In the wake of the snowstorm that brought subzero temperatures and up to a foot of snow to parts of Illinois, CUB received several calls from consumers complaining about high prices they were paying for a special program in which electricity rates can change by the hour.
CUB is a big proponent of real-time pricing programs—called Hourly Pricing by ComEd and Power Smart Pricing by Ameren Illinois. Most utility customers pay a flat rate for electricity that changes only a few times a year. But Hourly and Power Smart Pricing allow consumers to take advantage of the fact that the actual market price for electricity is lower than that standard rate most hours of the day.
There are peak times of the day–when energy demand is high, and prices go up. But if your household can avoid heavy electricity usage–running the dishwasher or doing laundry—until off-peak times, you will be able to save money on these programs. (See CUB’s Big Energy Data Center for research we’ve done on the efficacy of these programs.) In fact, while savings are not guaranteed, participants in these programs have saved on average about 10-15 percent on the supply side of bills. These programs are also good for the environment and reliability, because they ease stress on the grid and reduce peak usage, when some of the dirtiest power plants are operating.
But during extreme weather events, like what we saw with the recent snowstorm, prices can get quite high. Read CUB’s Q&A to find out what happened.
How high did the Power Smart Pricing and Hourly Pricing rates get?
Members of CUB’s staff who are on these programs alerted CUB after the snowstorm that prices for those programs were unusually high: Up to 46.6 cents per kilowatt-hour (kWh) for Ameren’s Power Smart Pricing customers on Wednesday morning and up to 32 cents per kWh for ComEd’s Hourly Pricing customers Tuesday night. That’s much higher than the standard rates most customers are paying now: About 7 cents per kWh for ComEd customers and about 4.5 cents per kWh for Ameren customers.
How long did these price spikes last?
About a week, between Feb. 14 and Feb. 21. The worst days were Tuesday through Friday. A CUB review found that by Friday, Feb. 19, the prices were beginning to come down to more normal levels as the weather warmed. Get up-to-date pricing information for Power Smart Pricing here and for Hourly Pricing here.
Why did we see these price spikes?
During this extreme cold snap:
- More people across the nation used electricity and natural gas to heat their homes, driving up demand.
- Natural gas pipelines and wellheads froze in Texas and other areas of the South, limiting supply across the country.
- Power plants that use natural gas to produce electricity became much more expensive to run.
These factors helped lead to the spike in wholesale electricity prices. ComEd and Ameren Illinois do not set hourly market prices for electricity–these programs follow the ups and downs of the energy markets. In fact, the utilities under law are not allowed to profit off supply prices: The wholesale cost of electricity is passed along to participants without markup.
Will people on these programs lose money in 2021 due to the price spike?
Hourly Pricing and Power Smart Pricing do not guarantee savings. However, CUB’s experience with these programs has been that when there is a spike like this, participants pay elevated prices for a short time but the savings over the rest of the year make up for it. For example, during the polar vortex of 2014, prices peaked at well over $1 per kWh. But practicing energy efficiency during that time, shifting usage to lower-priced times and saving in other parts of the year helped participants break even on the program that year.
Given these price spikes, does CUB still recommend hourly pricing programs for consumers who are willing to adjust their energy consumption to capitalize on savings opportunities?
Yes. Elevate Energy, which runs the Hourly Pricing program, says 80 percent of the time the hourly rates tend to be lower than the utility’s standard fixed-priced rates. While the Hourly and Power Smart Pricing programs do not guarantee savings, participants typically see savings in the long run. Historically, people participating in these programs have saved roughly 10-15 percent, on average, on the supply costs on their electric bills—compared with customers on standard rates.
During price spikes, how do people on these programs control costs?
During extreme weather, the best option for any customer is to practice energy efficiency. Typically there’s a morning and evening peak in the winter. (In the summer, typically the peak is on weekday afternoons.) Shifting your heaviest energy usage to lower-priced times helps you control costs. CUB’s website has efficiency tips. Also, read ComEd’s Winter Guide for saving money on Hourly Pricing and review Ameren’s Winter Guide for saving money on Power Smart Pricing.
Both ComEd and Ameren Illinois offer budget billing as another way to help even out your monthly bills and manage energy costs. Enroll in ComEd’s budget-billing program here and Ameren Illinois’ program here.
Note: Hourly Pricing and Power Smart Pricing are not for everyone. However, if you are an Ameren or ComEd customer on the utilities’ standard rates and you are interested in learning more about real-time pricing and if it is right for you, read our fact sheets on ComEd’s Hourly Pricing and Ameren’s Power Smart Pricing programs.
