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Electric
deregulation
legislation
passed
in 1997
enabled
ComEd
and Illinois’ other
electric
utilities
to sell
off their
electric
generating
plants
and enter
into
long-term
agreements
to purchase
power
in order
to supply
customers
under
regulated
tariffs.
The legislation
also
required
ComEd
and the
other
electric
utilities
to freeze
their
electric
tariffs
until
2007.
State-certified
electric
suppliers
have
been
providing
power
to ComEd
customers
since
the advent
of electric
deregulation
in Illinois,
however
recently
wholesale
electric
prices
have
increased
to such
a level
that
ComEd’s
frozen
rates
have
become,
by far,
the most
cost-effective
electric
supply
alternative.
Call
it “the
perfect
storm” for
Illinois
electric
customers,
because
at the
end of
2006
ComEd’s
rate
freeze
will
expire
at the
same
time
as the
end of
ComEd’s
wholesale
electric
supply
agreements.
2007 Electric Rates are Likely to Go Up 20% or More
The Illinois
Commerce
Commission
has approved
a plan
allowing
ComEd
to solicit
offers
to purchase
power
from
wholesale
electric
generators
through
an auction
process
whereby
electric
generators
bid lower
and lower
for ComEd’s
electric
load
until
the bidding
period
comes
to a
close.
These
wholesale
electric
prices
will
then
be used
to create
new retail
electric
rates
for ComEd’s
residential,
commercial
and industrial
customers.
All existing
ComEd
electric
rates,
or “Legacy
Tariffs,” have
been
restructured
under
new names
with
some
of the
most
familiar
existing
rates – like
Rider
25, the
electric
heat
rate – being
eliminated
from
the rate
schedule
entirely.
All that’s
missing
right
now is
ComEd’s
cost
of power
which
will
be embedded
into
the new
rate
structure
following
the auction.
ComEd
will
hold
its auction
in September
and publish
the cost
of its
new electric
rates
in October.
Like
all components
of the
energy
sector,
the market
price
of electricity
has increased
and industry
experts
are projecting
that
the new
ComEd
rates
will
be at
least
20% greater
than
its Legacy
Tariffs.
The May
29, 2006
issue
of Crain’s
Chicago
Business
suggested
that
if ComEd’s
auction
were
to be
held
right
now,
2007
electric
rates
would
increase
33%.
Considering
Your
Options
Carefully
It’s
important
to note
however,
that
certified
alternative
electric
suppliers
– there
are twenty
State-certified
alternative
retail
electric
suppliers
serving
Illinois
– are
actively
pursuing
commercial
and industrial
electric
customers
as an
alternative
to ComEd.
Their
offers
should
be taken
seriously
although
comparing
suppliers’ offers
can be
a tricky
business.
Electric
customers
will
rarely
enjoy
an apples-to-apples
comparison
from
among
suppliers’ offers.
Length
of the
supply
agreement,
contract
terms
and conditions,
and determining
the contract
quantities
of power
are also
among
the details
to be
worked
out in
an alternative
supply
arrangement.
Should You Take Action or Not?
Simply making no decision about the new rate structure and defaulting into the new tariffs is an option for most ComEd customers. Under certain circumstances, ComEd customers will migrate into the new ComEd rates and continue to have the option of selecting an alternative supplier. Under other circumstances, electric customers will have to either opt in or opt out of the new ComEd rate schedule for at least seventeen months. However, customer size will make a difference as to which new market-based rate customers will migrate into.
Sieben Energy Associates has been helping businesses understand the impact of electric deregulation and make the best supply choices since electric deregulation was enacted in Illinois.
Need Assistance Evaluating Your Options?
For more information about how
these changes will affect you as
an electric customer, or to understand
how to evaluate electric supply
alternatives, contact Craig
Sieben
or Jerry
Burin at
312-899-1000.
The Chicago Tribune
recently addressed the rate freeze in its Editorials.
Click here to download
a pdf of the article.
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