Electricity bills going once, going twice...

By Matt Wood in News on Jan 25, 2006 8:26PM

Jealous of all the fun People's Gas is having jacking up their rates to customers, Illinois Commerce Commissioners in bed with ComEd voted Tuesday to approve an auction system for obtaining electricity that could result in $1 billion increase per year in residential electricity bills. Illinois rates have been frozen for nine years, but the price caps will come to an end in 2007 as the electric industry deregulates.

The idea is that ComEd would purchase electricity at free market prices through an auction system. ComEd doesn't actually generate any power, they just broker it, purchasing it from others like, strangely, their own parent company Exelon who own actual plants. Theoretically the auction simulates a free market system. Since consumers only have one choice for an electricity supplier, the auction pushes the competition up the supply chain one step because ComEd has to re-sell the electricity it purchases at the same price. This doesn't guarantee savings for us though, because the energy suppliers are free to sell their juice to other brokers who can mark up prices and bid in the auction.

Complicated stuff. Chicagoist doesn't completely understand it, so we'd appreciate if one of you smartypants out there wants to provide any further explanation. But when we're already smarting from $360 gas bills, massive health insurance premiums, increasing cable rates, and exorbitant prices for generally shitty internet service, an increase in electricity rates is bad, albeit sadly expected, news.