The Energy-Smart Pricing Plan Demonstrates a Promising Option for Consumers
The innovative Energy-Smart Pricing Plan is helping residential electricity customers reduce their bills, and the program could become the model for new consumer options in Illinois. On May 4, The Community Energy Cooperative, a Chicago-based nonprofit, released the evaluation of the second year of the pilot program. The evaluation confirmed the promising results found in the previous year’s report; customers saved money while managing their energy use in ways that benefit the electrical system and the environment.
The Community Energy Cooperative launched the Energy-Smart Pricing Plan (ESPP) in 2003 with the cooperation of ComEd, and more than 1,400 households in Northern Illinois are now enrolled in the plan. ESPP is the first program in the nation to offer residential customers real-time electricity pricing. Rather than pay the same price at all hours, participants pay a variable rate based on actual market prices. Consumers typically save money with ESPP even if they don’t change the way they use energy, and they can increase their savings by taking simple actions to use energy efficiently, particularly during peak hours. Kathryn Tholin, the Cooperative’s general manager, says ESPP has produced exciting results.
“This program gives consumers more options, and it lets people take greater control of their bills,” says Tholin. “So far, we’ve been very happy with the results. People are saving money, they’re changing the way they use energy in positive ways, and they’re happy with the program.”
The ESPP evaluation found that participants have also been extremely satisfied with the plan, saying it was easy and convenient to save money. Savings averaged 11 percent (compared to the standard residential rate) for the plan’s first two years.
ESPP participants also adjusted their energy use in ways that benefit the electrical system and the environment. They responded to hourly prices by conserving energy when prices went up. This response helps maintain reliability because high prices typically occur at times when the demand for electricity and strain on the electrical grid are greatest. Even a small reduction in demand during these peak hours can have big benefits. Finally, ESPP participants said it motivated them to become more energy efficient in general, not just during high price hours. This suggests the potential environmental benefits of offering consumers a real-time electricity pricing option-particularly an option that, like ESPP, includes consumer support and energy-efficiency information.
The second-year evaluation concludes that real-time pricing offers a viable option for residential electricity customers. With the Energy-Smart Pricing Plan, the Community Energy Cooperative has designed and implemented a program that saves consumers money, encourages energy efficiency, and benefits the electrical system and the environment. ESPP is currently in its third year as a pilot program, and legislators, regulators and utilities are looking to the plan as a model as they work to restructure Illinois electricity markets. Increasing the availability of this type of program could give the state’s residential customers greater choice in how they pay for electricity.
The complete evaluation of year two of the Energy-Smart Pricing Plan is available at www.energycooperative.org/reports.php.