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Caveat emptor. That’s the message from Chicago’s leading consumer advocate on energy costs to residents who want to improve the environment and are signing up with green-power providers to do so.
The Citizens Utility Board, in a “consumer alert” yesterday, said there are better ways for consumers to put their money where their environmental hearts are than to sign up with electricity marketers peddling “100 percent green” power. The warning comes as the group reports getting more questions from consumers about these offers amid rampant confusion in the marketplace.
“It can be very difficult to figure out if you’re paying what you should be paying for what you’re getting,” CUB Executive Director David Kolata said in an interview.
The warning comes after a piece I wrote last week about my retired north suburban parents signing up with an outfit called CleanChoice Energy and unknowingly paying over $600 more than they would have with Commonwealth Edison over a period of just 17 months. In that period, their monthly price for electricity fluctuated wildly without warning and for fourth months touched 14.8 cents per kilowatt-hour, more than double ComEd’s comparable price at the time and far exceeding what would be a normal additional cost for renewable power.
“The story you wrote about your parents is eye-opening,” Kolata told me. He said CUB hears similar tales frequently.
Providers like CleanChoice purchase “renewable energy certificates,” or RECs, from operators of wind and solar farms in addition to electricity on the wholesale market to be able to claim their offers are 100 percent green. Costs for those RECs can vary based on where they’re sourced. But they generally don’t exceed 0.5 cents per kilowatt-hour (people can buy their own RECs for that cost online) and usually are less. Add that amount to ComEd’s price, and the cost is about 8 cents currently.
CleanChoice last week explained the extraordinarily high price it charged my parents as being due to volatility in energy markets. But while wholesale power prices have risen some in recent years, they’ve increased nothing like the 70 percent my parents experienced.
A CleanChoice representative didn’t respond to a request for comment on CUB’s warning.
“Signing up for a ‘green’ plan does NOT mean your home will be directly powered by solar or wind energy,” CUB said in its alert. “When you turn on the TV or charge your cellphone, there’s no way to guarantee that the electricity is coming from renewable energy. The power grid is constantly being fed by thousands of sources, from coal plants to wind and solar farms.”
Appealing to consumers’ desire to improve the environment is a highly effective way for retail electricity suppliers to convince customers to pay too much for electricity, Kolata said. In a statement, he added, “Green plans are a legitimate choice for consumers who fully understand what these offers are, but nobody should think that they have to pay more on their electric bills to protect the planet.”
Better ways to help, CUB advised, include investing in home improvements that cut back on power consumption.
Additionally, offers in the Chicago area will be coming in the next year or so for residents to invest in “community solar” projects, solar farms built on vacant parcels in denser urban and suburban areas that will accept subscribers, who in return can get a credit on their electric bills.
And some consumers should consider opting for “real-time pricing,” which prices electricity by the hour and in recent times has provided significant savings, Kolata said.
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