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ComEd to Increase Residential ComEd toSpace Increase Residential Electric Heating Rate Electric Space Heating Rate
June 2012 June 2012
Inside this issue : Inside this issue :
By: Jerry Wolin of the Oak Brook Club Condominiums
By: Jerry Wolin of the Oak Brook Club Condominiums Although most have not yet received any notification, ComEd has received Illinois Commerce Although most have not yet received anyCommission notification,(ICC) approval to phaseout electricCommerce supply space heat rates(ICC) over ComEd has received Illinois Commission the next several years. This will have a significant approval to phaseout electric supply space heat rates over negative impact on thoseThis whowill have electric space heating. the next several years. have a significant negative impact on those who have electric space heating. This is the latest development in a battle that goes back at least five of our condominiums as goes well back as at This is theyears. latestMany development in a battle that some townhomes and other are heated least five years. Many of ourhomes condominiums aswith well as electricity. In the and 1960s, ComEd provided incentives some townhomes other homes are heated with to heat with electricity so itComEd could profitably excess electricity. In the 1960s, provided utilize incentives to capacity in the winter months. In 2007, ComEd heat with electricity so it could profitably utilize excess announced it was months. eliminating the residential capacity in that the winter In 2007, ComEd electric ● spaceheat which would have the resulted in announced rate, that it was eliminating residential electric ● skyrocketing bills. Many protested the ratein spaceheat rate, which would have resulted increase alongbills. with ACTHA, the Citizens Utility Board skyrocketing Many protested the rate (CUB), the Illinois Attorney General’s Office, andBoard increase along with ACTHA, the Citizens Utility ● AARP. In response, the Illinois Legislature (CUB), the Illinois Attorney General’s Office,passed and the ● ● Rate Reform Act of 2007, which reinstated the residential AARP. In response, the Illinois Legislature passed the ● spaceheat rate. Rate Reform Act of 2007, which reinstated the residential spaceheat rate. However, last year ComEd again proposed eliminating spaceheat rates. ICC again ordered an investigation that However, last yearThe ComEd proposed eliminating concluded nonspace heat customers were subsidizing spaceheatthat rates. The ICC ordered an investigation that space heat customers. As a result, the subsidy for electric concluded that nonspace heat customers were subsidizing space heat will be phased over the few for electric customers. Asout a result, thenext subsidy years. The phase out has been designed to minimize the space heat will be phased out over the next few annual on total customer bills to no thanthe 10% years. impact The phase out has been designed to more minimize annually for larger users and a lesser impact for smaller annual impact on total customer bills to no more than 10% users. annually for larger users and a lesser impact for smaller users.
Tip of the Month Tip of the Month Fall Expo Announcements Fall Expo Announcements Com Ed Increases continued Com Ed Increases continued Legislative Update Legislative Update Question of the Month Question of the Month
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Board of Directors Officers President: President Beth Lloyd Vice President: President Diane Pagoulatos Treasurer: Bob La Montagne Secretary: Secretary Jacqueline Fanter Julie Cramer
Joe Fong
Directors Mike Matthews
Joyce Sampson
Jeff Schmitt
Executive Director: Director Gael Mennecke Lobbyist: Richard Lockhart, Social Engineering Associates, Inc. Legal Advisors Advisors: Rob Kogen, Kovitz, Shifrin Nesbit / Charles VanderVennet, Attorney in private practice Accountant/Advisor: Accountant/Advisor Garry Chankin, Frost Ruttenberg & Rothblatt, C.P.A. Note: Materials in this publication may not be reproduced without the written permission of ACTHA. The statements and opinions in this publication are those of individual authors and ACTHA assumes no responsibility for their accuracy. ACTHA is not engaged in rendering legal, accounting or other expert assistance. If required, the services of a competent professional should be sought. Acceptance of advertising in the ACTHA newsletter does not constitute an endorsement by ACTHA or its officers of the advertised products or services. The publisher reserves the right to reject any advertising.
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The first round of increases will begin on June 1, 2012.
The ComEd supply charge for the winter months (October through May) will increase from 4.308 cents/kilowatthour (kWh) to 5.192 cents per kWh (about a 21% increase) The ComEd supply charge for the summer months (June through September) will increase from 5.676 cents/kWh to 5.811 cents/kWh (about a 2% increase)
We can expect further increases over the next few years until the electric space heat subsidy is phased out. Users of electric space heat have several options:
Remain with ComEd ‘s fixed rates and pay the current and future increases. Switch your supply service to one of the independent companies providing electric supply. However, these suppliers may be charging more than the ComEd electric space heating rate even with the June 1 , 2012 increase. If your municipality is going out for bid and implementing an aggregation program to save its residents on the cost for electric supply charges, you may be able to obtain a rate that is less than ComEd’s new rate. For example, a number of North Shore communities have banded together and received an aggregated bid for 4.836 cents per kWh. If you are in a large association, you may benefit from a special bid for your association. There are electric consultants who can assist in developing a request for bid.
If you do decide to switch suppliers, ComEd will continue to provide service and fix outages. In most cases you will continue to receive just one bill from ComEd,
LEGISLATIVE RECAP Below is legislation affecting community associations that were introduced this year and the status upon the Illinois General Assembly’s adjournment. Unless indicated, most of these bills did not progress much beyond introduction.
Question of the Month By: Steve Silberman of Frost, Ruttenberg and Rothblatt, P.C.
By: David Bendoff of Kovitz Shifrin Nesbit 750 W. Lake Cook Rd., Buffalo Grove 60089 ● 8475370500
[email protected] [email protected]^ ●www.frronline.com www.ksnlaw.com
111 S. Pfingsten Rd., Suite 300, Deerfield, IL 60015 ^ 847-236-1111
Q. I recently got elected to the board of our association. I was reviewing our financial statements and noticed that our financials are prepared on the cash basis method of accounting. What are the
differences between the cash basis method and the accrual basis method and which method of accounting should our association be using?
A. The cash basis method of accounting is a very easy method to understand, which is why many associations use
this method. Income is recorded when cash is received and expenses are recorded when they are paid, therefore, it is easy to tie out your cash balance each month. You add income (cash received) to your beginning cash balance and subtract out expenses (cash paid out) to arrive at your month end cash balance. The accrual basis method of accounting records income (assessments) when billed or earned and expenses when incurred. It is very difficult to reconcile beginning and ending cash balances each month on the accrual basis, but it is the best method to determine your association’s true financial position. Your balance sheet will show accounts receivable, since you record income when billed, not when received, so all income may not have been collected. If you are on the cash basis you will not know if everyone has paid their assessments. Your balance sheet will also show accounts payable, since not all expenses incurred are always paid each month. If you have a big project that was completed but not paid by the end of the month, you will not know if the project was finished and how much is owed at the end of the month. It is even more important at year end, since you may have budgeted the project for the current year, but if the project is completed and not paid until the next year, you will not show that project until the next year on the cash basis and Continued on page 4 therefore not match your current year budget.
