It’s a new electricity market in Illinois

Three questions to ask before signing up with an alternative electricity supplier.Even as consumers flocked to alternative electricity suppliers to take advantage of prices that were sometimes 50 percent lower than the traditional utilities, CUB warned that this was just the honeymoon phase for the state’s power market.

Now it appears that the honeymoon is over. Crain’s Chicago Business reports that alternative suppliers are having a much harder time competing against the utility rates.

Since 2010, nearly 3 million Illinoisans have jumped to alternative suppliers. The explosion of competition was largely due to the fact that competitors—for the most part—offered lower rates than ComEd and Ameren, which for years were locked in higher priced contracts. The deals were particularly good in communities where officials negotiated with an alternative supplier for all their residents—a process called municipal aggregation.

However, as of June, Ameren and ComEd were finally freed of those high-priced contracts, and their rates dropped by about one to three cents per kilowatt-hour (kWh). (See the new “price to compare” for Ameren and ComEd.)

Many consumers are still saving money, but by a much thinner margin. Many times, the little-known Purchased Electricity Adjustment (PEA)—sometimes a credit, sometimes a charge on utility bills—means the difference between slim savings or slim loss in any given month.

The PEA, which reimburses utilities for any excess power they purchase for customers, only impacts people who still get their electricity from ComEd or Ameren. Depending on the month, it has added as much as a half-cent per kWh to the utility price—but in several months this year it has been a credit, making the utility a better deal than many alternative offers.

Suddenly, Illinoisans may be wondering if they should stay with an alternative supplier or go back to the utility. CUB recommends you take a critical eye to any power deal. Ask yourself:

Is the alternative supplier offering a better price than the utility? (obvious)

Will I be charged an exit fee if I want to get out of the plan?

Is the rate guaranteed to meet or beat the utility price over the length of the contract?

See what alternative suppliers are offering right now in ComEd and Ameren territory.

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About Jim Chilsen

Jim is director of communications for the Citizens Utility Board (CUB)
This entry was posted in Electric bills, Energy and tagged , , , , , , , . Bookmark the permalink.

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