Monday, February 19, 2007 9:19 PM CST
Chamber businesses can get help shopping for cheaper electric rates
By CINDY TITUS, Executive Director
Charleston Area Chamber of Commerce
By now you have received your most recent power bill and if you are in the Ameren service area, that bill reflects the effects of deregulated electricity prices. After a ten-year freeze on utility rates, utility companies such as Ameren Illinois and ComEd have moved to a market driven system for selling electricity and consumers are suffering rate shock as a result.
First, let me summarize some background information about this very complicated subject. In the mid 1990s, many energy consumers began working with utility companies, alternative power suppliers and the legislature to work towards a restructuring of the Illinois electric power system. Spurred by electric rates in most of Illinois that were much higher than the Midwest average, the goal was to create a system that benefited from market efficiencies and incentives for investment in the transmission grid.
The result was the 1997 Illinois Electric Service Customer Choice and Rate Relief Law, which established a seven-year transition from the old regulated monopoly system to a new system where electricity is supplied by many competing power generators and delivered by incumbent utilities. In 2002, the transition was extended for three years, making January 1, 2007 the start of the new electric market in Illinois.
During the transition, ComEd and Ameren sold or transferred their power generation to other companies or affiliates of their parent corporation. As a result, ComEd and Ameren now possess no power generating capacity of their own. They must secure all of the power they provide their customers from generating companies on the wholesale market.
Having no power generation, ComEd and Ameren are now distribution companies. They own and maintain the distribution system and perform billing and other services. They are compensated by distribution charges that are separate from the cost of the electric power they deliver.
The Illinois Commerce Commission conducted an auction last September that determined the price of electricity for residential customers and business customers that choose to stay with Ameren and ComEd. The substantial rate increases resulting from this auction are largely a reflection of higher wholesale cost for power and of market risk that is born by the power supplier, not the utility company.
These cost increases create a strong opportunity for alternative energy suppliers and will help strengthen the competitive market over time. Under the current market structure, businesses need to shop their power purchases to alternative suppliers to ensure they are getting the best value.
The Rate Relief Act of 1997 reduced and froze rates for Investor Owned Utilities (IOU’s) such as Ameren and ComEd. Electric cooperatives, such as Coles-Moultrie Electric Cooperative, are self-governed by locally elected boards of directors and chose to opt out of the 1997 Rate Relief Act. Their rates have gradually increased over the past decade and they now have no need to pass huge rate increases in 2007. Coles-Moultrie has a good power supply contract locked in through the end of 2008 and their rates will reflect minor adjustments in the future as their costs continue to rise.
That brings us back to the here and now. While it is a certainty that consumers will experience higher energy costs, there is good news for local Chamber member businesses. Under the current market system, shopping for electric power is the proactive way for business consumers to get the best electric power value. As part of their mission to help business, the Charleston Area Chamber of Commerce is offering to assist Chamber members in purchasing electricity in the deregulated market.
The Chamber in partnership with the Coles County Regional Planning and Development Office will serve as an intermediary between Chamber member businesses and interested alternative electricity suppliers to solicit contracts at rates that are less than they are currently being charged. The contract prices will be based on a negotiated or competitive selection process controlled by the customer, providing budget stability for the contract period. The program will also save individual Chamber members time and expense in choosing a supplier on their own. At this time the program is available only for business or commercial consumers and not residential customers.
Contracts will be written for individual business members’ locations and set for a specified term. It is likely the contracts will not extend past May 2008, when another auction will be held that will “re-set” the market rate for at least another 12 months. It is important to note that even by contracting with an alternative electric provider; consumers will still be paying higher rates than in past years. Choosing another supplier and writing a contract only offers the opportunity to mitigate the rate increases. Also, the contracts will only be written for electric rates. Natural gas rates are not included in the offer.
Once interested alternative power suppliers are identified by the Chamber, businesses will have to complete applications and meet the credit qualifications stipulated by the suppliers. Each business location may submit multiple meters or accounts and member businesses will have the right to accept or reject the final price offer. Each member will contract directly with the new supplier. The process of getting these final quotes is expected to take about 60 days.
To participate in the program, Chamber member businesses are asked to send a copy of their most recent electric bill (businesses only -- no residential) to the Chamber office by close of business on Wednesday, Feb. 28. The Charleston Chamber is located at 501 Jackson Avenue or send by fax to 345-7042.
This value-added service is available to Chamber members only. Participation in this program requires continuous membership in the Charleston Area Chamber of Commerce during the term of the energy agreement. Area businesses that are not currently members of the Chamber are urged to consider membership to take advantage of this opportunity.
While the Chamber cannot guarantee what the proposed rates will be or the percentage of savings to the individual businesses, this is a real opportunity for businesses to use their Chamber membership to their advantage. The more businesses that participate in the program, the better the chances will be to attract the attention of electric suppliers and begin realizing a savings on future energy bills.
Chamber members will be kept informed as this process moves forward. Any information provided will be kept confidential and used solely for the purpose of obtaining competitive electricity supplier proposals. Questions can be directed to the Charleston Chamber office at 345-7041.
The Mattoon Chamber of Commerce is also offering a similar program to their members. Further information can be provided by the Mattoon Chamber by calling 235-5661.
Cindy Titus is executive director of the Charleston Area Chamber of Commerce.
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shepsmsmollie wrote on Sep 23, 2007 2:29 PM: