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Year 2012 is expected to be watershed year for Illinois State’s 15-year policy to bring choice to customers. With approximately 80% of municipalities approving referendums on electric supply aggregation, based on preliminary results, ComEd estimated that approximately half of residential customers could switch to an alternative retail electric supplier (RES) by the end of the year. This represents great progress in the state’s 15-year policy to create a fully competitive market for electric supply, the company said.
“This week’s municipal referendums represented an important milestone in the journey to a fully competitive residential electric supply market, which ComEd has supported from the beginning,” said Anne Pramaggiore, president and chief executive officer, ComEd. “In the coming months, as municipalities go through the process of public hearings and deciding on the best supplier and electric supply contract, ComEd will do everything it can to help make the process smooth and productive.”
As a result of industry restructuring, ComEd’s primary role today is to distribute electricity that is generated by other competitive power producers. Already, more than 60% of all energy delivered by ComEd is provided by RES suppliers. ComEd purchases the remaining energy in the competitive wholesale market through the Illinois Power Agency (IPA) and passes it through to customers at its cost. ComEd does not profit on the sale of electricity.
The referendums were designed to earn public approval to begin a process to identify a supplier and contract terms. Municipalities are required to hold a public hearing and send opt-out letters to give individual residents the opportunity to decline participation in the municipal aggregation program.
ComEd’s supply costs are currently higher than the price RES’s can provide because of long-term contracts procured through the IPA in 2007 when wholesale market prices were much higher. Those contracts will expire in May 2013. ComEd will continue to deliver power to customers’ homes and businesses and restore outages regardless of which supplier a customer chooses now or in the future.
Competition in the residential market is expanding through individual customers switching to a RES and through electrical aggregation programs, where municipalities shop for electricity supply on behalf of their residents and enter into a single contract with a RES.
Once the municipality selects a RES, each resident has the option to “opt-out” of the program and either select their own supplier or remain with ComEd. ComEd works with these municipalities by providing electricity load data and other information to allow these communities to solicit bids and make informed decisions. More than 200 municipalities considered referendums to authorize them to pursue these opportunities.
While the electricity market for large commercial and industrial customers has experienced vibrant competition for years, the residential market was slower to develop. This has changed in the last year. Today, there are more than 30 alternative suppliers in ComEd’s territory who are certified to sell energy to residential consumers.