Some Basics About the City’s Electrical Aggregation Program
We have received a lot of calls about the City’s Community Electrical Aggregation Program
(CEAP). Many want to know why their electrical supply charge is going up and why there is a
new supplier.
Some years ago, the State of Illinois created a system of competition for supplying electricity.
The theory was that competition would benefit consumers through lower supply charges.
Subsequent changes allowed communities like Freeport, by referendum, to bid for a community
rate to seek the lowest possible energy supply charge. This community rate applies to all
customers – except those who “opt out” and go with a different supplier.
The City’s CEAP has been successful judging from the fact Freeport aggregation customers have
saved $2,320,000 in just the first two years! The program has exceeded original savings
estimates.
Some commonly asked questions and our answers are:
What is the “opt out” period? The opt out period is the time period that customers in the CEAP
have to opt out and select their own supplier or use ComEd. If you previously selected your own
supplier, you will not receive a letter from the City. If you are in our program, you should have
received a letter. The notice is time sensitive. If you want to opt out, you have to act by the
specified dates. If you do nothing, you are automatically in the program.
Why are we changing from the low community rate of 4.76 cents from First Energy?
The City’s original contract (secured two years ago) expires this August. The City used Rock
River Energy, the same firm as two years ago, to bid for a supplier. Homefield Energy had the
lowest bid averaged over 3 years. That rate will start on your ComEd August meter reading date.
It is a 3 year contract with the rate set at 7.68 cents/kwhr for the first 24 months and a reduced
rate of 6.832 cents/kwhr for the last 12 months of the contract.
Why was Homefield selected? They had the lowest overall bid. In addition they have had a lot
of community aggregation experience and good ratings. Their 3 year rate was the best value.
The City would have loved to secure First Energy’s rate of 4.76 cents per kwhr for another 3
years, but that was not possible. First Energy’s new bid was actually higher than Homefield’s.
Why are the new energy rates much higher than the original community rate?
There are several factors in the “total fixed rate”, including capacity, losses, renewable energy
charges, transmission as well as the energy charges. These are all regulated costs (except
energy) that the suppliers have to pass through to the customer. ComEd also has these same rates
built into their fixed energy cost. The capacity charge, alone, went from approximately .5 cents
to 2.4 cents for a single family home using 7900 annual kwhr’s for the next two years. Thus,
overall rates are going up from the previous rates of the past two years. Energy supply bids vary
from day to day and week to week. Our rates were the result of the date our energy consultant
went into the market.
What is the ComEd rate?
ComEd releases their rates in May for the nest 12 month period each year. Their current energy
and transmission rate is 7.596 cents plus or minus the Purchased Energy Adjustment (PEA). The
PEA is a true up each month because State regulations provide that while ComEd cannot make
money on energy, they cannot lose any money either. The average ComEd PEA rate for the past
24 months has been +0.33 cents per kwhr. Energy rates are expected to continue to rise in 2015,
2016 and 2017. Thus, it was prudent for the City to secure longer term rates for aggregation
participants. We believe Homefield’s rates will be better than ComEd’s over time, but the PEA is
a variable that will affect the overall rate.
If I opted out the last time, can I join? Yes, if you received a notice and you do not need to
send it in; you are automatically in the new program. If you have your own supplier, you can
join the City program, but make sure you do not have a termination fee if you switchr.
Can I leave the City’s program later if I do not opt out now? Yes, there is no termination fee.
Ratepayers are free to choose their own supplier, go back to ComEd or stay on the program.
I am receiving a lot of calls and offers for alternative choices. How do I know if these rates
are stable? How can I evaluate them?
If you are not sure, do not give any supplier your ComEd account number. With this
information, a solicitor can change your account to them. Almost 100% of all suppliers bill
through ComEd for the residential billing. Sometimes people do not even know that they have a
different supplier. If you receive a call and someone wants to check your rate, be assured it is
neither the City nor ComEd. Beware of solicitors slamming the City’s program or promising
extravagant savings. Not every company in this business has a good track record.
Who can I contact if I have further questions? You can contact the City’s consultant, Rock
River Energy Services at 815 732-4603 or email [email protected] You may
also contact City Hall @ 235-8200.
Since deregulation started in Illinois, consumers have saved $37 billion in energy costs. There
have been $18 billion in residential savings in the last 3 years, alone. You can save money, but
be careful of solicitors. Be particularly concerned about termination penalties, underhanded
switching of accounts and hidden charges from some of the private companies soliciting your
business. However, the letter informing you that Homefield Energy is the new City of Freeport
supplier is legitimate.
Published June 8, 2014 Journal Standard