Caution equiment warns of ComEd linemen working on a project on Maple Avenue in McHenry.

Since municipal aggregation programs started receiving voter approval in 2010, electricity prices have been coming down.

Municipalities with the programs have been able to save their residents money and in June of last year, ComEd was able to bring down its electricity rates.

So far 11 communities in McHenry County have passed municipal aggregation referendums.

With the motivation of having a chance to save money on electric bills, Algonquin has placed on the March ballot a referendum to start it’s own municipal electrical aggregation program.

In 2012 the village had a municipal aggregation referendum fail by nine votes.

In communities where energy aggregation programs are in place, residents are billed for electricity through ComEd and use ComEd-owned grids, but the electricity flowing into each home and small business could come from a different source. ComEd maintains the infrastructure and responds to calls during power outages.

David Hoover is the executive director of the Northern Illinois Municipal Electric Collaborative, which has helped manage about 100 municipal aggregations in the state.

ComEd doesn’t generate electricity. All it does is maintain wires to transmit power, Hoover said.

In 2007, the Illinois Power Agency entered into long-term contracts with energy suppliers with the intention of providing price stability for ComEd customers.

In 2008, the recession started and the rates the agency secured were higher than the market rate for electricity, Hoover said.

“If you bought power from someone else, you would have been able to beat that rate,” Hoover said.

When municipal aggregation programs began, people started to see 30 percent to 40 percent savings, Hoover said.

However, those supply contracts for ComEd finally came to an end in May of last year and the Illinois Power Agency was able to buy electricity at the prevailing market rate.

“In 2007-2008, if rates had gone up, we would be applauding the IPA,” Hoover said.

Electricity rates, however, are expected to increase in June, Hoover said. Rates that would be in place for a year, will be released in May. The Illinois Power Agency also is reserving the right to revisit those rates in September.

Overall, municipal aggregation has been a success, Hoover said.

“Municipal aggregation has been a homerun; it’s been spectacular,” Hoover said. “Those [savings] are real dollars that the residents would have paid to ComEd.”

In Cary, the village has seen significant savings from its municipal electrical aggregation program, said Village Administrator Chris Clark.

Cary started its program in November 2012. Through September of 2013, village residents and small businesses have seen an aggregate savings of $916,000 on their electric bills, Clark said.

Clark estimated the savings to be about $1 million townwide by now.

The average savings per household has been $180 through 10 months.

Clark acknowledged that ComEd rates have come down since June, and the margin between Cary’s electricity supply rate and ComEd’s supply rate has narrowed.

“Cary will need to decide the second or third quarter of 2014 of what to do next,” Clark said. “The first contract year has been successful. However, with the margins closing on power supply costs, ComEd versus alternate supply market, ... the village will need to make policy decisions if it wants to be involved.”

In Cary’s contract with First Energy Solutions, the village included a provision that if the ComEd rate dropped below the village’s alternate supplier rate, then the supplier would have to match the ComEd rate.

Rick Mack, the village president of Ringwood, said it’s village is on its second one-year contract with rates still below the ComEd rate.

The first year of the program, village residents saw a 47 percent savings in their electricity bills, Mack said.

“Our experience is it’s been an effective program for residents,” Mack said.

Fox River Grove recently ended its municipal aggregation program after proposed rates for a new contract from alternate suppliers were higher than the supply rate from ComEd.

ComEd is not a party to the pricing offers made by the aggregation suppliers, but expects them to make competitive offers compared to the ComEd rates, spokesman David O’Dowd wrote in an email to the Northwest Herald.

O’Dowd added ComEd continues to monitor the market closely so that it is prepared to meet customers’ needs.

“From the beginning, ComEd has supported customer choice,” O’Dowd said. “We’ve supported it as a matter of principle; that competition serves customers better.”

Current electrical supply rates in cents per KWH

Cary: 4.99

Crystal Lake: 4.69

Fox Lake: 4.932

Harvard: 5.411

Huntley: 4.9867

Island Lake: 4.87

Lakewood: 4.9867

Prairie Grove: 4.58

Ringwood: 4.9867 

Woodstock: 4.9867

ComEd: 5.523

Source: Pluginillinois.org

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