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Electric competition: Not the money saver it once was

The times are a’changing.

When electric competition began in northern Illinois, it seemed like a sure bet for savings.  ComEd’s price at the time was high and electric customers could easily find deals by shopping the market of unregulated suppliers.

But the era of easy savings is over, for now, in northern Illinois, as confirmed by a recent report from the Illinois Commerce Commission’s (ICC) Office of Retail Market Development.  From May 2014 to May 2015, ComEd customers saved $73.4 million more than those who signed up with an alternative electric supplier, the ICC reported.

This is a far cry from the state of the electric market just two years ago, when using an alternative electric supplier saved customers $257.5 million.

Back then, ComEd was locked into much higher rates.  Once those contracts expired in 2013, ComEd’s rates became more competitive with alternative suppler offers. Savings between ComEd and alternative suppliers have been converging ever since.

(This year’s ICC report focuses on savings in ComEd service territory.  Information on Ameren territory should be released in next year’s report.)

The report contained some other interesting findings on the state of the electric retail market in Illinois:

  • Currently, 85 alternative electric retail suppliers are authorized to sell in Illinois
  • 79.5% of the total electric usage of ComEd’s customers was provided by alternative retail electric suppliers this year (down from 81% last year)
  • As of May 31, 2015, more than 2.7 million residential customers across the state receive their power from an alternative electric supplier (down about 291,000 from a year prior)
  • It is expected that next year, the number will drop even further as 700,000 Chicago households will return to ComEd, after the City announced it would not continue its municipal aggregation program with Integrys Energy Services (now owned by Constellation Energy).
  • Just under 70% of residential alternative electric supply customers were part of a municipal aggregation program, where local government negotiates an electric supply deal on behalf of all residents.
  • However, of the 743 communities who have passed an aggregation referendum, 121 have chosen not to continue their programs as of June 2015.
  • While the number of communities engaged in municipal aggregation has gone down, the number of individuals choosing an alternative supply offer has risen.
  • Of the residential offers posted on PluginIllinois.org for ComEd customers, 76% were fixed offers, with prices that stay the same for the length of the contract, and 21% were variable offers, which change from month to month.

Because savings are no longer guaranteed, it is more important than ever to be a savvy shopper if you are in the market for a new electric supplier.  Always compare any alternative supply offer to the regulated utility—and be sure to look for any hidden monthly fees or exit fees that could make the deal less attractive.  Also, be wary of promotional rates, which disappear after a short time. Always check to see if your rate is a variable price that can change unpredictably from month to month.

For more information on alternative electric supply offers in Illinois, check out CUB’s weekly-updated fact sheets. (ComEd customers can click here, Ameren customers can click here.)