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A different kind of ‘power’ broker in Chicago

Marketplace Contributor Oct 26, 2012

A different kind of ‘power’ broker in Chicago

Marketplace Contributor Oct 26, 2012

Voters in Chicago this election won’t just be voting for who should take the reins in the White House. They’ll also decide whether or not to grant City Hall the authority to act as an energy brokers to get a cheaper electricity rate for residents.

It’s called municipal electricity aggregation, and in Illinois, it seems like everybody’s doing it.

Take Stephen Schwartz, for example: He owns a four bedroom two and a half bathroom colonial in Chicago’s northern suburbs and it takes a lot of energy to keep things running.

“It has all the problems that an older house has in terms of the older windows that aren’t terribly well insulated, you know, the un-insulated brick exterior, that kind of thing,” he says.

He’s always looking for ways to save money — shutting off lights, conserving heat or air conditioning, for example. But nothing has done more for his wallet than the village of Wilmette’s new municipal electricity aggregation program, which cut his electricity rate in half.

“What’s not to like about that?” Schwartz says. “You know, all the lights are still on, I can still use my computer, charge the electric mower, that kind of thing. So, no, no problems.”

Wilmette is one of 248 municipalities in Illinois with the program and Chicago could soon join them. Under the plan, the city would act like a big box store, using the pricing power of the city’s residential and small business utility customers to negotiate cheaper rates.

David Kolata is executive director of the Citizens Utility Board, an energy watchdog group. Currently, he says the main power supplier in Chicago, Commonwealth Edison, charges 8.23 cents per kilowatt hour, while smaller suppliers could offer the city an average rate of 4.83 cents.

ComEd has not come out against the plan — it gets paid to maintain Chicago’s power grid whether it supplies energy or not. But Kolata warns the cheap rates of a municipal aggregation program might not last forever.

“Just because you’re saving now, this isn’t a magic bullet,” he says. “And it may not always work.”

Kolata says ComEd’s higher prices are set to expire next June, and they’re expected to decline after that — maybe even lower than what smaller suppliers could offer.

But while Chicago voters mull their options, small energy suppliers are anxiously waiting to see who City Hall might choose to replace ComEd.

“There could be 900,000 eligible customers for this program. It would be the largest single solicitation of it’s kind anywhere in the country,” said Dave Fein Vice President of state government affairs for Constellation Energy.

But just like the presidential election, all parties will just have to wait and see what happens on November 6th.

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