Electric Aggregation Program Savings
May 20, 2012

Private residential opt-in aggregation program for electric space-heat high-rise condo associations, delivers higher savings than Chicago’s own residential aggregation program.

The concept behind aggregation makes a lot of sense; have a group of smaller users join together and be represented as one large buyer’s pool to achieve better pricing than each individual user can get on their own. In fact, Municipal or Government Energy Aggregation is saving millions of dollars for residents in Illinois, Ohio, and is just beginning to spread into New Jersey.

Although commercial and industrial users have been enjoying savings resulting from deregulation for many years, the residential homeowner or apartment dweller has been left with fewer opportunities to save.

Aggregation for Residents with Electric Space Heaters

There are Opt-In and Opt-Out aggregation programs, but most government programs are Opt-Out. And in general, that statement holds true for most residential customers. But did you know that there are two different electric tariff rates for residential? One is standard residential, but the second one is for residents that heat their condo or home with electricity instead of natural gas. Under the city aggregation program, both customer classes would receive the same rate per kWh. But in reality the electric space heat customers have a much better usage load profile and could achieve better rates and therefore better savings.

Aggregation programs for commercial, government or residential also provide the fairest benefit when users and rate classes are similar so that one does not subsidize the other. A residential electric space heat load is a larger user and uses more energy in the winter and at night – both time periods that offer lower cost power.

Size of Loads – It Makes a Difference

As part of the aggregation process, it is also important to identify the size of the loads, usage profiles, peak demands and rate classes in order to bundle members for optimized savings. Aggregating dissimilar loads can create hedging issues under many Municipal or Government Aggregation contracts that allow people to opt-out and leave at any time. For instance, the large user leaves and since their load subsidized everyone else, their departure ruins the intended economic benefits of the aggregated group. In these instances, the supplier takes on that additional risk, and passes it on by imposing higher costs for a program that was meant to save you money.

Energy Consultants

A good Energy Consultant will help find the right energy aggregation program to fit your needs and save you money.

At Alternative Utility Services (AUS), we manage the electricity and gas for the common areas of over 400 condo associations, and it is our job to recognize savings opportunities for our clients. In 2012 alone, AUS successfully aggregated 48 buildings with a total of 12,200 residences for a savings of 17% below the City of Chicago Aggregation rate.

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