Chicagoans' powerful vote: referendum on city buying electricity
BY STEPHANIE ZIMMERMANN Consumer Reporter October 28, 2012 11:37AM
“Residents thank me for doing the aggregation,” says Wilmette Village President Chris Canning. His eletric bill fell from $188.69 for August to 95.70 in September under the alternative energy supplier. | Tom Cruze~Sun-Times
Updated: November 29, 2012 6:26AM
Chris Canning doesn’t have to be asked twice whether it’s a good idea for municipalities to shop around for energy suppliers.
All he needs to do is look at his electric bill. It was $188.69 for the 29 days ending Aug. 29, before electricity aggregation took effect in Wilmette, where Canning is the village president. It was $95.70 in September — almost half as much.
“Every single meeting I’ve had, residents thank me for doing the aggregation,” Canning says.
On the eve of a Nov. 6 referendum in Chicago on whether to allow city leaders to choose an alternative supplier for the city’s residential and small-business electricity needs, it’s worth looking at what other communities have done to obtain lower rates and protect the interests of consumers.
In Wilmette, village officials negotiated an attractive fixed rate of 4.035 cents per kilowatt hour with MC Squared Energy Services. ComEd’s rate is 8.32 cents through May 2013.
Wilmette residents who want to support only “green” energy can pay a slightly higher rate of 4.11 cents per kilowatt hour and MC Squared will put an equal portion of renewable power back onto the grid system.
And if ComEd’s rate dips below MC Squared’s price, MC Squared must match it. There is no termination fee if customers want to leave.
On Election Day, voters in Chicago and dozens of other communities in ComEd’s service territory will be asked whether to allow municipal aggregation of energy. If it’s approved, City Hall will seek bids from alternate suppliers to buy energy in bulk for residential and small-business customers.
If Chicago contracts with a different energy supplier, consumers wouldn’t have to do anything to get the new rate; the change would be automatic unless the customer opted to stay with ComEd.
All customers would continue to receive bills from ComEd, which would stay on as their electricity deliverer, just not the supplier. They would call ComEd to fix any outages, as ComEd will still control all the poles and wires.
ComEd backs aggregation because it doesn’t affect its profits — by law, the utility can’t earn a markup on supply — and because ComEd’s parent company, Exelon Corp., is in the deregulation game with its subsidiary, Constellation Energy.
So far, 175 communities in the ComEd service area have begun aggregation. Energy supply rates range from 4.035 in Wilmette to 6.23 in Fulton, a small town west of Rockford.
But Chicago will be late to the party, even if voters pass the referendum. That’s because ComEd’s supply cost is expected to drop steeply starting in June, when the utility is freed of some expensive long-term contracts that had kept its supply rate high. So the huge differences in rates might be available for only a few months.
Chicago has hired two consultants to get ready. If the referendum passes — and City Hall hopes it will — Chicago is expected to quickly issue a “request for qualifications” to see which companies are interested, then put out a request for prices.
Still to be decided is whether all of Chicago would have one supply provider or if the city would be divided into smaller service areas.
Two public hearings already have been held; two more are scheduled for Tuesday at Truman College, 1145 W. Wilson, and Thursday at Wright College, 4300 N. Narragansett.
Many communities have required protection for consumers if ComEd’s price drops, such as forcing the competitor to match that price or send customers back to ComEd.
Some also have used their buying power to demand portfolios of green-energy sources.
Oak Park’s 100 percent green-energy contract doesn’t mean the village is powered solely by renewable sources, but its supplier, Integrys Energy Services, is required by contract to push an equal amount of green power onto the grid, said K.C. Poulos, sustainability manager for the village.
Poulos said the rate of 5.79 cents per kilowatt hour in its green-energy contract was only about one-tenth of a cent more than what Integrys would have charged. Oak Park’s contract expires in December.
Last summer, despite the record heat, “people were just marveling at how low their bills were,” Poulos said. “It was definitely worth it for us.”
Chicago Mayor Rahm Emanuel has said that getting cleaner energy is a priority for the city.
One challenge in Chicago will be the diversity of housing stock in a huge market of roughly 900,000 customers. Not all companies will be able to handle the range of customers from gigantic apartment towers to tiny bungalows.
David Fein, vice president for state government affairs at Constellation Energy, said his company is “very much interested” in bidding for Chicago’s supply market. Constellation already supplies power for the White Sox, Bears, Bulls and Blackhawks and is sophisticated enough to handle the urban market, Fein said.
The nonprofit Citizens Utility Board is neutral on the entire issue, saying it just wants to make sure voters are aware of what’s on the ballot. “The jury is still out” on whether any savings will be long-term, CUB spokesman Jim Chilsen said.