CTA to Seek Lower Electric Rates

April 10, 2008

The Chicago Transit Board today approved an ordinance authorizing CTA to solicit electricity supply proposals from authorized suppliers in an effort to lower the annual cost of supplying electricity to CTA trains and facilities.

Under its current contract with ComEd and Exelon, CTA spends approximately $39 million per year on electricity.

The CTA is seeking to lower its yearly costs by seeking a competitive electric supply as allowed by deregulation. All outside suppliers, which are referred to as a Retail Electric Supplier (RES), must be certified by the Illinois Commerce Commission.

Customers who purchase electricity from a RES will still have its electricity delivered by ComEd but the purchase would be under the "unbundled" Retail Customer Distribution Service Tariff which can allow for significant savings.

There are two ways to purchase electricity: bundled or unbundled. With bundled service, a customer purchases electricity through ComEd exclusively at either hourly market rates or through fixed prices set in advance based upon the size of the facility; this is the way a typical homeowner or small-to-medium-sized business may choose.

For larger customers, like the CTA, it is generally more cost-effective to negotiate the purchase of the electricity separately through an outside supplier and then use ComEd service lines to deliver the power.

Today's Board approval allows CTA to advertise a Request for Proposals (RFP) for electricity and review submitted proposals from authorized RES power suppliers and also provides, with the consent of the Chairman, approval to sign an agreement if CTA receives a proposal that meets the electric and financial needs of the agency. This approval process is needed due to the volatility of the market and short-life span of supply quotes.

If CTA does not receive such a proposal, today's ordinance allows CTA to re-advertise the RFP or to use the ComEd Bundled Tariff rates. CTA's current Retail Electric Supply contract expires May 31.

 

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