Sun-Times Media file photo
Updated: November 25, 2012 11:35AM
In some Chicago suburbs, electricity rates have dropped as much as 40 percent thanks to a process called “electricity aggregation,” which allows communities to negotiate for lower electricity bills.
On. Nov. 6, voters in Chicago and about 60 other Illinois municipalities will have a chance to join in by approving referendums authorizing aggregation. They should do so.
Under legislation Gov. Pat Quinn signed in August 2009, municipal residents can vote to negotiate with more than 40 certified alternative power suppliers for better electricity prices. Banding together to buy power in bulk gives municipal ratepayers leverage.
In the primary election last March, more than 200 Illinois communities voted to do so, and they generally have seen significantly lower electricity bills since then. Elsewhere in the nation, California, Massachusetts, New Jersey, Ohio and Rhode Island have community aggregation programs, and according to the Citizens Utility Board, Rhode Island and Ohio estimate their programs have saved consumers more than $18 million a year.
Individuals already have the right to switch to an alternate supplier, and more than 1.5 million ComEd residential customers have done so, but that’s a daunting process for one homeowner. If a municipality such as Chicago does it, the hard work of negotiating a contract is done in the background. Most people will notice only the lower bills. The Citizens Utility Board has scheduled a Wednesday news conference to release its guide for consumers trying to better understand electricity aggregation.
On Monday, Mayor Rahm Emanuel repeated his support for the idea, which passed the City Council unanimously.
“This would be a win for homeowners, a win for small businesses and a win for clean energy,” Emanuel said.
On Tuesday, ComEd also backed the referendum, which also is backed by its parent company, Exelon.
“Customers should explore any opportunities to save money on their bills, whether that’s through shopping or energy efficiency,” ComEd President and CEO Anne Pramaggiore said.
ComEd delivers electricity in the Chicago area, but the utility doesn’t generate the electricity. Rather, it buys the power on the wholesale market and delivers it at cost.
Hoping to see lower bills by the end of the year, Chicago already has begun work on the bidding process. The first of four public hearings was scheduled for Tuesday night, and the city has hired the Delta Institute and former Illinois Power Agency Director Mark Pruitt as consultants. The city also has set up a website for consumers at www.cityofchicago.org/electricityaggregation.
This all sounds good, but there are a couple of caveats. For one, Chicagoans are being asked to vote for electricity aggregation without knowing what the final contract will look like.
Second, ComEd’s long-term energy contracts will expire next June, which means prices probably will drop then even without municipal electricity aggregation.
But under the 2009 law, ratepayers cannot be forced to participate in electricity aggregation. They would have two chances to opt out — first, when the city signs a deal with a supplier, and second, when they get their first bill.
In the long run, the best way to cut our power bills is to improve municipal energy efficiency. Emanuel already has pledged to make that part of the city’s electricity aggregation contract so that the savings will be sustainable.
In the meantime, the short-term savings are too big to pass up.