Residents in Riverside and Brookfield will be asked come Election Day in March to approve a referendum allowing their municipalities to negotiate with electricity suppliers in order to lower monthly bills locally.
With the price of electricity falling to record lows in the past couple of years some 275 municipalities across the state are asking the same referendum question on March 20 of their residents, and a firm called the Northern Illinois Municipal Electric Cooperative (NIMEC) is rushing in to assist them.
Of the 19 municipalities adopting what is called “aggregation” – finding electricity at a lower rate than the one provided since 2007 by the Illinois Power Agency, which sets the rate customers pay ComEd each month – 15 of them used NIMEC to help them find lower rates.
According to Sharon Durling, a spokeswoman for NIMEC who provided an overview of the electric aggregation process to a dozen or so Riverside residents on Monday at the Riverside Township Hall, NIMEC was able to pass along savings of about 25 percent on the electric supply portion of customer bills, saving residential customers $175 or more annually.
With rates falling even further in recent months, the annual savings could be more than $200 for residential customers, Durling said. Municipalities opting for aggregation typically sign contracts of one to three years to lock in electric rates with suppliers.
Riverside has resolved to use NIMEC to negotiate with power suppliers if the referendum passes in March. Should it happen, Riverside residents could see their electric bills dropping by this summer.
Every household in Riverside will be automatically switched to the chosen supplier unless they specifically opt out. ComEd will still deliver the energy, keep sending out the bills and respond to service complaints. ComEd no longer supplies electricity and is indifferent to the chosen supplier, said Durling.
Illinois law allows electric customers to seek electric suppliers on their own and an array of energy companies have jumped onto the scene, mailing out information to residents and boasting of potential savings.
Some local customers have already switched to other suppliers and have seen their bills drop. However, by the end of 2010, very few residential customers, probably confused by the direct mail pieces and sensing a scam, had lowered their rates.
According to Durling, just 3 percent of residential customers had switched, while 80 percent of commercial customers, whose electric bills amount to a huge expenditure, had done so.
NIMEC saw an opportunity to get more residential customers to take advantage of the historically low rates and also make some money in the process. While NIMEC negotiates the rates, which have been noticeably lower than the rate charged by the Illinois Power Agency, NIMEC also charges a small fee to each customer for the service. That fee is embedded in the new electric rate and is invisible to customers.
With the rush by municipalities to make lower electric rates available to customers, NIMEC also stands to gain by serving as the agent for those municipalities.
It’s not clear how long electric aggregation will be able to produce lower rates than the rates charged by the Illinois Power Agency. But even if the rates offered by the Illinois Power Agency plummet below the rates negotiated on behalf of a municipality by NIMEC, Illinois law mandates that other suppliers must match that rate or relinquish those accounts, said Durling.
“Five years from now there may not be an advantage to aggregating,” said Durling.
In the meantime, she said, aggregation is a way for residential customers, who have been reluctant to switch electric suppliers on their own, to take advantage of historically low rates by having municipalities and NIMEC do the legwork for them.
If the referendum of March 20 passes, municipalities must hold two public hearings and every electric account in the village will receive two mailings allowing them to opt out of the program.
