Many ComEd customers free to choose new electricity providers, save money

ComEd customers who receive a bill in the mail from ComEd must, of course, pay the bill. But this year, for the first time, ComEd customers in Kane County and elsewhere in Illinois don't have to remain ComEd customers.

Or, at least, they now have the option of trying to find a better deal for their electricity.

But finding that deal may take at least a little bit of homework.

Late last year, the Illinois Commerce Commission changed the rules by which electric usage is billed, allowing other electricity providers to bill for their services on the ComEd bills many residents of Kane County and other areas of northern Illinois have grown accustomed to receiving for decades.

That change now means it is easier than it has been since the advent of electricity deregulation in Illinois in 1997 to switch electricity providers.

But the change also means, for many household electricity customers, that the process of choosing an electricity provider also has become confusing for the first time.

"Being an electrical customer just got more complicated," said Jim Chilsen, spokesman for the consumer advocacy group, Citizens Utility Board.

"Choice is good, yes. But it is only good insofar as it's an informed choice."

In the months since the ICC changed its billing rules, competition for the right to supply electricity to local households has surged.

In the past few months, consumers have been jolted by a steady stream of advertisements in their mailboxes and on their radios, TVs and computers from a number of electricity providers jockeying for their business.

In many instances, the savings, compared with the rates set for ComEd by the ICC, can be substantial, amounting to rate reductions of up to 10, 15 or even 20 percent.

To date, Illinois customers have been reticent to plug into the program. However, the number of those jumping to the new providers have steadily increased this year. Through June, the ICC reported that more than 35,300 ComEd customers had made the switch. And more than 29,000 of those had done so in May and June alone.

But before many customers make the switch, they likely will need to get past the confusion a change like this can bring.

The primary driver behind the confusion, say those attempting to sell their electricity to Illinois customers, is a lack of understanding of ComEd's role in the process. For decades, local customers have become accustomed to the name ComEd as synonymous with being the generator, distributor and retail seller of electricity.

However, under deregulation, ComEd has become something different: a neutral utility that merely transmits the electricity that is generated by others and sold by others.

In essence, under deregulation, the electricity distribution business has become something more akin to the gasoline distribution business. In this business model, electricity generators – those that own and operate the power plants – are roughly analogous to oil companies that gather crude oil and refine it into gasoline.

From there, the gasoline is bought by distributors who, in turn, sell it to retail gas stations who sell it to motorists. In the deregulation model of electricity distribution, ComEd has become the distributor who, for a fee, will transmit to homes and businesses the electricity that is bought from the generators by the retail electricity providers.

Under this model, ComEd earns its money from transmission fees charged to each household on its grid, regardless of whether they choose a different provider.

ComEd, as the distributor, operates and maintains the lines, so, no matter which provider is chosen by customers, ComEd would continue to respond in the case of an electricity outage or other service interruption.

For those living in ComEd territory who do not choose an electricity provider on their own, ComEd will remain their provider, purchasing electricity on their behalf, and passing on the cost to them.

But that cost will – for now, at least – remain significantly higher than the prices that can be obtained from other electricity providers.

Larry Friedeman, vice president of Choice Markets for Dublin, Ohio-based IGS Energy, said his company has encountered a great degree of confusion or outright skepticism among many would-be customers since IGS began marketing to ComEd customers in Illinois about six weeks ago.

"They say all the time: 'There's got to be a catch,'" said Friedeman. "This is a new concept, something people are not used to, so we recognize it's going to take some time and some explaining."

Perhaps adding to the confusion, some municipalities have entered the game, as well, taking advantage of state rules to purchase electricity on behalf of every resident in their community.

In the villages of Sugar Grove, Elburn and North Aurora, these arrangements have produced deals that village officials say will save their residents up to 23 percent on their electricity bills, compared with ComEd's current rate. Those agreements are scheduled to take effect this fall.

However, residents of those villages will still have the chance to opt out of their village's negotiated rates, and stick with ComEd or choose an entirely different provider.

To help ease some of the confusion, the ICC has launched a website, PlugInIllinois.org. The site allows residents to view offers from a host of different electricity providers, listing their rates, associated cancellation fees, contract terms and a description of their offers.

Houston, Texas-based Champion Energy, which operates locally from Schaumburg, participates in the site.

Derek Betlejewski, regional sales director for Champion, said his company has opted for a more low-key approach to entering the market, spreading the word about its offered electricity products through word-of-mouth, so-called "affinity programs" through partnerships with nonprofit organizations and through vehicles like PlugInIllinois.org.

To date, the company has signed up about 4,000 Illinois customers, Betlejewski said.

"This is all really new here, since the market didn't really open up until January," he said. "Our message is that our goal is to be the lowest cost residential provider, and we've done that well."

The ICC's site, however, does not include all of the providers in Illinois, as participation in the site is voluntary.

And given the high degree of competition, consumers should be wary, said Chilsen. He noted that ComEd's published comparable rates are set by the ICC and are good only through next May, at this point.

"Most people don't know this, but the rates went down about 6 percent this past June," Chilsen said. "And they will drop again next June, though we don't know how much."

So customers who do switch from ComEd to another supplier should keep an eye on electricity rates, while also becoming well versed in their new electricity provider's cancellation policies.

"You don't want to get caught in a situation in which you're paying more than you would if you were just paying ComEd," Chilsen said.

Of course, the situation is much less confusing for residents of cities, like St. Charles, Geneva and Batavia, which own and operate their own municipal utilities.

Phillip Mueller, vice president of government relations for the Illinois Municipal Electric Association, said state law exempts municipal utilities from electric choice.

"The exemptions were made because the municipal utilities were already aggregating, putting their residents into buying pools and going out to get the best deals for their customers that they could," Mueller said. "So, for these folks, they are already getting great deals."