FAQ: What is Municipal Aggregation and How Could I Save Money With (or Without) It

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..

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