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Key changes to electric market

November 12, 2010

By Thomas Janowiak, Director of Energy Services for Utility Management Group

Editor’s note: The CATA encourages its members to explore the natural gas and electricity rate structures of Utility Management Group, a licensed Illinois energy broker. The company’s Elmhurst office is (630) 279-0117.

The Illinois electric market recently experienced a number of changes in how Commonwealth Edison classifies the accounts of businesses and what programs businesses can use. ComEd categorizes the accounts based on the peak spikes in usage. Most automobile dealerships are in the 0-to-100 kilowatt or the 100-to-400 kw categories, meaning their peak spike in usage is either under 100 kw or between 100 kw and 400 kw.

The most dramatic change is for ComEd customers in the 0-to-100 kw category. Customers in this class who are on ComEd’s fixed rate program have seen a jump for Supply and Transmission charges from about 7.1 cents per kilowatt hour to an average of about 8.4 cents, a more than 15 percent increase. But whileComEd’s rates have increased, the electric market has dropped substantially, making this an opportune time to review offerings from suppliers other thanComEd.

The second change is for customers in the 100-to-400 kw class who purchase their electricity from ComEd. While ComEd previously offered a fixed rate for those customers, they no longer do. Now such ComEd customers are billed at a variable rate, or a rate that changes monthly depending on market conditions. While that rate may be inexpensive when the market is down, it also has the potential to be expensive. Given its volatility as well as the inability to lock rates if it’s advantageous to do so, other programs that offer greater benefits should be considered.

The third change is to one a ComEd charge called the capacity charge. This charge generally is not itemized on your ComEd invoice but is bundled with other charges. A business’s capacity charge is determined in large part by spikes in usage. Depending on those spikes, a capacity charge may average from justunder 1 cent per kilowatt hour to more than 3 cents per kwh. Most dealerships tend to be toward the lower end of that spectrum.

That charge is scheduled to spike over the next 12 months, followed by decreases in each of the next two 12-month periods. While that charge is set by ComEdand cannot be negotiated, if the business customer is not currently under contract with a supplier, there are ways to spread out its peaks and valleys. The benefits of this option depend on a number of factors, including the business’s individual capacity charge and the available offerings from suppliers.

In addition to what has changed, based on calls we’ve received from current customers we thought it would be helpful for you to understand what has not changed. While there are ways to control your energy costs, one of the options not available to you is the ability to negotiate or do away with ComEd’s pass-through charges, whether they relate to the delivery of electricity or to the electricity itself.

ComEd is required to bill all customers the same, depending on their class and program. Some of our customers have been informed that they have the option to do away with some ComEd charges. Unfortunately, this is something Com Ed is not able to offer.