SaveOnEnergy.com® has previously showed that the savings touted by municipal aggregations -- programs in Illinois and other states under which a city or town selects everyone's electricity supplier -- aren't any higher (and can often be lower) than the savings available when customers shop around individually for the lowest electric rate.
Now, however, a new drawback to municipal aggregations has emerged -- if the aggregation decides to put the customers back with their local utility, like Commonwealth Edison, the customer may be "stuck" on the utility, and the utility's rate, for 12 months.
The issue comes up in the Village of Fox River Grove, Illinois, which recently announced that its municipal aggregation program could no longer beat ComEd's electric rate, and customers were being sent back to the utility for their electricity supply. While the aggregation may not be able to beat ComEd's electric rate, competing energy suppliers can.
But it gets worse. The Village notes in its news release that, "When residents and small businesses are returned to Com Ed, there will be a two month opportunity to switch to another provider. After that period, accounts must remain with Com Ed until September, 2014."
That means that if customers don't exercise their right to find a rate lower than ComEd right way, they'll lose that ability for 12 months. The aggregation's decision to drop customers back to ComEd has apparently triggered what is known as a "minimum stay." Under the minimum stay, if you leave ComEd for a competitor, and then later return to ComEd, you must stay with ComEd for 12 full months -- even if you find a lower electric rate elsewhere.
Because most customers in the aggregation are passive -- they did not affirmatively choose the aggregation because it automatically signs up everyone unless they "opt out" -- customers won't likely recognize that they must take immediate action if they want to shop around for a lower electric rate. Customers may not realize until months later that, when they do try to shop for a low rate, they are stuck with ComEd until September 2014.
The next significant change in ComEd's electric rates will occur on June 1, 2014, and may result in a sharp increase. However, customers in Fox River Grove won't be able to shop for a low rate again until September 2014, due to the interaction of the aggregation and minimum stay.
It again shows that municipal aggregations are fraught with pitfalls, and that customers are better served by taking control of their energy costs by individually shopping around for a low rate, rather than leaving it to their local government.