Illinois Has Three Types of Electric Utilities:
- In 1997 the Illinois General Assembly enacted legislation that deregulated investor-owned utilities in Illinois. “Retail Electric Suppliers” (RES) formed to sell wholesale energy to customers, which would still be delivered by the host utility. Most of the early marketing of this alternative power supply was to larger commercial and industrial customers.
- Changes to the law set up one-bill service for customers buying through a RES. When approved by local voters, a provision for “aggregating” customers by municipalities and county governments was also added, with an opt-out for individuals.
- The RES offer is only for wholesale energy. (Electric bills = wholesale energy + sub-transmission + distribution services)
- Billing, outage repairs and metering will still be provided by Ameren.
- RECC members are receiving marketing calls and letters intended for Ameren Customers.
- The 1997 Illinois deregulation legislation gave local consumer-elected co-op boards and municipal councils control over whether or not to enter the deregulated electric market, based on the best long-term interest of their member/owners.
- Cooperatives have been in the aggregation business from the very beginning. Members elect local directors to look after their interests and to ensure that they are protected from “too good to be true” short-term wholesale energy contracts.
- RES activity targeting residential consumers in Illinois was minimal until around 2008. The financial crisis and subsequent collapse of the economy has resulted in significant closing of industrial and manufacturing capacity. This has led to decreased demand for electricity and an abundance of electricity supply being dumped on the market. Responding to the laws of supply and demand, the price of traded wholesale electricity declined substantially through 2011 and continues to be “soft” today.
- The Citizen Utility Board (CUB) warns Ameren and ComEd customers to look carefully at the fine print in these RES contracts.
- Ameren customers with a low credit score and LIHEAP recipients may not be eligible to purchase energy from a RES.
- RES marketers must make a profit to remain in business. They do not have any responsibility to build long term power supply plants or improve system reliability. Co-ops, like RECC, have a long-term goal of service reliability and affordability, NOT a short-term goal of maximizing profit.
- Wholesale energy markets will likely change in 2-3 years and prices could increase, so RES marketing and aggregation activities may be short-lived.
Historically the only proven way to maintain stable electric rates for an extended period of time has been to invest in generation capacity. Such investments, because of the magnitude of the cost of base load generation capacity, are by their very nature long term investments of 30 to 40 years. Electric cooperatives and municipal owned electric systems have in the past elected to make long term investments in base load generation in order to provide sufficient electric generation capacity to provide all the electric needs of their members at a stable price over a long period of time. The need for long term investments in base load generation capacity exists today the same as it has in the past. Such long term investments are only available through long term power contracts.
Because of the 1997 Illinois deregulation law, electric energy produced by base load generation plants is subject to the deregulated electric energy market place. The electricity so produced cannot be stored. Because the demand for electricity varies during each day, sufficient generation capacity must be constructed and available to produce the electric energy needed to meet the highest electric demand for any day.
Accordingly, the electric energy commodity price changes every 5 minutes of the day depending on the demand for electricity. This in turn creates volatility in the electric energy market price. Short term contracts for the purchase of electricity are more vulnerable to the volatility of the deregulated electric market place than are long term power contracts.
Because of RECC’s long-term power contract with the Illinois Municipal Electric Agency (IMEA), your electric rate is protected from the uncertainty of short-term contracts and the volatility of market-based prices.