Power rate hike to hit college in ’07

By Ryan Davis

Ameren IP will have a special treat in January for college students paying their own utilities – a 40 percent hike in their electrical bill.

The electrical company distributed a press release confirming the rate hike last Friday. The question is: would college students change their lifestyles to cushion the financial blow if given the option?

“I don’t think people are going to change their lifestyles because of prices,” said George Gross, professor of electrical and computer engineering at the University, who feels watching an episode of “Lost” might be more important to college students than getting zapped with high electricity prices.

However, a new state law which takes effect on Jan. 2, 2007, gives electrical consumers in Illinois the choice to opt for real-time pricing, which means they would be charged by hourly, market-based wholesale electricity prices.

The lure of real-time pricing comes at a time when the flat-rate applied to electricity, which was frozen over a decade ago at a reduced price, expires at the end of this year.

Under the new law, consumers would have access to hourly, market-based prices and could alter their behavior to accommodate surges in the cost of electricity.

This would require monitoring hourly changes in electricity prices so a student would know, for example, to wash their clothes at 9 p.m. instead of 8 p.m. when electrical prices are lower.

Jeanette Wallbaum, a junior in ACES, who pays for all her utilities, said she would be willing to alter her lifestyle to cut corners on costs if the option was available.

“When you’re at college and you’re paying for everything, you don’t have a choice,” said Wallbaum.

“Even if it means waiting until 8 p.m. to wash your clothes or 9 p.m. to cook dinner.”

Wallbaum said, however, that she would not make drastic changes in her behavior to lower her electrical bill.

“As long as it’s not too extreme,” said Wallbaum. “But if there’s a slight change I can make I would be willing to do it.”

Michael Manious, a junior in LAS who also pays for all his utilities, said he too would change his behaviors to cut prices but doubts whether most other students would.

“I don’t see (high electrical prices) stopping a whole lot of people from watching a movie at a certain time,” said Manious.

The rules for implementing such a program must still be worked out with Commonwealth Edison and Ameren IP by way of the Illinois Commerce Commission which has to approve a real-time pricing program and rate structure before it takes effect for consumers.

Upon approval by the ICC, electrical utility companies such as ComEd and Ameren IP would have to contract with a third party to serve as a program administrator to develop and implement a program to provide consumer outreach, enrollment and education concerning real-time pricing.

According to the legislation, the third party will have to set up an accessible system for electricity consumers to monitor hourly rate changes which could be done via a Web site.

Gross said he thinks the new law puts an awful lot of confidence in the consumer to monitor hourly changes in a market that he said is susceptible to dramatic price fluctuations.

“These markets are extremely volatile,” said Gross. “I tend to think most end-users don’t want to be subject to that volatility.”

For the past three years a pilot program run by the Community Energy Cooperative in conjunction with ComEd has tried to test the potential mass market value of the real-time pricing program.

The cooperative, a non-profit organization, helps consumers manage energy costs and also tested the real-time pricing system on Illinoisians.

“In the first three years people saved a lot,” said Stephanie Folk, communications and outreach coordinator of the Community Energy Cooperative, who said some of the 1,500 households who participated saved up to 20 percent.

Folk said, however, that in the third year some people broke even or lost money under the pilot program.

“On a set standard rate you pay a premium for certainty,” said Folk who said real-time pricing is far more risky.

“It’s something that you can think of like investing in a mutual fund,” said Folk who said that just like a mutual fund, real-time pricing has its ups and downs.

Folk said participants in the pilot program were notified the day before an increase in electricity prices so they could alter their behavior accordingly the following day.

“If they’re interested in reducing their bill they’ll bump up the temperature on their air conditioner a few degrees,” said Folk.

The legislation, upon ICC approval, would require electrical utilities to install a meter capable of recording hourly interval energy use at the service location of each customer that elects real-time pricing.

The new law gives the electrical company the means to pass the cost burden of new meters along to consumers whether they opt for real-time pricing or the traditional manner of billing.

So, will a student wait until non-peak hours to dry his freshly-washed clothes?

“I think this is a little bit far fetched,” Gross said.