The early returns are in....Chicago's aggregation is (barely) better than utility, but still more than hourly

A little late to the game, the City of Chicago made the leap to municipal aggregation this winter/spring, and gained a short-term benefit for residents of the city through the months of March, April and May.  The City negotiated a price of $0.05589 per unit of electricity (in Illinois, our meters measure and report kilowatt-hours or kWh), compared with the $0.0799 per unit from the utilities - thanks to outdated, reliability-focused contracts.  For three months, residents of the city enjoyed an approximately 15% reduction on their bill (totaling around $45 for the three months).

Although any reduction of cost to the consumer by a city has merit, that savings evaporated this summer when the outdated contracts ended, and the utility rate for supply (not for distribution, which the city did not, and cannot affect) dropped to more in line with the marketplace.  Specifically, it fell to around $0.0569 per unit, meaning the City contract saves less than 1% over the entire bill.*  On the plus side, this means that Chicagoans will not be harmed financially over the next year as a result of the aggregation.  Also, if this September, when a new round of reductions may occur in the utility rate, the cost of ComEd drops below the aggregated rate, the consumers will switch back or the City rate will drop automatically.  

There are two ways that Illinois, and specifically Chicago, loses in this.  First, customers on the real-time pricing plan have enjoyed a savings of an additional 3-5% more than the city negotiated.  This means had Chicago done nothing but move all its customers within the utility contract to real-time, there would be even greater savings without the involvement of a corporation that does not have to retain all its profits and expenses within the state or city.  Second, the short-term nature of these supply contracts provides little incentive for the company to make any long-term investments in community energy or energy efficiency on a large scale.  Chicago did its best in the negotiations to include some of those elements, but the marketplace significantly restricts what a short-term supplier can do.

At this point, it looks as if the main consequence of going through aggregation was to drive a wedge between the residents of the city and the electric utility.  If a future step involves the city attempting to buy-back the electrical infrastructure and operate independently from ComEd, it will be easier if consumers are already used to the concept of an "electric company" that is not ComEd.  (The City of Chicago already owns and maintains all of the water pipe and support infrastructure.)  If this is not the City's goal, then we will see if decreasing the incentive for the utility to invest in community energy and storage technologies makes any sense.  

So far, it is a short-term savings with long-term consequences that may be penny wise, but pound foolish.

*Note that the savings is on the energy supply portion of the bill, which makes up only about half of the  total bill for the homeowner.  Municipal aggregation does not change the utility distribution portion of the bill, which will continue to increase, now more steadily thanks to changes approved by the Illinois General Assembly this year that allows ComEd and Ameren to increase distribution charges automatically by formula, and give the Illinois Commerce Commission only the ability to go back after reductions if the formula generated a larger increase than warranted.