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Did real-time pricing help electricity customers save in 2018?

Cate York, staffing a CUB event

by Cate York, Sustainable Communities Liaison at CUB

Working as an outreach staffer for CUB takes me all over the state to talk to folks about how to save money on their utility bills. One of my favorite cost-saving measures to talk about is real-time pricing. 

As any dedicated reader of the WatchBlog knows, many Illinois residents have the option to pay for electricity based on market rates that change every hour according to demand. This program is called Hourly Pricing for ComEd customers, and Power Smart Pricing for Ameren customers. These programs are actually mandated by the Public Utilities Act and are overseen by the Illinois Commerce Commission (ICC). 

The law requires that utilities offer real-time pricing in order to “ensure the lowest total cost of service and to enhance the reliability of service.” By encouraging customers to use less electricity during peak hours, real-time pricing programs can help balance the grid and reduce peaker plant emissions. And sure, CUB’s own research has found that ComEd’s Hourly Pricing program would have been a money-saver for most customers in 2016.

But what about 2018? 

The ICC requires the utilities to file annual reports on how their real-time pricing programs performed (click here for ComEd’s report, and here for Ameren’s). And the 2018 reports, compiled by Elevate Energy, have just been published! So we can actually see what happened with these programs last year. 

First, the savings. Next to ComEd’s standard fixed rate, Hourly Pricing participants saved an average of 10.4 percent on their supply, or $75 on average, for a combined total of $1,947,768. And compared to Ameren’s standard fixed rate, Power Smart Pricing participants saved an average of 7.9 percent on their supply, or $58.10 on average, for a combined total of $681,971. Looking at the last four years, Hourly Pricing and Power Smart Pricing participants have respectively saved 15 percent and 10 percent on the supply portion of their bills.

“Since the price of electricity changes every hour, will I have to constantly check what the price is at any given time?” I get this question all the time when talking about real-time pricing programs in the field. And the answer is, well, it depends.

If you can check the hourly price before you plan on using a lot of electricity, you will probably save more. But of 5,029 Hourly Pricing customers surveyed in 2018, 40 percent said that they do not check prices. And of 2,469 Power Smart Pricing customers, 55 percent said that they don’t check either.

While real-time pricing isn’t right for every household, it’s a money saver for most participants. For example, in 2018, two out of every three homes (65.8 percent) enrolled in Hourly Pricing cut their annual bills. Both ComEd and Ameren recommend that the best candidates for real-time pricing use over 350 kilowatt-hours per billing cycle. You can check your monthly usage history on your ComEd or Ameren bill, or call the help lines for each program (Hourly Pricing: 1-888-202-7787, Power Smart Pricing: 1-877-655-6028) to consult with a representative about whether you’re a good fit. Program participants also receive monthly emails which tell them how much they saved (or didn’t save). CUB recommends that participants stay on real-time pricing for a full year, because electricity usage changes with the seasons, and where you didn’t save one month, you might save another month. But you can opt out from either program without charge.

You wouldn’t necessarily think that lowering the price you pay for something would lower the amount you consume. (My mother can attest to this, as any sale renders her incapable of buying less than two dozen of whatever’s marked down.) But real-time pricing participants not only pay less for electricity, they actually use less as well. Hourly Pricing customers reduced their annual electricity use by 732 kilowatt-hours on average. As we like to say at CUB, “The cheapest kilowatt-hour is the one you don’t use.” Paying less for supply is great, but using less lowers the amount you pay on the delivery and taxes sections of your bill as well! Good for the grid, your pocket book, and the planet.

And on that note, real-time pricing is gaining traction among electric vehicle owners. There were 2,208 self-reported electric vehicle owners on Hourly Pricing in 2018, which was a 58 percent increase from the previous year. CUB found that Hourly Pricing customers with electric vehicles would save 52-59 percent on their energy costs.

And finally, a note about Alternative Retail Electricity Suppliers (ARES). Customers enrolled in real-time pricing programs must have their supply provided by their regulated utility. So if you want to sign up for Hourly Pricing, you must have ComEd as your supply, and likewise, only customers on the Ameren supply are eligible for Power Smart Pricing. CUB recommends that consumers stay on the utility supply, as that is a regulated rate overseen by the Illinois Power Agency and is most likely the cheapest rate you will pay. 

But alternative suppliers have aggressive marketing tactics that can confuse customers, and many customers are “kicked out” of real-time pricing plans because they went onto alternative suppliers. In 2018, there were 1,084 participants who left Hourly Pricing because of a supplier switch, and 745 participants who left Power Smart Pricing. Hopefully, more consumer awareness can prevent this confusion in 2019 – I hope to see these values at zero in next year’s report!