Chicago Quits Coal, Cuts Electricity Bills

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Everyone knows quitting coal saves millions in externalities like healthcare, but what about when quitting coal also saves millions for utility ratepayers?

The city of Chicago recently showed how moving past coal can achieve both ideal outcomes, by inking a unique power supply deal with the utility Constellation that sources municipal demand exclusively from non-coal generation facilities.

But best of all, the two-year deal will actually cut Chicago’s utility bills by hundreds of thousands of dollars per year, adding quantifiable benefits to the esoteric environmental and climate impacts of cutting coal consumption.

Chicago goes green
Chicago goes green image via Shutterstock

Coal-Free Chicago City Buildings

Under the deal Constellation will supply all power demand for 450 facilities in the city’s Fleet and Facility Management portfolio, including every one of Chicago’s city libraries, police, and fire stations; municipal buildings like City Hall and the Cultural Center; both O’Hare and Midway airports, and all of the city’s street and traffic lights.

Despite escalating transmission and tariff costs across the region, Chicago will wind up paying 2% less for coal-free power ($42.67 per megawatt-hour annualized), and will save an estimated $1.2 million in electricity prices over the contract duration.

Quitting Coal Through Competitive Electricity Markets

All these benefits were made possible by Chicago bundling up demand from multiple facilities and requesting bids for that demand on a competitive electricity market, similar to the way Cincinnati went coal-free in 2012 and the way Pittsburgh can buy 100% renewables 10% cheaper than standard utility rates.

“Through the success of the municipal aggregation program, the City of Chicago has decreased its carbon footprint while delivering savings to residents and small businesses,” said Mayor Rahm Emanuel.

Chicago’s municipal aggregation program was approved by City Council in 2012 and serves 750,000 electricity customers. The program has been credited with saving city ratepayers $26 million since February 2013 on their electricity bills.

Another Win In The War On Coal

To be clear, Chicago’s coal-cutting deal isn’t a win for renewable energy – all the power will be supplied by natural gas generators and nuclear power plants. But it is a major victory for clean air and the fight against climate change, and shows once again that the “war on coal” is being waged – and won – by market forces and demand.

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