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Chicago Power Deal

The City of Chicago recently negotiated a new rate with Integrys Energy to fulfill the last 12 months of a 28-month municipal aggregation deal.  The bad news for consumers: rates are going up.  The less-bad news: rates are going up across the board for electricity in June, regardless of your supplier–and most customers should be able to save a little with the City’s offer.

Under municipal aggregation, municipalities are allowed to purchase electricity on behalf of residential and small business customers, theoretically using the collective buying power of its residents to secure a better deal (this only applies to the supply of power; delivery still goes through your regular utility–aka ComEd, for Chicagoans).  Chicago passed a referendum in November 2012 to launch a municipal aggregation program and contracted with Integrys shortly thereafter to supply the City’s power at a roughly 5.5 cents per kWh rate.

CUB has been getting a steady stream of calls from customers who have received a letter from the City about the new changes. Here’s what you need to know:

1.) New rates

Integrys will charge 5.299 cents per kWh from June 2014 through May 2015.  Customers will see an additional monthly charge–$9.06 for apartment and condo dwellers, $22.36 for single-family homes–that is intended to cover “capacity costs” and a transmission charge that are usually incorporated into your per-kilowatt-hour price to compare.

Although the extra monthly fee–which would be in addition to the customer charge you pay ComEd–is jarring to many customers, it appears the Chicago offer could be a decent deal for a lot of homes. But it’s hard to make any solid conclusions before we know what ComEd’s rate will be in June. (We won’t know that until April or May.) Assuming an 8.5 cents per kWh ComEd rate, this plan would most benefit apartment dwellers who use an average of more than 250 kilowatt-hours a month, and single-family home owners who use an average of more than 600 kilowatt-hours a month.  Once it’s clear what ComEd’s rate will be, some consumers may find it a better option to exit the Integrys plan and stick with ComEd.

2.) Potential Savings

The plan has so far been a money-saver for Chicagoans, and the question is: Will this last year add to your savings–or eat into them? The City estimates that consumers will save an average of $34 over this next year, in addition to the $42, on average, that they have already saved from the deal. Again, some lower-usage customers might want to go back to ComEd. We’ll be able to make a better determination once we know ComEd’s rate.

3.) Rest easy…

You should be automatically enrolled in the plan and won’t have to lift a finger.

4.)…unless you want to opt out

You can opt out of the City’s plan at any time with no exit fee and return to ComEd as your supplier (or choose another alternative supplier).  However, customers who don’t want to be automatically enrolled must opt out by March 31.

For more information, visit CUB’s fact sheet.