I’ve heard criticisms that the reverse auction in IL only includes annual and blended 3-year contracts for default service. Inclusion of longer time horizon products could allow for better portfolio management and bring prices down??

I’m still not sure I completely understand the argument. Any thoughts?

Also any idea when BlueStar is actually going to enter the residential market in IL? They’ve been hinting at it for a while. http://www.bluestarenergy.com/homes/index.html

It is sort of an economy of scale in management.

DOUG brings up good points regarding stranded costs, but aren’t those all in the past? If they got the plants for cheap, that doesn’t help them provide cheap power in future time periods (other than the fact that they may not have any capital costs other than maintenenace).

Like I said, we’re now getting charged about 10 cents a kW-hr, vs. 8 and change under the regulated rates. 10 cents is not a lot to pay if you look at rates nationwide. It is either average or a little below average.

In the specific case of Exelon (ComEd’s parent), during the proposed merger with PSEG Exelon’s efficient management of its nuclear fleet was touted as a potential benefit from the merger. So what your saying is that ComEd has not always been the sterling performer in this regard? But now, with shareholder money more immediately on the line, ways to improve have been found.

Just in the last few days I pulled a series of electricity prices from EIA, 1990-2005, and then I added 2006 from the monthly database. You know, Illinois has really gotten quite a deal in that period of time. Now, they were paying high rates in the early 90s, in real terms, but their prices have steadily dropped (real), clearly during the rate freeze period. So, it should be expected that their rates should jump to reach market.

On the other hand [advocating Mephistopheles here] I don’t know what arrangements were made for the transfer of Exelon’s nuclear fleet. Those plants were having real trouble in the early 90s. I remember thinking that ComEd was clearly going to go bankrupt. They didn’t, and those plants are good performers today. But I worry that the transfer prices on those nuclear plants might not have been equitable from the consumers’ perspective. I really don’t know in this case, but I think there were places in the country where consumers paid down “stranded cost” only to be out of luck when the costs aren’t stranded any more. I think this happened in more than one place. Texas comes to mind. I know… buyer beware. I just think some public service commissions made some very bad choices in letting go of assets in which their constituents had stranded benefits. Or, they let go of them cheap and had the consumers pay the stranded cost. That’s the real screw job that’s now coming home to roost. The downside of that is that it’s trashing the competitive market model, when it really doesn’t have much to do with market structure.

They want the old regulated rates, but they also want competition. Well, isn’t it possible that the old regulated rates are so low that no one can supply electricity at them?

The lack of competition is simply a reflection that the old rates were too low. But Madigan and her ilk need to spin this as collusion and conspiracy. That’s just sick.

Isn’t there a law of human nature that the simplest and most obvuous answer is generally the correct one?

Anyway, now that there’s a framework for buying electricity at auction, if the new rates really are a ripoff (and I just paid about 10 cents a kilowatt hour in February. Doesn’t seem outrageous to me) then electricity competition should become the norm in short order. If not, maybe those rates are TOO LOW.