Overcast and Breezy
37°FOvercast and BreezyFull Forecast

Sterling has better power deal

Rates lower than in Rock Falls; experts don’t expect situation to last long

Published: Saturday, Jan. 5, 2013 1:15 a.m. CDT • Updated: Saturday, Jan. 5, 2013 8:33 p.m. CDT

ROCK FALLS – Your electric bill depends on which side of the Rock River you live.

These days, Sterling residents are getting a considerably better deal than Rock Falls residents.

Sauk Valley Media recently examined a Sterling resident’s electric bill for November. For 909 kilowatt hours, that resident paid $68.96. The same amount of power in Rock Falls would have cost $95.18.

In September, Sterling residents began enjoying sharply reduced rates. That was the result of a process known as municipal aggregation, in which a town’s voters can approved a referendum to give their leaders the authority to negotiate lower rates with electricity providers.

In Sterling, the low bidder – Akron, Ohio-based First Energy – replaced ComEd as the power supplier in September, although ComEd maintains the distribution system. Rock Falls has long operated its own electric utility.

With ComEd as the power supplier, Sterling had higher bills than Rock Falls. For the 909 kilowatt hours, Sterling residents previously paid $102.14, compared to Rock Falls’ $95.18.

Cost and rate stability in Rock Falls

Dick Simon, director of the Rock Falls utility, went through the numbers and confirmed that Sterling customers now pay less for electricity than Rock Falls residents. But he said he didn’t expect that situation to last long.

Simon said that despite the price difference, the city utility offers things that ComEd cannot. Rock Falls utility employees are nearby and can take care of outages quickly, he said.

“They’re close enough that they can respond to emergencies,” he said. “They take it to heart and want to better their city.”

The Illinois Municipal Electric Agency secures power supply contracts for the Rock Falls utility and most of the other 41 municipal electric utilities in Illinois.

Like Simon, Phillip Mueller, an agency spokesman, doesn’t expect Sterling and other towns to have better rates than Rock Falls permanently.

“Historically, municipal systems have had the lowest rates,” Mueller said. “If you go back a few years to 2008, costs were going through the sky, but not in Rock Falls. There’s something to be said for cost and rate stability. That’s not going to be a part of aggregation deals going forward.”

Jim Chilsen, a spokesman for the Citizens Utility Board, a watchdog group, said ComEd’s long-term electricity contracts end this coming summer, so the company will likely reduce its prices to compete with alternative suppliers.

That will result in a leveling of prices, so consumers in places such as Rock Falls and Sterling probably won’t see such big differences in prices.

‘Inevitable increase in prices’

In 2015, the EPA will start requiring power plants to have more environmental controls, which will cost customers more money.

The Rock Falls utility has already met those requirements, but others have not, officials say. In fact, some power plants in Chicago have shut down because the costs of compliance were too high, Mueller said.

He said that’s why most aggregation deals aren’t long-term. In the Sauk Valley, the contracts are usually only 2 or 3 years.

“You’re probably going to see an inevitable increase in prices,” Mueller said.

He notes that Rock Falls has things many other utilities do not: backup generation and a hydroelectric dam, which provides 10 percent of the town’s power.

“When ComEd customers are out of power, crews have to come from miles away. That doesn’t happen in Rock Falls,” Mueller said. “Rock Falls’ outage times are for minutes, where some ComEd customers are out for weeks.”

He added that the city utility can be an economic development tool. While companies take cost into account, he said, they are more interested in reliability of service.

“On top of that, you have the concept of local control,” Mueller said. “If citizens don’t like the way the system is being operated, they don’t have to go to the Illinois Commerce Commission. They certainly won’t get into ComEd’s corporate offices to complain.”

Under the law, aggregation applies only to ComEd and Ameren customers, so Rock Falls can’t benefit.

Electricity costs in Dixon are now much higher than Sterling’s. Dixon’s voters have twice rejected referendums that would have given their city leaders the power to negotiate lower rates.

The question will be on the ballot again in Dixon on April 9.

Previous Page|1|2|Next Page
 

National video

Reader Poll

A statewide advisory question on the Nov. 4 ballot asks whether Illinois should increase its minimum wage for adults over 18 to $10 an hour. How would you vote?
Yes
No