ComEd, power suppliers agree at last: You have a right to know when you're overpaying for electricity

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Crain's Chicago Business

Was that so hard?

Just a month after helping to kill legislation to reform Illinois' electricity supply industry, state utility regulators called on Commonwealth Edison to post the utility's comparable price on all electric bills, including those of residents who've agreed to buy power from a firm other than ComEd. ComEd, which also helped to kill that bill in the House in late May, said it had agreed to do so but didn't say when that would take effect.

The Illinois Commerce Commission also called on suppliers to list the utility's price to compare on their marketing materials.

The change of heart comes as a fresh report from the ICC's Office of Retail Market Development shows that households buying from a supplier other than ComEd continued over the past year to overpay for electricity by more than $100 per year on average.

Households in ComEd's territory that contracted with outside suppliers collectively paid $138 million more than they would have if they'd bought from ComEd in the year that ended in May, according to the report. That was slightly down from $152 million the year before. But because there were fewer customers buying from marketers, the average overpayment was strikingly similar: 1.445 cents per kilowatt-hour versus 1.449 cents in the previous year.

What was striking and damning about this second year of terrible outcomes for retail suppliers' customers was that the competitive-supply industry was under the microscope during this period. The ICC had finalized what turned out to be relatively weak rules improving transparency of suppliers' offers. And the General Assembly was poised to vote on legislation to make more robust reforms.

That bill—championed by Illinois Attorney General Lisa Madigan—foundered in the House at the end of the session thanks in large part to opposition from ComEd parent Exelon, owner of the largest retail supplier in the state, the ICC (thanks to a turf dispute over enforcement with the attorney general's office) and a "neutral" position from ComEd that was akin to opposition.

But, evidently, suppliers saw no need to change their business model, which generally has households paying more than ComEd's price, either immediately or after a short teaser period. Marketing tactics that sow confusion in customers' minds about whether they'll be saving or not allow this to persist.

The spin from the supplier industry took an abrupt turn following the latest ICC report. Whereas it used to claim that customers were getting value outside just the price for the commodity—smart thermostats, green power choices or gift cards, for example—it's now saying that overpayment is protection against future ComEd price increases.

"Competitively supplied customers are paying less than $8 a month for energy contracts that are designed as a hedge against potentially higher market prices and that add green energy products, energy efficiency services and energy management technology options," emailed Kevin Wright, president of the Illinois Competitive Energy Association, which represents many suppliers.

He said suppliers he had spoken with supported an ICC requirement that they post the utility's price on their marketing materials. But he allowed that not all have chimed in yet.

The problem with the industry's new "price hedge" argument is that the vast majority of contracts being marketed are for just one or two years, according to the ICC. ComEd's price is essentially set for a year at a time. So at best the industry is offering a year of price security in the highly unlikely event of a major spike in wholesale power prices.

The average offer for a 24-month contract was 8.91 cents per kilowatt-hour, according to the ICC. That's 14 percent above ComEd's price for the coming year that began June 1.

The ICC's "call to action" for now is merely voluntary, so parties can adhere to them or not as they wish.

Asked if the commission intended to move quickly to formally require utilities and suppliers to inform customers of the utility's price when considering offers, spokeswoman Victoria Crawford emailed, "Staff has made the recommendation to require the (price to compare) on all customer bills, and are now in the process of finding the most suitable method to get this accomplished."

The ICC in a release accompanying the new report noted with approval that customers seemed increasingly to be noticing the bad deals they're getting, with a 6 percent decline in the number of Illinois households buying from non-utility suppliers year over year.

In ComEd's territory, the number of households signing up on their own (as opposed to living in a municipality that contracted on their behalf) was 655,375, down 14 percent from 759,825 the year before.

Still, even the lower figure amounts to 18 percent of households throughout ComEd's territory.

And "competition," at least on paper, doesn't seem to be improving the market, at least in terms of pricing. In ComEd's territory, there are a record 84 suppliers certified by the ICC to serve households, and 60 of those are "active." That's the largest number of active residential suppliers the ICC has tracked since the market opened in 2012. Last year there were 55.

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