SaveOnEnergy.com has previously detailed the many myths and problems with municipal opt-out aggregations, under which local governments switch customers to a new electric supplier of the town's choosing.
Now that some 200 Illinois municipalities are moving forward with the opt-out aggregations, these problems are becoming evident.
The savings available through electric choice come from tailoring electric products to meet customers' individual electric load and usage patterns through head-to-head competition. Electric choice also gives individual customers the power to choose products that appeal to them (such as premium products including green energy, or low-cost "value" products). By lumping all customers together in one aggregation, low-cost customers subsidize customers with a higher cost of service, which decreases the savings available versus what customers could get by shopping in the electric market themselves.
Like many Illinois cities, Evanston is facing these questions after voters approved an opt-out aggregation.
Most notably, there is a dichotomy among residents regarding whether the city should buy renewable power -- which costs more -- or whether it should forego green power for a lower energy rate. Both options have merit, but the problem with aggregation is that a single decision will be made for all of the city's diverse customers, unless a customer exercises their right to opt-out, and shop for their own power. If customers don't opt out, they could end up paying inflated rates for renewable power, or lose their right to shop for a green power provider without first paying an "exit fee" to the aggregation.
The purpose of the exit fees, "is to avoid people shopping the marketplace," reports Patch.com.
However, the competition in the marketplace is what produces the lowest electric rates. By taking customers out of the market, and denying customers the ability to shop, aggregations deprive customers of their choice, and their ability to find the lowest electric rate.