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."
Unregulated energy suppliers weren't the only ones hit by the polar vortex, the swirling air mass that brought wind chills of about 40 degree below zero to Illinois in January.
The temperatures led to record demand for natural gas to fuel power plants and heat homes, according to the U.S. Energy Information Administration, and utilities were withdrawing their supplies from storage at record amounts. As a result, gas prices surged.
Complicating matters, some plants that had promised to supply power during the cold snap were forced offline unexpectedly because of problems related to the weather, or simply didn't deliver. Constraints on interstate gas pipelines also contributed to shortages.
Those factors mean that Peoples Gas and North Shore Gas customers can expect higher-than-usual home heating bills.
"The ripple effects of this winter may be felt for a while," said Kathy Hartman, a spokeswoman for Chicago natural gas utility Peoples Gas, which serves 829,000 customers in the city. "I don't want to paint a dire picture, but I want to manage expectations that the gas charges won't go back to normal right away."
Unlike unregulated utilities, Peoples and North Shore don't make money from the gas they sell. They are paid to deliver it. The price they pay for gas on the market is the price their customers pay.
During the vortex, Hartman said, pipelines for the companies and their suppliers were restricted. To ensure that Peoples Gas had an adequate supply of natural gas, it was forced to go to other sources for natural gas at higher prices, Hartman said.
Peoples Gas customers will be paying 93 cents per therm for natural gas in March versus 39 cents at the same time last year. In April, those rates will rise to $1.19 per therm.
For the average customer, that means a bill of $165, about $60 higher than in 2013.
The company is offering payment plans and budget bills to spread out those costs at 866-556-6001 for Peoples Gas customers and at 866-556-6004 for North Shore Gas customers.
ComEd customers on a real-time pricing program have an electricity rate that changes hourly. During the cold snap, those rates rose to $2 per kilowatt-hour for a time Jan. 6 when ComEd's fixed-rate customers were paying pennies.
Even fixed-rate customers can expect to see higher prices in the future as a result of the unusual weather, said Kolata, if grid operators don't bake such possibilities into their forecasts.
Consumer advocates, including the Citizens Utility Board, have urged the Federal Energy Regulatory Commission to conduct an investigation into the causes behind the power plant outages and high gas prices that led to price spikes for consumers.
"Market prices will go up and down, but it's important for federal regulators to act now to identify any preventable problems," Kolata said.
As for Staunton, after getting charged $50 for leaving his first electricity supplier and then getting pummeled by the polar vortex with his second electricity supplier, he has decided to go back to ComEd.
"I quit," he said.
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