StoryImage( ‘/Images/Story//Auto-img-116966477023152.jpg’, ‘Image courtesy of www.scienceclarified.com‘, ‘Despite record profits, ComEds rate hike to commercial customers will increase by as much as 75 percent.‘);
Business owners better brace themselves for an even sharper increase on their next ComEd bill, one consumer advocate warns.
What they have done is that they have upped our energy charge, explained Alberto Altamore, director of the Illinois Coalition Against Unfair Utilities (ICAUU). They have jacked that charge up from a little over 4 cents a kilowatt hour to over 7 cents a kilowatt hour. … Thats a 75 percent increase.
While residential rate increases have been well publicized, Altamore fears the even higher business rate increase will catch many offguard.
I think it will be more than the 22 percent, said Illinois Commerce Commission (ICC) Chairman and former mayor of Rockford Charles Box. It just depends on their particular usage and what category theyre in.
Its gonna hurt small businesses, thats for sure, said Brian Imus, director of the Illinois Public Interest Research Group (PIRG), and have a huge impact in Rockford and all across the state.
Altamore blamed state legislators and the ICC for not extending the ComEd rate freeze, despite record profits.
ComEd officials argued the new rates reflect the actual price paid for the electricity provided to customers in Illinois.
ComEd has another rate hike for 2008 in the works.
The biggest buyer of electricity, ComEd, is owned by the biggest producer of electricity, Exelon, and that creates all kinds of perverse incentives, Citizens Utility Board (CUB) Executive Director David Kolata alleged. They erect barriers to competition and, more than anything, they want to become a de-regulated monopoly. The CUB director added, They have an incentive to try to keep our rates as high as possible.
The real effects that people will see a big difference will not be this month, Altamore cautioned, but it will be in their next billing period, which is essentially the next bill that they get in February.
Altamore said bills received in January are pro-rated to reflect charges predominantly from before the new rates took effect.
Kolata noted, For most customers, the full impact wont be felt until summer, when youre paying those high air conditioning bills.
Altamore, who is also a concerned restaurant owner, spoke with ComEd spokesman Paul Callighan about the increase.
Based on my conversation with Paul, they have said that yes, they had upped the energy charge by 75 percent, Altamore reported. But they have lessened the burden on the demand charge, which is a complicated, unjustifiable charge.
Altamore illustrated how the demand charge works: Lets say that I own a bar. You come in to my bar the first day, and you have one beer You give me $3 By the way, theres only one bar in town The next day, you come in You have three beers You give me $9 Now, the next day, you come in, and you sit around for a long time and you have 10 beers $30 You come in every other day after that, but you only have one beer What are you supposed to pay me? …$30 The day before, you hit your high peak. You had 10 beers that day so, thats what you pay for the rest of the month, whether you have one beer or 10 beers.
The demand charge is one of the most unfair, crooked charges that ComEd has, said Altamore, who started the ICAUU in 1996 to combat the charge. Its unfair because its based on 30 minutes of your highest peak of electricity that anybody uses in a business.
Callighan, however, said Altamore is comparing apples to oranges.
If you try to look at some of the old line items, and the new line items, theyre not gonna match up because its a different way of applying the charges, Callighan explained. If you took a line item and saw a large change in a particular line item, how it was calculated, but that was not reflective of his whole bill.
Callighan said Altamores cost increase over last year would be only 6.4 percent.
Altamore isnt so sure.
If you were paying 4 cents, and now you pay 7 cents, Altamore argued, what do you think is gonna happen to your bill?
Callighan and Box said no specific average increase to the business rate could be cited because of usage variables. Callighan suggested business and residential customers visit http://www.comedrates.com to use ComEds bill estimator tool.
Callighan pointed out two alternatives to fixed-rate pricing for residential customers. The first is a phase-in plan that would allow for no more than a 10 percent increase over each of three years.
The Illinois Commerce Commission approved whats called a real-time pricing program for residential customers, Callighan added. Its advantageous if you dont have someone at home during the day, and your main use of electricity is in the evenings and weekends.
Callighan explained prices on the power market vary throughout the day and are cheaper on nights and weekends.
Residential solutions are cold comfort, however, to business owners, who will be seeing an even greater increase.
The best thing for a business to do is to get a lighting energy audit, suggested Bob Vogl, president of the Illinois Renewable Energy Association.
Energy audits determine where most of your power is going so you can work on ways to lower your energy cost. Vogl said organizations like the Smart Energy Design Assistance Center (SEDAC) offer free energy audits and design solutions through its Small Business Smart Energy program, online at http://www.sedac.org/.
Vogl said he and his wife Sonia recently dined in a local establishment and, by quick calculation, deduced the restaurant could save over $900 a year by replacing its 60 light bulbs with compact fluorescents.
Altamore, Imus and Kolata agree the higher electrical cost for businesses will be passed on to consumers and urged ComEd customers to press their legislators to address the issue.
We have a law that pre-supposes you have robust competition, Kolata explained. That world of competition just hasnt materialized. He added, Thats why we really need to rewrite the law to reflect that reality, and come up with a comprehensive energy plan thats gonna be fair for consumers; not one thats just good for ComEd and Exelon.
This issues been studied since 1997, when the act passed, Box defended the increase, when the rates were reduced 20 percent and then frozen for nine years. Its just a culmination of what was done almost 10 years ago.
Box and Callighan asserted competition is already available for commercial/industrial customers.
Box said he handed out a list of 14 alternative retail area energy suppliers at a Rockford Area Chamber of Commerce event in November.
One such competitor, Strategic Energy, estimates under ComEds new business rate structure, an average small business will see a 12 percent increase, and an average mid-sized business will be hit with a 66 percent hike.
As for residential rates, Box blamed artificially low electricity prices for the lack of competition entering the market. The ICC chairman and Callighan think the end of the nine-year rate freeze may change that.
We do anticipate, with the changing rates thats occurred, Callighan said, that you will see more competition enter the residential market.
We havent seen competition develop substantially in any state where they have moved forward with a de-regulated market, Imus indicated. It just doesnt seem to be working.
As many hold their breath in anticipation of the next bill, Kolata pointed out its not too late to unplug the higher rates and suggested continued pressure on legislators to forge a plan thats better for consumers.
Kolata concluded, Its really a problem that only the state legislature can solve.
From the Jan. 24-30, 2007, issue