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Growing Opposition to Mandatory Demand Charges

By Abe Scarr
Director

Illinois PIRG joined elected in community leaders from Chicago and Cook County in opposition to ComEd's mandatory demand charge proposal. Below is a letter being distributed to members of the Illinois General Assembly.

 

Dear Members of the Illinois General Assembly:

We want to express our deep concern with Commonwealth Edison’s (ComEd) proposal to impose “demand charges” on household electricity bills as part of their proposed energy legislation SB 1585.  

Under this plan, all electricity utilities would, for the very first time, be allowed to add a demand charge to household electricity bills.  This is a radical departure from how customers have paid for electricity since the inception of the industry more than a century ago. In fact, no other state legislature has ever approved a demand charge on residential customers.  

What is a demand charge?   A residential demand charge, like the one ComEd wants to impose, will charge customers a fee for the entire month based on a short time period during which they use the most electricity.  Turning on your dryer, toaster, and microwave at the wrong time will significantly increase your bill. Demand charges are hard to understand and hard to control.  They will make it impossible for consumers to control their electricity bills.

For many citizens of Illinois, electricity bills are significant portions of their expenses, and demand charges may significantly increase these already expensive bills.  The burden will be even greater if you live pay check to pay check or on a fixed income. A single hour’s careless electricity use can cause an unexpected bill spike that puts energy or other essential expenditures out of reach.  In addition, the charges negate the bill savings that customers could see from either saving energy through energy efficiency or conservation measures or investing in renewable energy systems for their homes.

A recent white paper from five leading utility experts, including former Illinois Commerce Commissioner John T. Colgan, concluded that demand charges tend to overcharge the smallest utility customers for electricity service, hitting apartment dwellers particularly hard.  The paper also warns that demand charges are confusing for customers and difficult for customers to predict and manage.[1] 

While some other utilities across the country are considering changes in rate design to meet the future needs of the electricity grid, no state has given blanket approval to this kind of charge.  Significant analysis is needed to determine how such a fundamental change will impact customers, and ComEd’s proposal to shift to this new way of collecting fees without the benefit of pilot projects or a full regulatory proceeding to assess its impacts on households is reckless and unnecessary.

Illinois customers - especially low-income communities of seniors, immigrants, or diverse neighborhoods - should not be subject to a largely untested new electricity rate policy, with these potentially difficult consequences for households.  Furthermore, ComEd has not demonstrated that it has a need for an additional charge. 

We agree with Attorney General Madigan who was quoted as saying, “By subjecting consumers to demand rates, ComEd’s proposal could unfairly allow consumers to be charged more for using less. … ComEd’s untested proposal would take away control and predictability in consumers’ bills and should be rejected.”

We urge you to join us and others in rejecting this component of the company’s proposed legislation SB 1585.

Sincerely,

Recorder of Deeds and Proviso Committeeman Karen Yarbrough
Jesus "Chuy" Garcia, Commissioner of the 7th District, Cook County
Proco "Joe" Moreno, 1st Ward Alderman and Committeeman
Kevin Bailey, 20th Ward Committeeman
Howard B. Brookins Jr., 21st Ward Alderman and Committeeman
Ricardo Munoz, 22nd Ward Alderman and Committeeman
Michael Scott Jr., 24th Ward Alderman and Committeeman
Jason Ervin, 28th Ward Alderman and Committeeman
Emma Mitts, 37th Ward Alderman and Committeeman
Emma Lozano, Centro Sin Fronteras
The West Side NAACP
Kathy Allison, United for a Better Living Foundation
Dr. Betty Allen-Green, Chicago Lawndale AMACHI Mentoring Program
West Portage Park Neighbors Association
The North Lawndale Employee Network
AARP Illinois
Illinois Public Interest Research Group

 

[1] Chernick et al., Charge Without a Cause? Assessing Electric Utility Demand Charges on Small Customers, (July 18, 2016).

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