Group lights the way to cheaper energy bills
"The conventional thinking was that residential customers weren't interested in paying attention to their energy use," said Kathryn Tholin, CEO of the Center for Neighborhood Technology.
The cooperative is an affiliate of CNT. "It's too complicated. It's risky. People don't want to deal with fluctuating prices."
A three-year pilot program proved the skeptics wrong. Under the Energy-Smart Pricing Plan, customers save money, reduce their power use and cut stress on the system. Now a new law requires utilities to offer hourly, market-based electricity prices to residential customers statewide in 2007.
The Energy-Smart Pricing Plan inspired interest and imitators around the country, and has earned a Chicago Innovation Award for 2006.
"What we've proved is that residential customers will change the way they use energy," Tholin said. "Customers love the program."
Under the pilot program, about 1,100 Commonwealth Edison customers in the Chicago area buy their electricity on an hourly basis on the market, rather than using a regulated flat rate set by the utility. The customers learn when electric rates are cheaper -- such as the early morning or late evening -- and when they'll be high, such as on a hot summer day.
Customers have saved an average of 10 percent on their bills, and cut their power use by 3 percent to 4 percent through simple measures like turning on the drier at night or leaving off the air conditioner during the day.
"I do a lot of things later in the day than I used to," said Cheryl Kinkead, 57, of Elgin, one of the real-time customers. "I do things smarter. In the summer, I wait until evening to make cookies, so I don't heat up the house."
Besides saving money, reducing use during peak periods takes the strain off the electric grid, which can reduce the risk of a blackout and lower prices for everybody. Customers in the program use a special meter, worth about $125 and paid for by ComEd and the Illinois Department of Commerce and Economic Opportunity, to measure hourly use. Customers are alerted to price spikes through e-mails or phone calls. Customers can also check prices for the day ahead on a Web site.
Tholin compares the real-time program to buying fruit at the store based on what's in season: "You can make a decision -- do I want to use less when the price is high?"
She said an increase in the use of real-time pricing will help drive the market for real-time technology -- like driers that won't run when the cost of power is above a certain price.
The Illinois Commerce Commission is reviewing testimony on how to best manage a real-time program for the state, including details like who will pay for the special meters. Tholin believes that 3 percent, or about 100,000 ComEd customers, will sign up for real-time pricing during the next three years.
The program might seem more attractive now that ComEd's fixed rate is expected to rise 22 percent in 2007. "If people see their rates going up and they want an opportunity to save, this is a viable option," Tholin said.