AUSenergy News Update 03/26/2014
Mar 26, 2014

In today’s AUSenergy News Update: Gas utilities warn of 30-37% increase in default service rate, Tinley Park electricity savings may shrink, and some Pennsylvania customers on fixed-rate plans still see higher electricity bills.

Gas Utilities Warn of 30-37% Increase in Default Service Rate

Summary: North Shore and Peoples Gas warn Illinois customers about substantial increases in default service rates projected for April. The sustained colder-than-normal winter temperatures are claimed to be the cause of the increases. North Shore said its gas charge for April is expected to be $1.21 per therm (37% higher than the current rate of $0.8816 per therm) and Peoples Gas said its charge for April is expected to be about $1.19 per therm (27% higher than the current rate of $0.9336 per therm.)
AUS Comment: These increases are also reflected in the market. The Natural Gas Index (NGI) for March was 1.0820 per therm, up .284 cents from February which settled at .7980 per therm. This is a 35% increase in Index pricing. Both index and utility gas pricing in Illinois have been at very low levels for almost 3 decades, which is why many customers haven’t considered fixed pricing or hedging against future price increases. There is little customers can do now to protect against these increases if they haven’t budgeted for them, except to try to consume less gas during these particular months.

Tinley Park electricity savings may shrink

Summary: Tinley Park residents and small business owners participating in the municipal aggregation program there are cautioned to lower their expectations for savings in the coming year. There are a few reasons for this. First, ComEd has narrowed the rate gap after it renegotiated contracts with suppliers to bring costs more in line with those of its competitors. Secondly, ComEd has increased the cost of electricity delivery by 1 cent per kWh. The average monthly household electricity utility bill is expected to increase by about $5.50.
AUS Comment: Those who continue to participate in the electricity aggregation program will likely continue to see a lower rate than that offered by ComEd, though the rate gap will be smaller than it has been for the previous two years. Customers who choose to opt out of the municipal aggregation program will not be charged, but if they do not choose another supplier within 60 days, they will be locked into ComEd for a year.

Some customers on fixed-rate plans in Pennsylvania still see higher electricity bills

Summary: Unwary electricity customers in Pennsylvania have been hit hard by skyrocketing electricity bills. Most of the customers more severely affected were on variable rate plans. In most cases, customers on fixed rate plans did not experience the effects of rate increases. However, some customers who thought they were on a fixed rate plan were not notified that their supplier had switched them to a variable rate plan once their contract expired.
AUS Comment: Current PUC rules do not require suppliers to give notice when switching customers from a fixed rate plan to a different variable rate plan. However, it is required for suppliers to give customers on fixed rate plans at least 90 days-notice of the expiration of the plan. It is crucial that customers know what the terms are for their fixed rate plans.

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