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