By: Rob Dolin, Co-Founder and CTO, Energy Simply LLC

BACKGROUND

About thirty years ago, everyone had just one electricity provider.  It was either a publicly owned utility like Seattle City Light or a Privately-owned but very regulated utility that was allowed to earn a guaranteed rate of return in exchange for providing power to all the customers in a given service area regardless of how much it cost to serve them.

With privatization , some electricity providers went from public ownership to private ownership and/or private electricity providers were formed.  Puget Sound Energy (PSE) is an example of a private electricity provider.

With deregulation, multiple electricity providers were allowed to service customers.  Often, these other companies provide electricity over the same wires owned by the “incumbent” electricity provider.  For example, in Chicago, IL, the incumbent, ComEd, makes its wires available to many companies (27 in Dec. 2014) and literally DOZENS of retail electricity offers are available to customers (70 in Dec. 2014.)  For example, the Ambit Energy company has three offers for northeastern Illinois residents.  You can see a list of all seventy offers for northeastern Illinois residents at: http://www.pluginillinois.org/offers.aspx?said=1.

MUNICIPAL AGGREGATION

When you’re negotiating, if you buy more, you often get a lower price.  This holds for electricity.  Cities, counties, and groups of cities and counties, get together to negotiate on behalf of their residents.  When a municipality negotiates an electricity deal on behalf of its citizens, this is called municipal aggregation.

PROS AND CONS OF MUNICIPAL AGGREGATION

Municipal Aggregation is usually a better deal than the incumbent electricity provider and than many of the dozens of other offers; but there may be some exceptions:

• LOCKED-IN PRICE: A municipal aggregation deal with a fixed price may be a good deal at the beginning, but if the cost of electricity goes down, it may not be as good.
• FIXED MINIMUM COST: some municipal aggregation deals have a fixed minimum cost so apartments or homes that are frugal with their electricity use may not be getting a better deal.
• NOT RENEWABLE / GREEN: A municipal aggregation agreement may get a relatively low price, but it might not be choosing energy sources that align with your values.  In some municipalities if you want renewable energy, you need to opt-out of the municipal aggregation agreement.

ENERGY SIMPLY AND MUNICIPAL AGGREGATION

Energy Simply isn’t just another website for browsing the myriad of electricity providers (though we do enable our customers to compare power plans for Illinois and Texas.)  Energy Simply analyzes YOUR electricity usage and preferences (cheapest or cheapest renewable) to build a personalized electricity profile and then monitors the ever-changing market to help you find the best plan for you (and switch to it if you choose our Gold plan.)

Our system takes into account your location and any municipal aggregation offers available to you; and helps you find the best electricity provider.  You can sign-up today for a FREE 30-day trial at: http://www.EnergySimp.ly/

Thanks–
–Rob

P.S. If you have more questions about Municipal Aggregation, the Plug-in Illinois website from the Illinois Commerce Commission has more info at: http://www.pluginillinois.org/MunicipalAggregation.aspx

Rob Dolin is the Co-Founder and CTO of Energy Simply. He has over a dozen years experience in the technology industry including work in the Office, MSN, and Windows divisions of Microsoft Corp. and technical partnerships with Facebook, Twitter, LinkedIn, and Sina Weibo. Rob holds a B.S. in Engineering with Honors from the University of Illinois and a Graduate Certificate in User-Centered Design from the University of Washington..

By: Jordan Hobfoll, Co-Founder and CEO, Energy Simply LLC

When shopping for plans you will likely come across two different types. The first is a fixed or fixed-term plan. The other is a Variable or month-to-month plan. So what is the difference between the two?

FIXED TERM

Fixed term plans allow you to lock in a fixed price for your power over the plans term which might range from 3 to 24 months. This kind of plan gives you security over the term that your price per kWh will not change though your monthly bill will fluctuate based on your actual usage.

The main thing you have to worry about with these plans, besides choosing the lowest price, is making sure you don’t get caught sleeping at the end of the plan term. If you do you may end up in an expensive month-to-month plan.

VARIABLE or MONTH-TO-MONTH

Variable plans on the other hand only give you the price per kWh that was advertised to you for one month guaranteed. Thereafter, the price will fluctuate based on the “market.” So in month two the price could be theoretically lower or higher. With this plan you lack certainty. If there is a natural gas shortage due to a severe winter you could be hit with a much higher rate. Some people have seen their rates increase by as much as 4x. The truth is most companies have a very opaque process for setting the variable rates and just like in used car sales they have an information advantage on you that they can leverage to overcharge you. I’m sure that some companies have honest methodologies for determining variable rates but the truth is that it is extremely hard to tell if that’s the case.

WHAT DOES THIS MEAN FOR YOU?

Due to the information disparity between you and the power companies, opacity of the variable rate market, and the certainty that comes from fixed rates we strongly recommend that you always choose a fixed rate for your power. You will never be surprised and you will be able to do fair comparisons between companies.

Remember to watch out for the expiration of your fixed plans, however. If you aren’t paying attention, you will get thrown onto a variable, month-to-month plan when you plan expires. SO make sure you are at the ready to sign yourself up for a new fixed rate plan when your is about to expire.

For those of you who don’t want the hassle of tracking your plans and want to avoid getting stuck on month-to-month plans because your life is too busy to remember to switch, Energy Simply’s Gold Plan is perfect for you. We will sign you up for the best plan, track your expiration and switch you automatically. Click Here to Learn More.

Jordan Hobfoll is the Co-Founder and CEO of Energy Simply. He previously worked at McKinsey & Company, where he was a consultant for some of the largest electric utilities in the United States. Jordan also holds an MBA from the University of Texas at Austin and a B.S. in Finance with High Honors from the University of Illinois.