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Court ruling threatens ComEd customers with 20% rate hike

20140919_AreYouKiddingMe_fbWe received bad news recently out of Washington: A ruling by the U.S. Court of Appeals for the District of Columbia Circuit could spark a 20 percent increase in the supply rate charged by ComEd.

In addition to fighting nearly $1 billion in rate hikes, CUB for years has pushed programs that promote energy efficiency and something called “demand response,” aka “DR” or “negawatts.” DR is any program that gives residential, commercial and/or industrial customers incentive to shift their heaviest power usage away from “peak demand” times of the day—when electricity demand is highest, power plants work overtime and hourly prices skyrocket.

These peak-usage times may only amount to a few days of the year, but they are the main culprit behind our power problems, because the grid needs to have the capacity to meet that super-demand. Here’s a quick list of those problems:

  • Our electric bills are expensive year-round because they help cover all those pricey power plants needed to meet demand;
  • Coal-burning power plants are forced to work harder, creating all kinds of environmental concerns;
  • Our grid is stretched to the limit, threatening major power outages.

So you can see why DR plays such a key role in building a smarter power grid. If we reduce that peak demand, power plants don’t have to work so hard, and we make the power system more affordable and more reliable.

But a court ruling serves as a brutal gut-punch to DR. It limits the regional manager of northern Illinois’ power grid—PJM—from making “negawatts” payments to big industrial users that agree to power down during high demand times. The case was brought by power generators across the country. They wanted to reduce the amount of the payments, but the D.C. court went a step further and outlawed them, arguing that they encroached on state authority.

How big is this? PJM has said that the “negawatts” program frees up enough electricity when the grid is stressed to equal a large nuclear power plant. And Crain’s Chicago Business reports that the ruling would could mean a 20 percent increase in the price ComEd charges for electricity. (For example, such a hike would increase ComEd’s current rate from 7.5 cents per kilowatt-hour to 9 cents per kWh.)

We’re waiting to see if the Federal Energy Regulatory Commission appeals the ruling to the U.S. Supreme Court—and if Congress can mount a bipartisan effort to step in with legislation that would protect consumers. But, as Crain’s columnist Joe Cahill reports in his usual wry tone: “If you don’t think partisan gridlock in Washington affects you, keep an eye on your electric bill.”