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| Electricity Rate Increase to Average 22 percent in 2007  ComEd residential customers can expect an estimated increase of approximately 22 percent on their average monthly electric bills beginning in 2007, based on the results from Illinois' first electricity auction. This preliminary estimated increase follows a 20 percent residential rate cut and nine-year rate freeze that will have saved ComEd's residential customers $4 billion by the end of this year. Electricity supply costs represents approximately 60 percent of the total electric bill for residential customers. For an average residential customer with a $60 monthly bill, the increase would be about $13.20 per month, a 22 percent increase, based on ComEd's preliminary estimate. The increase would not take effect until Jan. 2, 2007.Recognizing that rate increases are difficult for customers, ComEd proposed a voluntary plan that, if approved by the ICC, would phase in residential rate increases over time. The plan is part of ComEd's CARE (Customers' Affordable Reliable Energy) initiative to assist residential customers with rising energy prices. Although electricity rates will increase in 2007, ComEd residential rates will remain comparable to or lower than those of most major cities, including Boston, New York, Los Angeles, San Francisco and Philadelphia. The average rate for the ten largest metropolitan areas will still be 14 percent higher than ComEd's average residential rate, even with the estimated increase. ComEd owns no generation and must go to the open market to buy electricity for 2007 and beyond. After an 11-month proceeding to develop the best power procurement plan for Illinois electric utility companies, the ICC concluded that a statewide auction to buy power would serve consumers best. The auction provides the utilities' customers with the lowest available market price for electricity. The auction design and rules resulted from six months of procurement workshops involving all stakeholders, followed by an 11-month formal process that included weeks of hearings, 5, 000 pages of testimony from all parties, and a detailed final ICC order. In the auction, successive rounds of bidding by qualified wholesale energy suppliers drive the price for energy lower. The process is open and transparent, and the lowest bidders win. The auction also employs several features to protect consumers and promote competition. For example, a diverse portfolio of suppliers is assured because no single supplier can win more than 35 percent of ComEd's load at auction. Also, the staggered three-year contracts offered at auction reduce exposure to volatility in the wholesale market. The Illinois Commerce Commission (ICC) recently decided to allow the auction result to go into effect, with a final blended price of $63.76 per megawatt hour for residential and small commercial customers. ICC staff and an independent auction monitor provided ongoing oversight of the process, which was administered by NERA, the auction manager. write your comments about the article :: © 2006 Construction News :: home page |