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Switching Electricity Suppliers: Where Are The Savings??

Not surprisingly, there appears to be a lot of confusion around the savings you can achieve by using alternative energy suppliers. Allow me to clarify things a bit. First of all, there are two main parts to your ComEd bill: Supply and Delivery. If you have not yet switched, ComEd is currently handling both your supply and delivery. If you switch, another supplier will manage your supply, and ComEd will still manage the delivery.

Here’s a bit more info on how it all breaks down: Suppliers are essentially buying electricity wholesale and reselling it to you with a slight mark-up, much like any other retailer. (They have to make some kind of profit, otherwise, why would they bother?)

Suppliers also provide oversight for the transmission of energy from the power plants. Once electricity is generated, it leaves the plants through high tension wires and passes through a substation, where the power is converted to a lower voltage as it shifts from the “transmission” grid over to the “distribution” grid. (Tidbit: Transmission relates to the transport of energy across the country, whereas distribution occurs on a more local level.) This is essentially where the supplier passes the baton to the local utility company. If you were to switch to a new supplier, their charges on your bill would include supply and transmission.

Delivery (or distribution) refers to the means by which your electricity is being physically transported from the local power grid to your home or business, through power lines on poles — or underground, if you’re really lucky. The utility company is entirely responsible for delivery of electricity to your home, and as such, any charges related to delivery will be unaffected if you switch suppliers.

So, what that means is…  if you switch, you will see the savings on your supply charges, but likely not on your delivery charges (unless by some miracle ComEd decides to lower their rates, but I’m certainly not betting the farm on it). In terms of rates, they are completely independent from one another.

Here’s a look at my own bill so you can see for yourself!  (Click to enlarge)

Another important thing to note is that you may not actually see a decrease in your bills once you switch. Um, what is the point then, you’re probably asking? Well, it all depends on your usage! If you use more electricity this month than last month, even if your supply rates decrease as a result of switching, your bill is determined by how much electricity you use each month (which is multiplied by the rate of your supply). Similarly, your delivery charges will increase, too, as you use more electricity! So, there’s definitely a compelling argument for switching suppliers AND conserving as much energy as possible — you’ll see an even greater reduction in your bills each month when you do BOTH.

Additionally, there’s never been a better time to switch suppliers in Illinois, with the ComEd rate hikes taking effect in the coming years. The savings you could see on the supply side could easily offset the increase in ComEd rates, and you could also save some additional money on top of that! So, what are you waiting for? Go ahead and make the switch!


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