New cooperative seeking to be an alternative to Ameren
A new company is trying to break into the barren wasteland known as residential electric service in Illinois and bring competition that’s long been promised but never delivered.
Dubbed NICE, New Illinois Cooperative Energy hopes to sign up thousands of residential and business customers now being served by Ameren Corp. across much of Illinois, then provide them power starting early next year.
But whether the new group spearheaded by an energy co-op in southern Illinois can make its business model work elsewhere is a key question, especially since Ameren has such a stranglehold on the residential market.
NICE officials are careful not to send the wrong message on offering lower prices to Ameren customers.
“We can’t make one single promise, can’t make one single guarantee because there’s so many variables,” said Kerry Sloan, NICE’s CEO. “We absolutely don’t know what our price would be.”
Ameren welcomes the competition, spokesman Leigh Morris said.
“We have been very supportive of choice, and as more options become available, that just demonstrates that the choice law is working,” Morris said.
NICE is being formed by the team of the Southwestern Electric Cooperative, which serves customers in southern Illinois, and Integrys Energy Services, which supplies power nationwide.
NICE was developed by Illinoisans upset over Ameren’s electric rate increases. The end of a 10-year rate freeze in 2007 sent many customers’ rates soaring.
The idea is to get a large enough pool of customers to let the not-for-profit NICE group negotiate attractive power purchase prices. Sloan expects the not-for-profit business model will be more beneficial for consumers than Ameren’s for-profit model.
State Sen. Dave Koehler, D-Peoria, is one of NICE’s architects. He sees it as a new strategy, borrowing from the bulk buying power used in health care, and trying to make that work for electric customers.
“If we’re going to be involved in deregulation, then this is a strategy based on those conditions,” Koehler said. “The concept is consumers helping each other and trying to negotiate for power.”
Competition has grown for business customers, but no one has really emerged to challenge Ameren and ComEd for residential service. NICE hopes to draw lower rates than Ameren by purchasing electricity far more often, catching lower market prices at the right times.
First, the group needs turnout.
It plans to offer service in early 2009 but needs at least 7,000 Ameren customers to switch over first before that can happen. Being a not-for-profit, NICE won’t be running advertisements or doing a lot of expensive promotional work but isn’t just shooting for a small customer base either.
“Hopefully, word of mouth is going to get this program up and going and sustaining it,” Sloan said. “We would absolutely be thrilled if we had every customer in the state. Think of the buying power, think of the clout.”
Customers who do switch will still receive their power from Ameren, the distributing company, over Ameren’s lines. NICE residential customers will pay a $4 monthly fee, while small businesses will pay $8 monthly.
“We simply urge people to be aware of their options, to investigate their options and to make a decision that is right for them,” Ameren’s Morris said.
Citizens Utility Board executive director David Kolata said it’s smart for consumers to be cautious about whether the new service can deliver lower rates. But he called NICE’s formation an “encouraging development” for consumers ready for competition to help drive down electric costs.
“If they do that, I think it’s going to be very popular,” Kolata said. “If there’s ways for consumers to save, we’re going to be the first ones to let people know about it.”
Ryan Keith can be reached at (217) 788-1518.