Monday April 24 2006


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Illinois governor gets bill
to allow real-time prices

Illinois lawmakers voted to require utilities to let residential customers choose real-time prices next year.
       SB 1705, has passed by both houses and is headed to Gov Rod Blagojevich, D.
       The Illinois Commerce Commission would develop a formula for pricing based on ISO real-time prices.
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Click here for more information        Utilities with fewer than 100,000 customers are exempt so the bill only applies to Ameren and Commonwealth Edison customers.
       Residential customers choosing real-time rates have to stay for 12 months but get an interval meter without extra charge.
       Program costs including meters are to be paid for by all residential customers.
       The utility is to contract with a "program administrator" who will manage customer outreach, education and enrollment and give technical assistance to customers choosing the option.
       Finding a suitable person for that job should be easy for ComEd since Community Energy Cooperative has been operating in ComEd's footprint for four years (RT, 12/3/02).
       The co-op's Energy-Smart Pricing Plan peaked at 1,400+ members but serves about 1,100 now, Kathryn Tholin told RT (www.energycooperative.org).
       She's CEO of the Center for Neighborhood Technology and general manager of the co-op.
       The co-op has stuck so far to a low-cost, low-tech profile -- except for successful tests over two summers using ComEd switches adapted to respond to price signals.
       Fifty members are to test this summer a technology Southern California Edison has used -- globe-like pagers.
       Members get a recording meter paid for by the Illinois Dept of Commerce & Community Affairs.
       Members are protected from anything over a 50¢/kwh spike by a hedge the co-op buys, Tholin said.
       Co-op members got their first taste of high power prices last summer and fall after two relatively mild summers.
       How'd they do?
       "Nobody freaked out," Tholin replied, even with prices rising to 21¢/kwh.
       Members took it in stride and adjusted their power use even at the cost of personal comfort, she added.
       A very few dropped out of the program but most members -- particularly those who had been in the co-op for several years -- signed up again.
       The co-op's first hot summer silenced critics who had been asking what would happen in a really hot summer, she noted.
       Can what the co-op is doing be scaled up to serve real-time volunteers at a 3 million-customer utility like ComEd?
       "Absolutely," said Tholin.
       The co-op has figured out how to handle the key element of voluntary real-time rates -- providing clear information on how rates work, she noted.
       The real-time rate option is voluntary, she pointed out.
       If 3% of ComEd's customers sign up that's 100,000 -- enough to make a real difference in peak demand but manageable from a customer-service perspective.
       For some the benefits of lower peak use is number one while others enjoy giving members a chance to save money -- about 5%, she said, now that the market has settled down.
       Turns out too that five members of the General Assembly are co-op members and have been since year one, Tholin noted.
       One lawmaker described his experiences buying power real-time during the House debate.
       Another long-time member is Citizens Utility Board Executive Director David Kolata.
       Kolata even wrote about his real-time experiences in CUB's newsletter and favors the legislation.
       It's not a plan for everyone, Kolata told Tholin, but will give many households a chance to save money and incentive to cut use.
       The biggest boost the program gave the new legislation is nearly four years of proof that residential customers care and are smart enough to manage their energy use.
       Tholin believes Illinois will become the first state to require that real-time prices be an option for everyone including residential customers.
       Other states have stopped at pre-set zoned rates (time of use) for residential customers even when they required real-time prices for some C&Is, she noted.
       In a state where shopping has failed to take hold for small customers, real-time rates at least give customers one choice and the opportunity to control their power bills, she said.
       Tholin is optimistic about the savings members should be able to capture once ComEd's rate freeze ends next year.
       She expects flat rates based on the mix of short- and long-term power contracts being auctioned this fall will include significant rate premiums.
       That should give members a "significant opportunity to save money," she noted.
        Originally published in Restructuring Today on April 10, 2006

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