The update is in the Illinois Commerce Commission’s Annual Report in the retail electricity markets in the state. The year ending May 31 marks the eighth year in a row that households buying from a supplier other than ComEd paid significantly more for their electricity.
Overall, retailers’ residential customers paid $112 million more than they would have with ComEd. The average ComEd customer pays about $85 per month for electricity.
Perhaps unsurprisingly, the industry’s consistent record of charging far more than the utility does for electricity has led to a decline in market share. In the year ending May 31, just over 500,000 households in ComEd territory had registered with a retail provider on their own, up from around 536,000 the previous year, according to the ICC report.
This still represents around 14% of ComEd’s residential customers.
“The value proposition for some customers is flexible contract terms and fixed price certainty, green power options and energy-saving products that competing retail electricity providers offer, but not the service public,” said Kevin Wright, president of the Illinois Competitive Energy Association. , which represents suppliers. “Price is one of the many factors that consumers consider when making their electricity supply decision.”
Overall, more than 747,000 households were customers of non-utility providers in May. The approximately 211,000 others are registered through contracts negotiated by their municipalities. Once a popular policy choice for area suburbs, contracting with vendors on behalf of residents and small businesses is much less so now as savings have been hard to come by. Over the past year, the number of residential customers served by retailers has decreased overall by 20%.
The state cracked down on sketchy bait-and-switch marketing tactics commonly employed by some providers in the so-called HEAT Act, signed into law in 2019. Among other things, the law prohibits companies from automatically renewing customers after the their contracts expire if they don’t charge a firm price for the duration of the pact. Many providers before the law lured customers in with low incentive rates, then dramatically increased prices after three months.
This could explain why suppliers struggle to attract new customers to replace those who have left. Another big factor was the COVID-19 pandemic, which kept marketers’ sales reps from going door-to-door for about a year.
The recent spike in wholesale electricity prices is likely to change the dynamics of retailers. With market prices for energy exceptionally low for most of the past decade, consumers were generally not looking for savings. Instead, they were to be sold.
Now, like in other industries, consumers may well become more price-sensitive and seek out deals. This could be an opportunity for the retail industry, as well as a challenge for law enforcement personnel charged with keeping the industry’s marketing tactics honest.