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Imagine ComEd buys no electricity…it’s easy if you try.

With apologies to the late, great John Lennon…sometimes it’s hard to get the general public to imagine much of anything.  Could they have imagined the Internet? IPhone Apps? Skype? TVs bigger than a couch and smaller than a floppy disc? (Yes, I remember what a floppy disc is!)

So can we imagine a world in which ComEd and Ameren no longer buy any electricity for its customers?  I think it’s easy if you try.

For the past 12 years, commercial and industrial customers have benefited from buying electricity from Alternative Retail Electricity Suppliers (ARES).  The ARES are more nimble buyers of electricity than the Illinois Power Agency — which buys the power for ComEd and Ameren customers once a year at auction.  Therefore the ARES have been able to offer lower prices than the utilities can and business customers have saved tons of money.  One representative from an energy intensive industry told me that setting up the competitive electricity marketplace was “the only good thing the Illinois legislature has done in the past 12 years.”

Today more than 75% of Illinois businesses buy their power from ARES.

Now the ARES are offering their products and services to residential customers.  Individually more than 125,000 customers have left ComEd and Ameren — a small number compared to the millions of customers they have.  However, it’s trending up….rapidly.  ComEd alone has seen its number of customers using ARES triple since June.

(It’s good to point out here that even if you switch to an ARES, ComEd and Ameren still deliver the power to you — after all they own the grid.  Think of them as the UPS/FedEx of electricity.  They deliver it. And it’s important to note that ComEd and Ameren don’t care if you leave them and use an ARES to buy your power.  All they care about is energy delivery.)

And now municipalities and looking at “aggregating” their residential constituents and small businesses into a single, large group of buyers to get even better rates from ARES and save their constituents money.

Here’s this week’s article from the Northwest Herald on the issue and here’s the article from the Chicago Tribune from late August.  I recently spoke with an city councilmen from Highland Park and they plan to put a referendum on the ballot next year that will allow it to aggregate its citizens into a group of buyers.  This could take off rapidly as it allows municipal governments to take credit for lowering electricity rates for its (voting) constituents.

Think about it…if more and more residential customers leave the utility buying market then isn’t it possible to imagine a day where ComEd and Ameren just deliver power and don’t buy it?

The answer is YES!  I’ve been informed that the Illinois law that created the competitive marketplace (the IPA Act)  includes a provision that anytime after July 1, 2012, if more than 33.3% of the residential customer base is using an ARES and there are at least three ARES to choose from, the incumbent utility can go to the Illinois Commerce Commission and ask the Commission to declare the market “competitive.”  If the ICC agrees, then those customers still with ComEd or Ameren will have to choose an ARES.  The utilities will no longer need to procure power through the IPA.  The IPA may need to disappear or at least it’s job will be really, really easier.

If you like to keep score at home, here is a link to the ICC’s monthly recap of customers who have switched to ARES.  And here is a link to the ICC’s web site (pluginillinois) that reviews the ARES and their offerings so consumers have good information when deciding on which ARES to switch to.

What does this possible sea change this mean for ICC oversight? What does this mean for CUB? What does the mean for any long-term contracts the IPA has been asked to sign onto (i.e. Tenaska)?  What will it mean for residential and business customers? Will the ARES market explode?  Or will it consolidate?

We can only imagine.



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