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‘Era of easy savings is over’

Dixon’s deal not as good as others

Published: Thursday, May 9, 2013 1:15 a.m. CDT

DIXON – Dixon residents won’t get as good a deal on electricity rates as other area towns.

Why? The city missed the window of opportunity last year, a watchdog group says.

This week, the Dixon City Council took a step toward lowering residents’ electric bills.

In March, voters gave the city the power to negotiate for lower rates, which they had twice before rejected. The low bidder, Verde Energy, offered the city a rate of 5.3 cents per kilowatt hour in the first year and 5.8 cents in the second year.

Last year, Sterling and Amboy negotiated rates of 4.7 cents, while Morrison got a rate of 4.8 cents.

“Market electricity prices were lowest during the spring of last year,” said Patrick Deignan, a spokesman for the Citizens Utility Board, a Chicago-based watchdog group. “That’s why Sterling was able to negotiate such a competitive rate.”

Also, a cold winter drove up natural gas rates a bit, which also pushed up electricity prices, he said.

Another development is the expiration of ComEd’s long-term energy contracts. The northern Illinois electric utility negotiated down its rate from 8.3 cents to 5.5 cents per kilowatt hour for the next year.

The new ComEd rate starts next month. Under the rate structure, the company can charge up to 6 cents per kilowatt hour, based on its costs.

As for aggregation, Deignan said, “the era of easy savings is over now that ComEd prices are going to drop in June.”

The ComEd rate will remain higher than those in Sterling and other towns. But it will drop below the 6.2-cent-per-kilowatt-hour rate in Fulton, which was the first in the state to take advantage of municipal aggregation a couple of years ago.

Fulton’s contract, though, requires its supplier, FirstEnergy, to either match the ComEd rate or allow the town to go back to the utility. The company decided to match the utility’s rate. Most other towns have a similar provision in their contracts.

Mike Mudge, a consultant who negotiated rates for towns around the Sauk Valley, said communities are still getting lower rates under aggregation. He said he has been surprised that suppliers are bidding so low, given their thin margins.

“The suppliers are aggressive. They want the business,” he said.

Bob Gibler, a former Dixon mayoral candidate, opposes municipal aggregation, saying he doesn’t want to give the city that kind of power. He plans to exercise his right to opt out of the process, which any consumer can do.

“ComEd’s rates will go down anyway,” he said. “Their rates will be comparable to others. The city should have rejected all the bids and gone out to bid again.”

ComEd makes no profit on supplying electricity; it makes its money through its distribution system.

The Dixon council is expected to vote on a 2-year contract with Verde Energy at its May 20 meeting.

What they pay

Here's what selected cities, villages and counties are paying for electricity since they passed municipal aggregation referendums. They are all less than ComEd's rate of 8.32 cents per kilowatt hour.

Municipality or county                         Price/kilowatt hour                   Supplier

Amboy                                                   4.67 cents                                   FirstEnergy

Ashton                                                   5.18 cents                                   FirstEnergy

Byron                                                     4.78 cents                                   Direct Energy

Carroll County                                     4.87 cents                                   FirstEnergy

Chicago                                                5.42 cents                                   Integrys

Dixon                                                     5.29 cents                                   Verde Energy

Erie                                                        5.47 cents                                   Nordic Energy

Forreston                                              4.82 cents                                   FirstEnergy

Franklin Grove                                     4.65 cents                                   Verde Energy

Fulton                                                    6.23 cents                                   FirstEnergy

Lyndon                                                  5.43 cents                                   FirstEnergy

Milledgeville                                         5.90 cents                                   FirstEnergy

Morrison                                                4.77 cents                                   FirstEnergy

Mount Morris                                        5.94 cents                                   FirstEnergy

Oregon                                                  4.78 cents                                   Direct Energy

Polo                                                       5.83 cents                                   FirstEnergy

Prophetstown                                      5.52 cents                                    FirstEnergy

Rockford                                               4.66 cents                                   FirstEnergy

Rock Falls                                            6.39 cents                                   Municipal utility

Sterling                                                 4.67 cents                                   FirstEnergy

Walnut                                                  4.84 cents                                    FirstEnergy

Source: Illinois Commerce Commission's Plug In Illinois website

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