For years now, thanks to deregulation, a lot of people have been cutting their electric bills by signing up with suppliers who charge less than the local utilities, Commonwealth Edison and Ameren Illinois.

Cities and counties have started to get in on the act, cutting deals to buy power in bulk for their residents and small businesses. About 200 communities across the state have made such deals.

The savings have been substantial. ComEd and Ameren locked in long-term electricity contracts that made their power more expensive than the juice available from competing suppliers on the open market.

Voters in Chicago and at least 60 more communities from Glenview to Belleville will find referendum questions on the Nov. 6 ballot asking them to give local officials the authority to cut power deals for them.

Approval of these ballot measures has been no slam dunk. About one-fourth of the 200 referendum questions on the March primary ballot were rejected by voters. Suspicions persist about the potential for cronyism and mismanagement of these deals. Contract negotiations can be complicated, and some residents have concerns that town leaders could get in over their heads.

We recommend voting “yes” on these initiatives ― and understanding what’s at stake so you can ask good questions in your own town.

Communities with November referendum questions are a little late to the party. They may need to move quickly to make the most of the potential savings. ComEd will be free to offer more competitive rates again in June at the latest, when the last of its long-term contracts expire. Significant savings from turning to outside suppliers may be harder to come by after that, though it’s also possible that lower rates from ComEd will put more price pressure on the other suppliers.

A few important details: Under aggregation contracts, ComEd and Ameren still deliver the electricity over the same local transmission network. They send customers a single bill. They maintain the power lines and other infrastructure. In the event of a power outage, they remain responsible for turning the lights back on. All that changes is the source of the electricity, and the price.

No one in Illinois needs to wait for a city or county to act. Individuals can shop around right now on websites such as pluginillinois.org, which lets you compare dozens of offers. Thousands of Illinois residents have made the switch on their own.

Far more people are getting switched through municipal aggregation. The greater purchasing power of an entire city provides a bigger savings opportunity than individuals usually can obtain on their own. Discounts run about 20 to 30 percent off the cost of power, which accounts for two-thirds of a typical bill. The other one-third of the bill is what you pay ComEd or Ameren to deliver the electricity and maintain the network.

As for pitfalls: Watch out for municipalities that award no-bid power contracts. Last month, the Vermilion County Board selected a supplier for the county’s aggregation program without seeking bids from alternative suppliers. That raises doubts about the integrity of the board’s decision-making and removes the potential for competition to lower the electric rate for customers.

Chicago officials say they will seek competitive bids.

Some municipalities have paid high prices for consulting services to help them manage the bidding and power changeover. Some have diverted a share of the savings to their general funds. Hiring a consultant can make sense, but it’s good to ask how much money is going to consultants or going into the town coffers ... instead of into your pocket. Contracts of more than 24 months run the risk of locking in rates that become uncompetitive if prices decline in the future.

If you made your own deal to buy electricity and your town is going to referendum, take a look at your contract. How long are you required to buy from your supplier? You will want to have the option of switching to the aggregate deal without a long wait for your own deal to expire.

(Chicago Tribune)
(MCT Information Services)