Finally, Illinois residents can shop for electricity the same way they shop for groceries — by comparing prices.
For the first time since Illinois opened itself to electric competition more than a decade ago, a website launched this month by the Illinois Commerce Commission allows consumers to see how much Commonwealth Edison and Ameren are charging per kilowatt-hour and if they could save by switching to a competitor.
Consumer advocates say the site is a game changer, clarifying what has been a frustrating and confounding process.
At ComEd's website, for example, consumers seeking information about their electric rates are directed to 400 pages of material. As of June 24, alternative suppliers offered 22 options with key details sometimes buried in fine print.
Still, some alternative suppliers contend the focus on kilowatt-hour pricing is overly simplistic.
"If you have just a price comparison website, it doesn't allow for service quality differentiation or other products that wouldn't be reflected on the website," said Roy Boston, an Illinois state chairman of the Retail Energy Supply Association, a group of electric and gas suppliers competing with state utilities.
For instance, a supplier that doesn't charge an early-termination fee or that provides other perks may be offering a better deal than the company with the cheapest rate. Viridian Energy, which plans to enter the Illinois market this summer, uses a Mary Kay cosmetics-type sales tactic that allows customers to earn money by signing up friends and family. And Energy Plus Holdings, which entered the Illinois market in February, said it signed up more than 10,000 customers in two months by offering loyalty program points for major hotels and airlines or cash-back rewards.
Participation in the ICC website is voluntary, and Energy Plus has chosen not to participate.
"Essentially, we think that our unique marketing approach that focuses on customer rewards doesn't fit very well with the site,'' said Paul Frantz, chief marketing officer for Energy Plus.
So far, price is the driving factor in causing people to switch suppliers, said Phil Nevels co-founder of Chicago-based startup Power2Switch — a site launched two years ago at the University of Chicago's Booth School of Business with a mission of making it easier for customers to compare electricity offers.
The monthly cost savings amount to just a few dollars for the average city dweller, according to offers on the ICC's website. Nevels said most people switching are in the suburbs, not the city.
"Because it's new, people don't even understand that they have a right to shop," said Scott White, president of IGS Energy, an alternative supplier advertising rates 10 percent below ComEd's without added fees. "People worry about it being a hassle, about getting two bills."
For most suppliers, customers who choose to purchase electricity through another supplier receive a single bill that includes charges from the supplier as well as ComEd for delivering that electricity. ComEd is responsible for maintaining the lines and is still the company customers will call in case of a power outage.
White and other alternative suppliers hope that the ICC's website will help customers clear a mental hurdle that prevents them from switching. States such as Pennsylvania and Texas that have made it easier for consumers to comparison shop have seen switching skyrocket.
"People go and fill up their tank with gasoline, and they know instantly what they're paying," said White. "Consumer behavior is driven by the price of the commodity, but we really don't have that awareness with our utility."
A recent survey by the Energy and Environment Marketing Agency found that most people aren't aware that they have a choice of electricity providers despite the fact that 15 states including Illinois have deregulated energy markets.
Overall, according to that survey, 88 percent of Americans said they thought it was a good idea for consumers to have a choice of electricity suppliers, but fewer than half were aware that consumers in many states have a right to purchase electricity from other than their local electric utility.
Kay Hayes, a 40-year-old student living in Chicago's Gresham neighborhood who recently switched to Constellation Energy, said she didn't know there was an alternative to ComEd until she received a flier in the mail. Her electricity bills have decreased significantly, she said.
"I've told everybody I know," said Hayes, who added that friends didn't know there were competitors to ComEd, a unit of Chicago-based Exelon Corp.
The lack of awareness among residential customers contrasts with business customers. About 80 percent of the electricity used by businesses comes from ComEd competitors, according to the ICC.
"If you stick with it, like all other markets, if you see the development in the nonresidential sector, you'll see it in the residential sector," said David Fein, president of RESA, an electric and gas competitors' group. "It will be interesting toward the end of the year to see a market going from virtually no residential customers to a pretty significant number."
So far, 83,000 ComEd residential customers have switched, a huge jump from the end of 2010, when just 1,100 customers signed with alternative suppliers. The latest figure represents just 2.5 percent of ComEd's approximately 3.4 million residential customers in Northern Illinois.
There is a window now in which people can save money by switching to alternative electric suppliers. But that won't necessarily continue because electricity suppliers, including ComEd, purchase electricity from a larger energy market, and there may be times that ComEd is able to offer better deals than competitors.
The ICC's comparison matrix for electricity rates — available at pluginillinois.org by clicking "Compare Offers Now" — includes links to each supplier's website, their offer price in cents per kilowatt-hour, whether it's a fixed or variable rate, the term of the contract in months, any termination fees and a description of the offers. Customers can sort by supplier name, offer price and termination fees and compare multiple offers side by side.
BlueStar Energy Solutions is one of several providers offering a "green" option that allows customers to get 100 percent of their electricity from wind.
But Nevels, of Power2Switch, doesn't expect many takers. "People talk about being green, but people always go with the lowest price," Nevels said.
No comments:
Post a Comment