As Chicagoans enter the voting booth on Nov. 6, they will encounter a referendum that could have a major impact on what they pay for electricity.
The referendum is on "municipal aggregation," a process that has secured savings of 25 to 50 percent off ComEd's power price for the 175 communities that have launched aggregation programs so far. But the jury's still out on whether consumers will enjoy long-term savings. When they enter the voting booth on Nov. 6, Chicagoans should arm themselves with the facts to make an informed vote.
(Don't live in Chicago? See CUB's Illinois guide to municipal aggregation
What is municipal aggregation?
Illinois law allows municipalities and counties to purchase electricity on behalf of residential and small-business utility customers living within their borders. While municipalities choosing community aggregation would be responsible for negotiating the price of power from a supplier other than ComEd, the utility would still be responsible for delivering that power to your home, and billing you for it. In theory, municipal aggregation allows communities to use the collective bargaining power of their residents to negotiate for lower power prices from suppliers.
customers can also choose an alternative electricity supplier on their own.
Who purchases electricity under the current system?
Referendum: "Shall the City of Chicago have the authority to arrange for the supply of electricity for its residential and small commercial retail customers who have not opted out of such program?"
The Illinois Power Agency (IPA) is a state office that negotiates power prices on behalf of most residential customers statewide. The agency buys power for the state's two biggest utilities, ComEd and Ameren. Those utilities pass the cost of power onto their customers with no markup.
Would I automatically be billed at my community's rates?
Yes, unless you opt out of the program. If Chicago passes a referendum approving electricity aggregation, it is expected that local officials would put out a request for proposals (RFP) and select a winning bid. Chicago residents who don't wish to participate would have two opportunities to "opt out" of the program:
1. When Chicago sends out an initial letter notifying residents that their electricity supplier will change, and
2. when the utility sends customers a letter notifying them that their electricity supplier has changed. After receiving the utility notification, residents generally have 10 days to opt out.
So, even if Chicago passes a referendum, you don't have to participate in aggregation if you don't want to.
If Chicago fails to pass a referendum but still chooses to move forward, the program would be "opt in," where residents are not enrolled until they sign up. In any case, consumers always have the option of paying their utility's default prices—those negotiated by the IPA.
ComEd price to compare (through May 2013)
8.32¢ per kWh
Who do I call if the power goes out?
Even if you choose to participate in municipal aggregation, ComEd is still responsible for delivering the electricity you purchase to your doorstep. So if the power goes out in your home, you should call your utility.
Would I get two bills?
In most municipalities, consumers will continue to get a single bill from their utility, but it's not a certainty.
What happens if I'm already enrolled with an alternative electricity supplier?
So far, most communities have separated out individuals who are already under contract with an alternative supplier. It's wise to check with Chicago officials to learn what the process will be. The rate you're offered through municipal aggregation may be better than the what your current supplier is offering you. If you switch, however, you may have to pay an exit fee.
Will municipal aggregation lower my electric bill?
Savings would depend on the contract Chicago negotiates. If the proposed offer does not compare favorably to ComEd's rates, residents would have the opportunity to opt out of the program. While municipal aggregation has delivered savings in the short term, long-term savings are not guaranteed. That's because the last of several expensive long-term electricity contracts for ComEd are set to expire by June of 2013. ComEd's power prices should drop significantly then.
The best way for a community to ensure long-term residential savings is not to solely rely on the market, but to include robust, creative efficiency measures in its energy plan. That will help reduce power usage at peak times, which cuts individual power bills as well as market prices. So far, CUB has not seen communities use aggregation as an opportunity to employ such efficiency measures. See a list of prices these communities have negotiated so far
If I'm a Real-Time Pricing customer can I stay with the program if I opt for aggregation?
ComEd's Real-Time Pricing program
allows customers to pay hourly market electricity prices, rather than the utility's fixed rates. Consumers who aren't home during the day, when energy prices tend to be highest, or who can shift high-energy usage activities like running the clothes dryer or dishwasher to off-peak hours, benefit most. In fact, participants have saved an average of about 15 percent on their power bills. To date, no municipal power agreements offer real-time pricing options, so if you would like to enroll or stay enrolled in real-time pricing, you'll have to stick with your utility. Just like customers who are already enrolled with alternative suppliers, Real-Time Pricing customers will likely be filtered out when residents are switched over to the community's negotiated power supplier. Still, it's an important detail to check.
Will space-heat customers save with municipal aggregation?
Customers who use electricity to heat their homes currently pay a lower rate than non-space heat customers—but communities often have been able to negotiate even lower rates through municipal aggregation. Just like customers who are already enrolled with an alternative supplier, space-heat customers could be separated out when residents are transferred over to their community's negotiated supplier. Ask what the process is, and make sure to compare the rates you pay with the rates offered through aggregation.
What else can I do to lower my bill?
No matter what company supplies you with electricity, CUBenergysaver.com
can help you make deep cuts in your utility bills. It recommends hundreds of simple, money-saving actions. Users can connect to their ComEd accounts to track real savings and earn rewards for their energy savings redeemable at local and national businesses. Signing up is free, and takes just a few minutes. On average, CUB Energy Saver users have cut their gas and electric bills by about $100 a year.
Checklist: What Everyone Should Know About
What price is the supplier offering and how does it compare with the utility's price?
While it is a basic question, it is the key question for consumers: Will I save money with municipal aggregation? Ask community leaders to be clear about the price being offered and match it up with your utility's "price to compare."
What if I want to leave the alternative supplier?
Always check to see if you can get out of a deal without having to pay an exit fee.
What happens when my community's power contract ends?
After your municipality's agreement with an alternative supplier runs its course, will you automatically return to your utility's rates, or will you become a customer of the alternative supplier your community contracted with? Check with your community leaders to find out.
Will my community factor energy efficiency into its power contract?
Reducing power usage, especially during peak hours, reduces electricity costs for everyone. Find out what energy efficiency measures, if any, your community plans to include in its contract with an alternative supplier. To date, alternative power suppliers have not offered programs like Real-Time Pricing, which charges consumers an hourly market rate—rather than a fixed rate—for electricity, rewarding customers who use less energy when power prices and electricity demand are at their peak.
Will my community purchase Renewable Energy Certificates (RECs) to invest in "green" energy?
Many alternative power suppliers offer "green" plans, which ensure that a certain percentage of the power consumed will be put back onto the grid by renewable energy sources, like wind and solar power. Find out if your community plans to purchase RECs, and if it will cost you extra. Just remember, even if you purchase "green energy" from an alternative power supplier, it doesn't mean the actual electricity you consume is from a renewable energy source—it just means that clean energy was added somewhere to the power grid.
Are consultants advising my municipality on community aggregation, and if so, what fee(s) are they charging?
Many communities obtain a consultant to seek out and negotiate power prices on behalf of residents. These consultants charge fees—taxpayer dollars—for their services. Make sure your municipality's consulting fees, if any, won't eat up the electric bill savings residents of your community may see.
Does my community plan to accept fees from the alternative supplier it chooses?
Some communities take fees from alternative suppliers. If your community is considering such a move, ask local leaders how that impacts the price offered and what they plan to do with the extra money.
What if I have more questions?
Call CUB, at 1-800-669-5556. Also, the City of Chicago is holding some informational meetings:
7 p.m., Oct. 25, Kennedy-King College, 6301 S. Halsted Street
7 p.m., Oct. 30, Truman College, 1145 W. Wilson Ave.
7 p.m., Nov. 1, Wilbur Wright College, 4300 N. Narragansett Ave.