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City’s Electric Aggregation Taking Six-Month Hiatus
Elgin’s municipal electric aggregation contract with Dynegy is expiring in January 2017. The city will be taking a six-month hiatus to review the municipal electricity market during those months to ensure Elgin residents and small businesses can obtain electricity at the lowest possible cost.
ComEd’s supply rates are currently lower than competing municipal electricity suppliers. Elgin residents and small businesses will automatically be switched to ComEd’s lower rates in January. Residents and small business owners will experience no changes in their electricity service. Bills will still come from ComEd, but residents will notice a lower rate.
Municipal electric aggregation has been extremely effective in forcing ComEd to reduce its electricity supply rates to competitive levels. When first introduced in 2012, municipalities secured rates beating ComEd’s by up to 50 percent. ComEd responded to the market forces, so that just two years later, 102 of the 725 municipalities tracked by the Citizens Utility Board (CUB) had ended their aggregations programs because ComEd supplied electricity at the lowest rate. This past summer, ComEd lowered its June-September supply rates by another 12 percent, making ComEd the lowest cost provider in virtually every market.
CUB was quoted in a Chicago Tribune article from earlier this year, stating, “the alternate suppliers were previously able to undercut ComEd, but the utility shed some high-priced power contracts in recent years and the competitive advantage enjoyed by alternative suppliers were short-circuited. There was a time when it was easy to secure significant savings with an alternative electricity supplier,” CUB said, but “the era of easy savings is over in Illinois’ electric market.”
Elgin residents and small businesses participating in the current aggregation program with Dynegy are paying 6.798 cents per kilowatt-hour for one hundred percent renewable energy. ComEd’s current rate is 6.388 cents per kilowatt-hour (kWH) until May 2017. Current one-year market pricing for one hundred percent renewable energy is as high as 11.304 cents per kWh with most suppliers clustered in the 7.00 to 8.50 cents kWh range.
The city will be closely monitoring the municipal electric aggregation marketplace in the coming months in anticipation of a decision on whether ComEd will be able to continue maintaining the competitive advantage it has established over its competitors since 2014.
For residents interested in green energy options, there are still alternative suppliers they can receive services from. According to CUB, this energy typically comes at a higher price. Those suppliers with “Renewable Energy Certificates” produce power from renewable sources like wind. This does not mean the actual power you use comes from a renewable source. Instead the company delivers an amount of renewable energy into the electricity system equal to what you consume.
Background on Elgin’s municipal electrical aggregation initiatives:
The city’s first municipal electric aggregation program involved a two-year agreement with Direct Energy for 2013 and 2014. The city entered into a two-year agreement at that time because the al-ternate energy market pricing was considerably lower than what ComEd was charging its custom-ers during that time period. At that time, the city was able to save residents approximately 2.5 cents per kilowatt-hour, which was for one hundred percent renewable energy. From the period of August 2012 through March 2014, that generated a savings of $7.6 million in the community.
When the Direct Energy services agreement concluded, the city entered into a one-year agreement with Constellation Energy for 2015 that was the extended for an additional two months, making it a fourteen-month agreement. A shorter length agreement was determined to be the best course of ac-tion with Constellation because of changing market conditions in which ComEd was anticipated to become more competitive in its pricing. The city did not want to lock its electricity rates for a longer period at price levels that did not produce the greatest savings for its residents and small businesses.
Following that, an additional one-year agreement with Dynegy Energy services with the option of one hundred percent renewable energy began in January 2016, with its contract expiration at the end of December 2016. Once again, the city entered into a shorter length agreement because the pric-ing offered by the alternative suppliers was not as significant as it had been before.
If you are still interested in having an alternate supplier other than ComEd, you will need to enter into a contract with an Alternate Retail Electric Supplier (ARES), approved by the Illinois Commerce Commission.
Click here to find an Alternate Retail Electric Supplier (ARES).
Why has the city chosen to enter into municipal electric aggregation?
In 2011 the state legislature passed a law allowing municipalities to “pool” the buying power of their communities to seek lower cost suppliers on behave of their residents. In the spring of 2012, the voters of Elgin voted on and passed a referendum allowing for Elgin to begin a municipal electric aggregation program. As a result of the City Council’s interest in saving the citizens money, we began our first contract in the fall of 2012.
City of Elgin
150 Dexter Ct.
Elgin, IL 60120
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