This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

CUB Report Card Gives IL Power Suppliers High Marks For $90-$200 Million In Savings, But Warns Of Misleading Pitches, High Exit Fees, 'Major Market Shift'

CHICAGO, Feb. 18, 2013 /PRNewswire-USNewswire/ -- Electricity competition saved Illinoisans up to $218 million in 2012, but power suppliers get an overall grade of "incomplete" for reports of misleading pitches, a lack of innovation, and the looming question of whether they can offer savings after a major market shift this summer, the Citizens Utility Board (CUB) said Monday.

"It's good news that power shoppers have saved money in the short term, but Illinois is still in the honeymoon phase of electric competition," CUB Executive Director David Kolata said at a news conference unveiling the watchdog group's report card for Illinois' electricity market. "The Land of Lincoln power market is about to undergo a big test, and alternative electric suppliers should make key improvements."

Illinois restructured its electricity market in 1997, but alternative suppliers didn't begin competing for residential customers until more than a decade later, sparked by higher utility rates and a new state rule that allowed companies to add their charges to ComEd and Ameren bills. Now, consumers can choose an alternative supplier themselves, or, if their community passes a referendum, have local leaders choose one for them through a process called "municipal aggregation."

Since 2010, 1.7 million residential customers have switched to alternative suppliers, most in 2012, which saw a 562 percent increase in participation. That increase, unmatched in the nation, was largely fueled by 467 communities that have launched aggregation programs. CUB's report card graded the electric market in three areas.  

Short-term Savings, A-: With some exceptions, alternative suppliers have beaten utility rates, because Ameren and ComEd have been locked in higher priced power contracts. In general, municipal aggregation has offered the lowest rates—an average price of 4.85 cents per kilowatt-hour in ComEd communities, and 4.08 cents per kWh in Ameren communities. Compare that to ComEd's current supply rate of 8.3 cents per kWh, and about 5.4 cents per kWh for Ameren. CUB estimates that competition sparked $92 million to $218 million in savings in 2012.

The big question facing Illinois' electricity market is how it will change on June 1, when the last of higher priced utility contracts expire and ComEd and Ameren rates are expected to drop.

Consumer Protection, C: Because of the expected drop in utility prices, CUB is concerned that many offers it is tracking charge "termination fees" of up to $175 if customers want to exit a contract early. (It appears many municipal aggregation deals do not charge exit fees, but that is a good detail to check with local officials.) In addition, CUB has received troubling reports of misleading marketing. The reports often come from aggregation communities, such as Chicago, presumably because competing suppliers are racing to sign up customers before the community switches residents to its chosen supplier. Sales representatives may become more desperate as the pool of potential customers gets smaller and in the face of the expected drop in utility rates.

" Illinois consumers should be on alert," Kolata said. "Conditions could be ripe for rip-offs."

CUB warned Illinoisans to use extreme caution if a marketer:

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,098.45 +18.88 0.11%
S&P 500 2,003.37 +6.63 0.33%
NASDAQ 4,580.2710 +22.5760 0.50%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs