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Storage issues push electricity price increase

Published: Friday, May 30, 2014 11:25 p.m. CDT

DeKALB – Electricity costs will increase or decrease Sunday depending on where in Illinois you live, driven largely by capacity issues in northern Illinois.

ComEd's electricity rates will increase from 5.5 to 7.596 cents a kilowatt-hour starting Sunday, but those living in Ameren's territory in central and southern Illinois will see a decrease from about 4.8 to about 4.6 cents a kilowatt-hour.

Officials said the reason behind ComEd's prices are an increase in the cost to reserve the power supply in case of higher demand and the harsh winter.

"Think of those hot summer days when everybody's cranking up their air conditioning," said Jim Chilsen, spokesman for the Citizens Utility Board. "Demand goes through the roof. The power grid has to have the capacity to meet demand on those days."

The Illinois Power Agency buys power on behalf of both ComEd and Ameren, so neither company sets its own rates. Chilsen said it's actually more beneficial for the IPA to determine costs rather than having for-profit companies do so. The IPA was established in 2007.

"IPA is a step in the right direction," Chilsen said. "The previous system had ComEd and Ameren in charge of buying power, which led to a lot of big problems."

Meanwhile, Ameren's costs are decreasing, because they don't face the same high demand issue, Chilsen said. Costs also are expected to decline because of the IPA's hedging strategies. A large portion of current year purchases were made in past years when prices were lower, Ameren spokeswoman Marcelyn Love said.

DeKalb County residents should expect to pay higher bills because the increase in capacity costs, which are factored into the electricity rate, will likely affect companies that have aggregation contracts with municipalities, Chilsen said.

Sycamore officials will vote on entering into a contract during the City Council meeting Monday. City documents show the city will have 24 hours to accept one of the bids, or all bids can be rejected, and the aggregated load will be re-bid in the summer after ComEd’s rate is established.

Sycamore's agreement likely will be on par with that of DeKalb, where electricity customers can expect rates to increase 55 percent July 1 through the city's electrical aggregation agreement, which was signed in March.

Dave Hoover, consultant for Northern Illinois Municipal Electric Collaborative, said the price of natural gas largely dictates electricity pricing, and natural gas rates have been going up as well.

"Perhaps the reason for that is the economy is improving," Hoover said.

Sycamore's current electrical supply contract is with First Energy, which delivers power at a fixed rate for electricity of 4.81 cents a kilowatt hour. The contract will expire in August. Since the program was implemented, participating households have saved an average of $300 in electric supply costs, for a cumulative citywide savings of more than $1.5 million, city documents show.

DeKalb officials entered into an agreement March 24 with Homefield Energy with rates at 7.237 cents a kilowatt hour for the first two years and 6.927 cents in the third year compared to the current rate of 4.64 cents. The new agreement takes effect July 1.

Even when Sycamore enters into an agreement with a company, residents can still opt out.

Residents can research what companies have the lowest rates at www.pluginillinois.org.

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