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Chicago Municipal Electricity Aggregation: Getting to know Integrys Energy Services

Fellow Chicagoans, it is official, the City of Chicago has chosen your new electricity supplier. It is – drumroll please – Integrys Energy Services!  (And, you hear crickets…)

Integrys Energy Services is not a well-known company for most of us. But, they’re about to take the place of ComEd, a company we all know and… well, we all know. Integrys Energy Services will soon be supplying all of our electricity. Maybe we should know a little something about them. Power2Switch has a complete description of Integrys Energy Services along with descriptions and reviews of other electricity suppliers. But, I’ve included the highlights below for your benefit.

Most of us are somewhat familiar with Integrys Energy Services, though we know them under different names – People’s Gas and North Shore Gas, the two natural gas utilities here in northern Illinois. Here’s how this works out. The parent of Integrys Energy Services is Integrys Energy Group.  Integrys Energy Group owns People’s Gas and North Shore Gas. Think of Integrys Energy Group as the parents of People’s Gas and Integrys Energy Services, but People’s Gas and Integrys Energy Services live in different houses and don’t share toys. Integrys Energy Group also owns Wisconsin Public Service (WPS – a regulated electric utility in Wisconsin), Michigan Gas Utilities (a regulated natural gas utility in Michigan), Minnesota Energy Resources (a regulated natural gas utility in Minnesota), and Upper Peninsula Power Company (a regulated electric utility in the Upper Peninsula of Michigan).

With all these subsidiaries, the Integrys Energy Group is a large company. They are publicly traded on the New York Stock Exchange (NYSE) under the symbol “TEG”, and have more than $10.0 billion in assets.

What does Integrys Energy Services mean for Chicago and Chicagoans?

Now that we know a little more about Integrys Energy Group, we can start pulling together what that means for us as electricity customers in Chicago. First, let’s take a look at Integrys Energy Group’s generation mix:

Coal:                                                                             72.6%

Natural Gas / Fuel Oil:                                              19.7%

Renewable Energy:                                                    7.7%

Total Generation:                                                       2,471.1 MW

Note: Renewable Energy in this case includes hydro-electric.

A full list of each power plant and their location is located in the supplier review for Integrys Energy . By taking a quick glance through the list, a few items come to light. First, notice that none of Integrys’ power plants are located in Illinois. With power plants located outside of Illinois, Integrys will need to send the electricity from Wisconsin and Iowa if it wants to use its own electricity plants to provide electricity. With Chicago being in PJM ISO territory, and Wisconsin and Iowa being in MISO territory, it becomes more difficult to send electricity from one ISO to another. (PJM and MISO are both independent system operators, which manage the electrical transmission grid over large areas. To find out more about how the electrical grid works, take a look at this series of articles that explains our modern electrical grid) Second, remember that the City of Chicago is requiring that no coal be used in the generation of the electricity supplied to electricity customers in Chicago. Integrys does not own enough “non-coal” generation to be able to supply Chicago with enough electricity. Both of these point to the need for Integrys to purchase its electricity from someone else. This happens all the time in the electricity industry. Even ComEd buys all of its electricity from someone else .

The “No Coal” Requirement

Let’s dig a little deeper into the City of Chicago’s “no coal” requirement for the electricity being supplied. Crain’s made the valid point in an article earlier this week that it is nearly impossible to ensure that none of the electricity produced by coal will reach the city’s customers (http://www.chicagobusiness.com/article/20121206/NEWS11/121209865/chicago-pushes-no-coal-in-electricity-contract).

The way the grid operates, and the way electrons operate, makes it impossible to track, which electrons go where. Electrons are the pieces that make up electricity. The electrical grid operates by a power plant on one end of the grid putting electrons onto the grid. These electrons then flow to where every they are needed. Since all the electrical lines are interconnected to truly form a grid (this provides redundancy and robustness to the electrical grid), the electrons can end up just about anywhere. The electrons powering your lights right now could be coming from 100 different power plants!

So, if you can’t track where the electrons are going, how can Integrys deliver electricity without using coal to the City of Chicago? It all comes down to accounting. Integrys has contracts with a number of power plants that use different types of fuel, and it has a number of end user contracts that are also outside of the City of Chicago. Integrys simply has to make sure that it’s calling for enough generation from its “non-coal” power contracts to cover all Chicago’s demand at that time.

A quick example will help clarify. For simplicities sake, let’s only use coal and nuclear power plants. The nuclear plant can produce 170 MW at 3 c/kWh and the coal plant can produce 150 MW at 4 c/kWh. Let’s assume the City of Chicago needs 100 MW at this moment, and all of Integrys’ other customers in Schaumburg need 120 MW. Without the “no-coal” requirement, Integrys would dispatch the least expensive 220 MW of electricity from its generation contracts. So, 170 MW will come from the nuclear plant and addition 50 MW will come from the coal plant. The nuclear contract is dispatched first since it’s less expensive.  (Check out this link for more about how this works)  With the “no-coal” requirement, Integrys would dispatch the exact same amount from each electricity plant. The only difference is that an accountant would make a note that 100 MW of the nuclear generation was going to the City of Chicago, and that 70 MW of the nuclear generation and all the coal generation was going to Schaumburg.

So, when will the “no coal” stipulation have any impact on which power plants Integrys turns on?  The only time it will have an impact is when the City of Chicago requires more electricity than can be provided by Integrys’ contracts for nuclear generation. If you look at the generation mix in Illinois for August 2012 (the latest month for which data is available through the EIA), nuclear accounted for 47.8% (8,404 GWh), coal accounted for 43.6% (7,661 GWh), natural gas accounted for 6.6% (1,163 GWh), and other renewables (mostly wind) accounted for 2.0% (357 GWh). (Find the relevant data from the EIA here – http://www.eia.gov/beta/state/?sid=IL#tabs-4.)  And, assume that Integrys has contracts for generation that roughly match the generation mix for the state, the only time the “no-coal” provision will have an impact on what Integrys doing is when the 900,000 customers in Chicago are more than 56.4% of the electricity demanded.  For simplicity, if we assume each customer demands the same amount of electricity, as long as Integrys has at least 1.6 million customers in PJM ISO (900,000 in the City of Chicago, and 700,000 outside).  There are 3.8 million customers in ComEd territory along (including the 900,000 in the City of Chicago).  When you add in potential customers from Ohio, Pennsylvania, New Jersey, and Maryland, it becomes clear that this is not a very high hurdle for Integrys to hit.  At the end of the day, the “no coal” provision for the City of Chicago is going to have no impact on the generation mix in the state of Illinois.  But, it’s one of those things that sound really good.


If you’re perfectly happy with Integrys as your electricity, and if you’re happy that 43.6% of your electricity is going to come from coal, you don’t have to do a thing. Integrys will take care of all of the work, and you’ll start paying them for electricity supply in February or March of 2013. You’ll probably end up saving a little money too. But, if you want to choose another electricity supplier, or if you want to get more of your electricity from green generation, you have that option.

Stayed tuned for more useful information about Chicago Municipal Aggregation from your friends at Power2Switch.

De-regulation is the democratization of electricity – you have the power to choose. Make your voice heard! Join the conversation on twitter by following @Power2Switch #ChicagoMuniAgg

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  1. Fred Maurer says:

    This “savings” is rumored to be around a 10% off the price we are paying now, yet Aurora has a 100% green product as their default program and it is sourced exactly the same way Integrys will source their renewable energy, yet the savings in Aurora was almost 40% off. The difference is over ten peope were able to bid in Aurora, yet somehow only 2 (both Chicago based) companies were allowed to submit pricing for this deal. Smells like typical Chicago politics to me! Someone got very rich off of this deal.