Why Does It Keep Getting More Expensive?

The office has had several inquiries lately about electric bills. And there are many things over the past couple years that have changed and led to increases into what everyone is paying to keep the lights on and the stove hot. Unfortunately, we are not economists and can not explain why. The cost of energy itself has come down in recent years, as evidenced by gas prices. But there are different components on your bill that can help explain what is getting more expensive.

First, several years ago, billing was divided between three main components: Supply, Delivery, and Taxes & Fees. This was a part of an effort by advocates promoting deregulation, which at the time were billed as opportunities to give consumers more power and put dollars back in our wallets.

We do have more control. Supply is the one component of electric service which requires a choice on our part. You may recall that 2 years ago the City entered a bulk arrangement with “Integrys Energy Services”. We all got notices about this, and management held a meeting for residents to try to help explain what was happening. All residents of Chicago are entitled to be a part of this program, and so far as we can tell, this is the best deal out there right now, at about 5.3 cents per kilowatt hour. But we have found some folks paying double or more. Over the past two months I have seen electric bills with charges of 8-15 cents per kilowatt hour, which is outrageous.

The owner or resident at some point probably got a flyer in the mail for an independent electricity provider. Some of the names out there are ‘Spark’, ‘Wabash’, ‘Liberty’, ‘IDT’ and ironically ‘Ethical Electic’. The latter sent a flyer out to almost everyone in the neighborhood, which we featured an article on and posted a warning throughout the building.

We can not tell you who to use. Part of having more control over the rates under this system of deregulation, is you have the control and decision making ability over this like you do with the gas station you fill up at. But, with this, you must read the fine print. Many folks see the introductory rate, which may look great. But they do not read the statement at the asterisk which says the supplier may increase the rate with no notice. So, you may unexpectedly get a bill where your “Supply” rate doubled. And you have no choice but to pay it.

At this time, the only suggestion we can make is that ‘Integrys’ is probably the best vetted program out there. One might assume they want to keep the City happy so they have a quasi-captive consumer base. With millions of customers via the City’s program, they should be able to continue keeping the rate on the lower end. In addition, the terms and conditions are being managed by the City administration, which has an interest in keeping the public happy.

Taxes and Fees are obviously out of our control. Both State and Municipal tax rates and “Franchise Costs” did increase in recent years. And the “Energy Efficiency Programs” are something regulators decide whether to continue and at what rate on a semi-annual basis. But you may have some influence over ‘Delivery’ costs.

ComEd got the green light from the State to increase Delivery rates by about 11% in December. Coupled with increases from earlier in the year, most of us probably saw our bills go up $10 to $20, just due to this. The purpose of this increase is to support improvements across the electrical grid, such as installing smart meters and modernized equipment and infrastructure. Some of these changes will ultimately result in some positive changes for consumers. In general, the modernized grid may help keep future rate increases lower. And the addition of smart meters should give you more control over your electric use and billing. We expect smart meters to be installed at Park Tower as soon as some time this summer. While we are waiting for more information about everything the new meters will allow consumers to do, we know you will be able to log in to your ComEd account and view your daily usage history so you are more informed and can budget your future use.

These Delivery rate hikes are controlled by the State. So theoretically, writing your representatives could help influence the process. But the truth be told, some are of the strong opinion our electrical grid was in dire need of significant modernization.

If you would like, I am happy to take a look at your bill to see if there is anything strange, or if I believe there is an opportunity for you to save money. Please PDF it, and e-mail it to the office, or drop a copy off.

For most the City of Chicago Electrical Aggregation Program with Integrys Energy Services, is very likely the best option to consider at this time.