Customers switch off ComEd
Many businesses have defected since last year
Chicago Sun-Times
March 8, 2007
By Mary Wisniewski Business Reporter
While the state Legislature considers a new electric rate freeze, small and medium-size businesses are increasingly switching from ComEd to alternative suppliers.
A total of 20.2 percent of ComEd's small business load, which includes gas stations and small stores, were using another supplier as of Jan. 31, compared with 11 percent at the end of October of last year.
Among medium-size businesses, like grocery stores and small office buildings, the percentage of non-ComEd load increased to 47 percent by Jan. 31 from 19 percent Oct. 31, according to figures from ComEd and the Illinois Commerce Commission.
ComEd, which still distributes the electricity, expects that 75 percent of its non-residential load will get power from another supplier by mid-March, up from 39 percent at the end of October. That represents half of ComEd's total load.
"I'm happy to have a choice," said Jamie Harrison, vice president of Just Rite Acoustics in Elk Grove Village, who switched from ComEd to Constellation NewEnergy for his electric supply last week. He said the switch will save the acoustic ceiling tile business a couple of thousand dollars a year.
A majority of the largest businesses, like factories, were already using alternative suppliers even before the end of a nine-year rate freeze Jan. 2. These businesses were willing to pay what's known as a "transition fee" to switch from ComEd to an alternative supplier during the state's nearly 10-year transition period to a deregulated market.
Now that both the freeze and the transition costs have gone away, smaller businesses are switching in greater numbers, said Phil O'Connor, vice president of Illinois Region for Constellation NewEnergy.
"It makes a difference," O'Connor said. "Now customers can realize the full amount of savings between the market and the utility's price."
In 1997, Illinois passed legislation that started a transition to a non-regulated electricity market. It was hoped that the state would benefit from competition between suppliers.
But the development of competition was hampered by both a 20 percent rate cut for residential customers and a nine-year rate freeze for everyone, according to suppliers.
Residential competition still hasn't materialized, and the lifting of the freeze meant electric bill increases of about 24 percent for ComEd customers and between 40 percent and 170 percent for Downstate Ameren customers. Consumer advocates have objected to lifting the freeze, arguing that since there is no competition for residential customers, they shouldn't be exposed to market prices.
The Illinois House on Tuesday voted to extend the rate freeze by three years, which would include residential and small to medium-size businesses using up to 400 kilowatt hours, according to Citizens Utility Board Executive Director David Kolata. Kolata noted that most small businesses still use ComEd, and though some are switching to other suppliers, they still face much higher rates than they did before the freeze ended.
Now that rates are up, a few alternative suppliers like BlueStar Energy Services want to get into the residential market. BlueStar CEO Guy Morgan says his company is holding off until the Legislature decides whether to reinstate the rate freeze, which would make it too difficult to enter the residential market.
Meanwhile, Morgan said his company has seen a lot of new business from small businesses looking to switch. "They're actively seeking it."
ComEd and Ameren make their money from distribution, not supply, so it doesn't cost them if customers change suppliers, said Paul Crumrine, ComEd's director of regulatory strategies and services.
"It was what we were hoping for," Crumrine said. "Every time a customer determines they don't need to buy power from us, one can conclude they got a better deal in the market."
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