Illinois ORMD Commences Review of Potential Residential Barriers at Ameren

Illinois' Office of Retail Market Development has asked electric suppliers to informally comment on the reasons for the lack of residential competition at Ameren.

As only noted in Matters (12/16), the request is an outgrowth from a directive from Commissioner Sherman Elliott, made during the adjudication of Commonwealth Edison's Purchase of Receivables program.

Ameren has had POR in place since November 2009, but has seen scarce residential competition. ComEd has already attracted over half a dozen residential suppliers that are either currently in the market or will enter within the next few months (BlueStar Energy Services, Champion Energy, Spark Energy, Nordic Energy Services, Constellation NewEnergy, and Energy Plus Holdings, LLC all confirmed; several additional big names expected soon).

ORMD encouraged suppliers to respond regardless of their current certification status or Illinois plans. Responses will be aggregated by ORMD, but individual responses will not be identified as from a specific supplier or made public, due to competitive concerns and to encourage frank dialogue.

ORMD specifically asked suppliers to identify barriers to serving Ameren residential customers, and whether the same issues are present with respect to non-residential customers in the service area.

Although Ameren presents several unique issues (membership in the Midwest ISO and a much less urban service area compared to ComEd, for example), the main driver for a lack of residential competition appears to be the declining, two-tiered default service rate structure for residential customers during non-summer months in place for all customers in Rate Zone II, and for space heating and Metro-East customers in Rate Zones I and III. The tiers set a price for the first 800 kWh, and a lower price for all other kWh.

For example, in Rate Zone II, base generation for all default service residential customers is priced at 5.9¢/kWh for the first 800 kWh, but then drops to 3.775¢/kWh for kilowatt-hours in excess of 800 kWh.