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Competition Heats Up in Illinois

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Can you remember the last time a salesman came to your front door? If you live in the suburbs of Chicago, the answer is probably yes. Alternative electricity suppliers like Spark Energy and Direct Energy are scrambling to sign up residential customers in northern Illinois before local governments sign municipal electricity aggregation contracts.

Municipal aggregation allows town leaders to negotiate a contract with an alternative electricity supplier for all the town’s residents, unless a resident chooses to opt-out of the agreement. About 250 municipalities across Illinois, including about 100 near Chicago, have signed contracts to lock-in lower electricity rates.

Residents in Hinsdale, Illinois can reap savings of up to 40 percent off the default electric rate thanks to a new contract with Nordic Energy Services. Over in Vernon Hills, a bid from Integrys Energy Services was accepted and is 42 percent below the current ComEd rate.

Now the Windy City is considering pursuing a municipal aggregation contract. But before a formal electricity aggregation contract can be put in place, voters have to approve the move via referendum on the November ballot. However, delaying an aggregation agreement until the fall may reduce the amount of savings for city residents.

Com-Ed, the default electricity provider in the Chicago area, is facing a year of high risk as the surge in electricity shopping continues. Aggregation contracts have taken responsibility for about 30 percent of the utilities electricity demand. If more municipalities switch there’s a good chance the Com-Ed will end up with more power than it needs, forcing it to sell generation at a loss, which will be passed on to consumers through higher rates.

The good news is Com-Ed’s generation contract with parent company Exelon for power from six nuclear power plants expires in 2013, allowing the utility to re-balance supply with demand. The extent of the re-balancing will be determined by the city of Chicago.

The scramble to take advantage of cheaper electricity rates hasn’t occurred without a few bumps in the road. Unscrupulous alternative providers have been using misleading marketing tactics in order to secure individual residential contracts before a municipal aggregation agreement begins. In one scheme, a provider was knocking on doors and informing consumers that the company possessed a permit from the village– wrongfully implying they were awarded the municipal contract.

Overall, the re-energized Illinois electricity market is a positive thing, benefiting consumers and manufacturers alike with cheaper electricity.

The post Competition Heats Up in Illinois appeared first on Electric Choice.


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