Under these programs, customers are automatically switched away from their utility (ComEd or Ameren) for their electricity supply, and are placed with an alternative retail electric supplier chosen by the municipal government, unless the customer affirmatively opts out.
SaveOnEnergy.com has previously documented the problems with opt-out municipal aggregation, including most prominently the fact that the savings from these programs are meager, and customers can get lower electric rates by shopping individually for an alternative retail electric supplier.
In fact, current savings available from electric suppliers competing for customers are nearly triple the savings offered to customers by opt-out aggregations.
However, most of the Illinois opt-out municipal aggregation programs on the ballot were approved, meaning customers must be ready to exercise their right to "opt out" and find greater savings in the electric market.
If customers don't opt-out during the initial opt-out window, they may be unable to leave the municipal aggregation in the future (as rates from competing energy providers fall even more), or customers may only be allowed to leave after paying a exorbitant "exit fee" to the municipality, such as $250.
By law, municipalities must notify customers (via mail) of the coming aggregation, and provide a window during which customers can opt out of the pool. However, customers may only be given 30 days to exercise their right to opt out, meaning they must be vigilant to ensure that they receive the opt-out notice and make their election in time.
The timing of this opt-out window will vary with municipality. Some municipalities are ready to begin their aggregations and will soon begin the opt-out period, while others are still selecting their energy supplier, and won't begin the opt-out period for several months.
But in either case, if customers don't opt out when they have the chance, they will be locked into the municipal aggregation rate and will be unable to leave unless they pay a penalty.
Additionally, any customer who is already shopping and being served by a competing electric supplier is not included in the municipal aggregation, so another way to ensure that you will always receive the lowest electric rate, and to avoid being included in the aggregation, is to switch to a competing electric supplier now, ahead of the opt-out window.
Some of the quoted savings from the proposed opt-out municipal aggregations are only 5-10% versus the ComEd electric rate. While this may sound enticing, customers may be unaware that savings as high as 27% for residential customers -- and higher for businesses -- are available by choosing your own supplier.
In other words, customers lose out on hundreds of dollars in additional savings if they do not opt out of the higher municipal aggregation rate.
How can suppliers offer customers rates lower than the municipal aggregations?
As previously noted, the municipal aggregations have a tendency to "skim" the savings available to customers for their own benefit. Often times, the municipal aggregation will ask for bids including a higher electric rate charged to customers in exchange for direct monetary contributions from the winning supplier -- such as funding for grants, environmental projects, or even new fire trucks. To the electric supplier, they are still discounting their electricity at the same rate -- it's just that with opt-out aggregations, part of the savings are going directly to the city or town, and not the customers in the form of a lower electric rate.
Additionally, the design of opt-out municipal aggregations themselves -- which rely on customer inertia and the fact that customers do not make an active choice -- lend themselves to higher prices. Suppliers of the municipal aggregations assume that most customers will just sit back and do nothing, meaning customers will be automatically switched to the aggregation. Municipal aggregation suppliers don't have to "win" these customers individually, and thus don't have to offer their lowest savings to entice customers to take action and make a switch. Essentially, municipal aggregation suppliers replace the utility as the "default" supplier, and since they expect most customers won't take the affirmative step to switch, they know they can get away with charging a higher rate than what is offered in the market, because customer inertia will keep customers from switching and finding a lower electric rate.
Customers don't have to stand for these premium rates charged by municipal aggregations. But customers must exercise their right to opt-out when it becomes available, or shop for new providers immediately, to enjoy these savings.