Municipal aggregation ain’t what it used to be

Want to see just how drastically Illinois’ electric market has changed? Take a look at what’s happening to “municipal aggregation.”

Aggregation is where local leaders negotiate power prices with alternative suppliers on behalf of their residents. A few years ago, it was an almost-universally great idea for communities. In fact, in a report card last year CUB gave alternative suppliers an A- for customer savings, and that high grade was mostly due to aggregation programs in hundreds of communities statewide.

In a market where ComEd and Ameren were locked into artificially high rates, aggregation seemed to be the safest bet. CUB’s report card/analysis found that some communities were beating ComEd’s price by more than 50 percent.

Then higher-priced contracts the utilities were locked into expired. And suddenly alternative suppliers–including those involved in aggregation–found that it was much more difficult, if not impossible, to beat the utility price. As one energy consultant put it: “The good times are over.” (More recently, another observer said the “Illinois municipal electric aggregation bubble is in the process of bursting.”)

The big change has become more evident this spring and summer, as old aggregation contracts–with those sweet low prices–expire. Now we’re seeing headlines like this:

 Downers Grove electrical rates to increase 56 percent

Ameren electric rate drop prompts some to question aggregation

Village of Westmont agrees to let electric aggregation contract end

A quick CUB review found more than a dozen communities that have abandoned aggregation, at least for now.

A bunch of communities have negotiated new deals, and some still have been able to secure savings for their residents, compared with ComEd’s summer rate of 7.596 cents per kilowatt-hour (kWh). Skokie, for example, is at 6.7 cents per kWh through May 2015. And Chicago is taking a novel approach, reallocating certain charges that it argues put too much burden on apartment/condo dwellers. The result is an offer that will allow certain consumers to add to the savings they’ve already gained from the program, depending on their usage. (Hey Chicagoans, try our calculator to find out if the deal is still right for you: www.chicagopowercalculator.com.)

But recently Steve Daniels reported in Crain’s Chicago Business that other communities are moving forward with aggregation deals, even though the flat rates they’re offering are higher than ComEd’s summer rate. (Daniels, writing about Aurora and Mount Prospect, called this a “head-scratcher.”) An Urbana official, acknowledging that the aggregation rate would be higher than Ameren’s, said: “If residents want to go with the lower rate, we’re sympathetic…Just a simple phone call, and it’ll be done.”

We’ve compiled a list of towns that have decided aggregation contracts weren’t enticing enough to continue.  If you know of any other communities that have stepped away from municipal aggregation, leave it in the comments or email mcarlson@citizensutiltiyboard.org.

Communities abandoning aggregation (for now): 

  1. Addison
  2. Downers Grove
  3. Lansing
  4. Lombard
  5. Macon County
  6. Westmont
  7. Yorkville
  8. Lake Villa
  9. Lindenhurst
  10. Lake Villa Township
  11. Round Lake Beach
  12. Sangamon County
  13. Champaign
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About Jim Chilsen

Jim is director of communications for the Citizens Utility Board (CUB)
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