When a woman from Nordic Energy called 72-year-old John Staunton and offered him a cheap rate on electricity, he signed up. His roommate wastes a lot of electricity, he said, by sleeping with the TV on.
The first month, the bill came as promised — a bargain at $81. The next month, his rates quadrupled without warning. The company blamed the polar vortex.
"It suddenly went up. It's a lot of money to pay. I'm on Social Security," Staunton said. He said he didn't realize he had signed up for a variable-rate contract with his electricity supplier and has no way of knowing how his rates are calculated.
Some residents are feeling burned by their electricity providers, some of whom are blaming the polar vortex for higher charges. Record-breaking cold drove up demand for natural gas, which is used to heat homes and to produce electricity.
The issue, consumer advocates say, is that customers have no way of knowing how the extra charges are calculated, or whether the size of those charges is warranted. That's because electricity suppliers other than Commonwealth Edison aren't regulated.
"While certainly the polar vortex was a big event, when you look at energy prices, there was really only a day or two, or even a couple of hours over a couple of days, where they approached seriously high levels. We've received a lot of complaints from consumers who had variable rates they couldn't understand," said David Kolata, executive director of the Citizens Utility Board, a consumer advocate in Chicago.
Jim Deering, president of Oakbrook Terrace-based Nordic Energy Services LLC, said customers who saw quadrupled rates were the victims of a billing error that will be fixed. Still, Deering said 95 percent of the company's variable-rate customers paid up to 10.5 cents per kilowatt-hour during the polar vortex — or a maximum of about double the introductory rate.
"January saw very large price swings, and I can understand how customers could be surprised by the bills they received," he said.
Several Nordic customers filed complaints with the Citizens Utility Board.
Another nonregulated utility, Ohio-based FirstEnergy, which supplies electricity to about 180 municipalities in the ComEd region, estimates it will charge customers $5 to $10 extra in June to cover higher-than-normal costs.
FirstEnergy spokeswoman Diane Francis said it absorbed some costs and passed the rest to customers whose contracts allowed it. "We're calling it unprecedented," she said.
The Illinois Commerce Commission, which regulates utilities, is urging electricity customers no longer with their legacy utility — about 70 percent in ComEd's region — to review their contracts and contact their electricity suppliers to answer questions.
"Some customers on variable rates could see large increases in their electric supply rate," the regulator said.
Customers on fixed rates also should read their contracts carefully, the regulator said, because some allow customers to be converted to a variable rate after a set period of time.
ComEd said its fixed-rate customers will not see any effect on their bills as a result of the polar vortex. The company purchases much of its electricity in advance and sets rates accordingly.
"It depends on the contract you signed," Kolata said. "It's very important for customers to be educated and to really look closely at their contract. We've heard some suppliers are issuing refunds. To the extent that they're doing that, we think that's a positive development."
Because alternative electricity suppliers are private companies that do not answer to regulators, the ICC said it can't quantify how many customers have signed contracts that could be affected by the polar vortex.
"We've definitely seen more volatility in the market during the polar vortex, but without seeing the specifics of how they calculate their rates, we wouldn't be able to comment on any particular electricity provider," said Anthony Star, director of the Illinois Power Agency, which procures power on behalf of the state's regulated utilities.
Joe Lamargo, spokesman for Orland Park, which had signed up its residents to receive electricity from Nordic Energy, said it protected residents by building into its contract that Nordic would either have to stay below ComEd's rate or release its residents from the contract. The two mutually agreed to part ways in February, four months before the contract was set to end.
"The days of simply receiving your bill and paying for it without checking it are over," said Mark Pruitt, an energy consultant. "As a consumer, do that yourself, talk to your utility advocate. This is what utility deregulation means, is that you take care of yourself."