Electric rates negotiated by many Illinois cities and towns under a process known as municipal aggregation are set to be above the utility's electric rate starting on June 1, showing that the municipal aggregations are not a good deal for customers, and that customers looking for the lowest electric rate need to shop individually.
Municipal aggregation is a process in place in Illinois and select other states that allows local governments to choose a customer's electric supplier without any affirmative consent from the customer. Essentially, the local government picks an electric supplier for all the customers in the town, to replace the local utility like ComEd or Ameren. If customers don't "opt-out" of the town's supplier, they are automatically switched from the utility to the town's chosen supplier.
While local governments initially touted claimed savings under the programs, the electric rates are now turning around, and cheaper rates are available by shopping outside of the aggregation. Crain's reports that at more than a dozen municipalities, "[c]ontracts they negotiated more than a year ago with power suppliers to lower residents' electric bills -- that until now offered savings from Commonwealth Edison Co.'s energy price -- will exceed the costs ComEd customers pay beginning in June."
"Making matters worse ... residents who want to go back to ComEd or find another supplier must pay $50 to exit," the government program, Crain's noted.
The results only reinforce that municipal governments are ill-equipped to find the best electric rate. Local governments are not energy market experts, and should not be making decisions for their residents and businesses about what electricity plan to choose.
If you're a business owner, would you want the local government selecting and negotiating with your suppliers and vendors? If you're a homeowner, would you trust the government to find the best contractor for a remodeling? That's essentially what municipal aggregation does with electricity.
Because local governments lack expertise in the energy industry, whatever savings they get for their customers can typically be beat by customers individually shopping around for the best electric rate through a market expert. And when you shop for a low energy rate, you get the lowest rate that fits your unique needs, not a one-size-fits-all product from the government aggregation that may not produce the lowest savings for you.
While Illinoisans in municipal aggregations are going to see their savings go away, those who shop can still find rates lower than the new ComEd rates, through the power of competition.