After enjoying record level low electricity prices for the past year and a half, residential customers serviced by Commonwealth Edison (ComEd) are facing a huge electric rate hike that went into effect on June 1, 2014. For some consumers the rate hike is more than 50% as the ComEd default rate has jumped from below 5 cents to, in some cases, just above 8 cents. The price hike will effect all residential ComEd consumers who are on the “Price to Compare” rate structure, which is the price consumers pay for generation and transmission service who have not shopped for an alternative solution.

The large price increase by ComEd has resurrected competitive electricity rate offers that can produce savings. During the last year and a half, Illinois electricity suppliers found it difficult to offer rate plans that could show savings versus the ComEd price to compare. Instead they focused on promotional incentives and longer term price protection contracts in order to gain new customers. With high ComEd rates accompanied by low wholesale prices, ComEd energy choice can once again provide fixed electric rates that are lower than the default prices and thus offer clean cut savings on the ComEd electric bill.

Finding a low electricity rate offered by a electricity supplier who is licensed by the Illinois Commerce Commission can result in lower monthly ComEd electric bills.

The competitive residential electricity market in Illinois continues to grow as consumer awareness of energy choice increases. Electricity choice has been steady in the Illinois commercial market, however residential awareness has only seen significant growth in the past year.

All four main utilities in Illinois – ComEd, Ameren I, Ameren II, Ameren III – have seen extreme growth in customer participation over the last twelve months. In July of 2011 the total number of Illinois electricity households buying power from a competitive supplier was just over 54,000 with just over 52,000 of those customers living in the ComEd territory. In July 2012 the total number of Illinois choice customers jumped up to over 800,000 with 527,000 of these customers located in the ComEd service area. The three Ameren areas went from having just below 2,000 shoppers in July of 2011 to over 270,000 in July of 2012.

The huge market growth has been a direct result of low electric rates that competitive energy companies have been able to offer to Illinois consumers compared to the utility default rates. When Illinois electricity consumers do not shop for competitive electric rates they end up paying a default rate for their generation supply service. The default rate, called the price to compare, is determined by several auctions held by the utilities for energy companies who wish to bid for the right to serve a percentage of price to compare customers. Since the Illinois energy choice law allows consumers to switch off of price to compare service and onto a competitive rate at anytime, the energy companies must put a premium on their price bids. The rapid move of customers taking the time to find cheaper electric rates has further increased this premium.

Meanwhile, those customers who do take the time to learn about Illinois electricity choice and compare electricity rates will be able to save a significant amount of money on their electricity bills. Most competitive electricity companies offer single billing which means that the Illinois consumer continues to only get one electric bill from the utility (ComEd, Ameren) that they are used to getting the monthly bill from. The competitive electric rate simply replaces the supply charges, which include generation and transmission, on the electric bill. If the competitive rate is less than the sum of the generation and transmission utility default rate you will pay less and save on your electricity bill.

Find your Illinois utility below and choose a competitive electric rate so you can start saving money!

The Energy Plus Company has seen tremendous market growth since being founded in 2007. The company’s success is centered around their rewards programs which they built with household name corporations in the airline, hotel, and retail industries. In 2011 the company was bought by NRG, a fortune 500 company who owns several other retail brand energy companies. Energy Plus offers electricity service in New Jersey, Connecticut, Illinois, Maryland, Massachusetts, New York, Ohio, Pennsylvania, and Texas

Energy Plus has built their marketing campaigns around their ongoing rewards programs, similar to credit card reward programs; the more power you use the more rewards you will get. They entice people to sign up for their electric variable rate service, and in return customers can receive their choice from a variety of rewards including cash back, student loan payoff funds, airline mileage, or gift certificates to retail stores.

For customers looking to maximize their savings, the problem with the Energy Plus Company is that they not only charge a variable rate that has no limit to how high it can go, but they don’t even post what the initial variable rate will be when you get your first bill. You might get reward points or cash, but that money is coming from an inflated monthly electricity bill. In the north east markets, where the majority of the Energy Plus Company customers are located, smart shoppers can save a tremendous amount of money on their bills by taking the time to compare low fixed electric rates. In many areas savings are above 20%. For example, Illinois electricity consumers living in the ComEd area can currently save up to 29% versus the local default rates. However, according to customer surveys, the Energy Plus Company charges rates that are close to the utility default rates and sometimes more.

Their contract states:

“The variable rate may change each month and will reflect the cost of electricity, including energy, capacity, settlement, ancillaries, related transmission and distribution charges and other market-related factors; plus all applicable taxes, fees, charges, costs, expenses and margins. The rate may be higher than your EDC’s rate. EP does not guarantee any savings over the EDC’s rates for the entire term of this Agreement”

In conclusion, the Energy Plus Company has a successful marketing program going because their is a market out there of uneducated consumers whose eyes light up when they see the word “REWARDS”. However, in the end these consumers end up paying more money for the rewards they earn then they are worth. Smart electricity shoppers should focus on getting the lowest fixed rate available in their service territory.