City inks new electric deal as customers brace for higher summer bills

After an absolutely lousy winter of high utility bills, consumers over the weekend got hit with headlines like this: “Chicago electric bills to rise up to 18% in June…”

But here’s the silver lining: While electric rates are going up 14 to 18 percent under a new deal the City of Chicago has inked with alternative power supplier Integrys, officials say consumers will actually save a bit of money, compared with what ComEd will be charging for power this summer. Here are the details of the Integrys offer:

-Chicagoans will pay a fixed price of 5.3 cents per kilowatt-hour.
-Plus, single-family households will pay Integrys a set fee of $22.36 per month, residents in multi-family buildings will pay $9.06 a month.
-If the average household’s rates turn out to be higher than ComEd, Integrys must match the price or send its customers back to the utility with no exit fee.
-The contract won’t include power from coal-fired sources, and 5 percent of the electricity is to come from wind farms.

Adding together the charges, the City told Crain’s Chicago Business the effective electricity rate will be about 7.4 cents per kWh for single-family homes, and about 7 cents per kWh for apartment and condo dwellers. Although we don’t know exactly what rate ComEd will charge in June, the City estimates it will be about 8.5 cents per kWh (compared with about 5.5 cents per kWh now).

Total savings? We don’t know for sure, because we don’t yet know what ComEd’s new power prices will be. But the City estimates savings of  about $34 from June 2014 to June 2015 for the average household, or $24 million in total.

CUB said the original deal, detailed in December of 2012, had the strongest consumer protections in the state. And the new deal with Integrys seems to be an effective reaction to developments in the power market right now:

1) The market has tightened considerably in the last six months. ComEd’s rates were inflated because it was stuck in some higher priced contracts, but the last of those expired in June 2013, and the utility’s power prices plunged. So it’s not as easy for alternative suppliers to offer savings. Plus, in one disturbing development, an alternative supplier that entered a contract to supply Hinsdale consumers with electricity now wants to force the community to renegotiate the low price it offered because the “polar vortex” winter jacked up its costs.

2) ComEd’s electric rates are set to soar in June because of “capacity costs” that are wrapped into the charge we pay for power. These federally mandated costs are supposed to assure that the power companies will always have enough power on hand, even during the hottest days of the year.

The City’s new offer attempts to allocate those capacity  costs in a way that protects smaller electricity users in condos and apartments.

Still consumers should brace themselves for higher bills come June. There’s no better time than now to join CUB Energy Saver, which can help cut utility bills by up to $250 a year.

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About Jim Chilsen

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

7 Responses to City inks new electric deal as customers brace for higher summer bills

  1. Anonymous says:

    Will everyone see the 22.36 charge whether its Com Ed or Integrys? This charge really hurts modest users of electricity.

    • Jim Chilsen says:

      No, the $22.36 monthly fee is just for people on the Integrys rate. We pay those fees with ComEd also, but they’re wrapped in the per kWh electricity charge. Under this plan, apartment dwellers with an average usage of more than 300 kWh a month and home owners with average usage of more than 600 kWh a month will probably save a little bit of money this year. Regardless of what happens in the last year of the deal, the savings were significant enough in the first 16 months that the overall 28-month deal is a money saver for Chicagoans.

      • DK says:

        ‘Integrys must match the price or send its customers back to the utility with no exit fee.’ … When they’re calculating what the “rate” is that they have to match for comed, are they including the $22/month fee that they’re imposing as part of their rate structure? If so, the points of savings would vary by how much electricity you actually use. Are you saying Integrys swill send customers back to ComEd automatically, or that it will just become an option to leave with no termination fee?

  2. Anonymous says:

    Is the monthly fixed fee in addition to the rate increase or is it a part of the rate increase?

  3. Bob Flanary says:

    5% wind? That is ok with you Jim? The problem I have is that you are validating the myth that this is a good deal. It is not. I don’t see how you are NOT part of the problem, Jim.

    • Jim Chilsen says:

      Hey Bob: Thanks for your comment! We don’t endorse offers, but we can offer observations. This seems a reasonable response to major changes in the electric market that will lead to higher bills for consumers. It seems the City has found a way to save customers a bit of money–and if the deal can’t meet or beat ComEd’s average price, then customers can leave without paying an exit fee. Those are the kind of consumer protections we focus on. But if people don’t like the details of this offer, then by all means they should go back to ComEd.

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