UPDATE 1-ComEd sees power rates rising about 2.5 pct in June

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NEW YORK, March 12 (Reuters) - Exelon Corp's (EXC.N: Quote, Profile, Research) Commonwealth Edison subsidiary on Wednesday estimated average residential bills for its northern Illinois customers may increase by about 2.5 percent -- or less than $2 a month -- beginning in June.

As part of a new procurement process established by legislation, ComEd said it would file the new rates with the Illinois Commerce Commission (ICC) to reflect the costs of power for June 2008 to May 2009.

In 2007, the Illinois legislature established a new procurement method -- a sealed-bid "request for proposal" (RFP) process -- to replace the reverse auction used in 2006.

Some of the contracts from the 2006 auction expire this year and ComEd must replace about 20 percent of its power needs through the new RFP process. ComEd passes through power costs to its customers without any mark-up.

Because power prices have increased, ComEd, which supplies power to about 3.8 million customers in northern Illinois, estimates average residential customer bills may increase by about 2.5 percent -- or less than $2 on the average $75 monthly bill -- beginning in June.

"Just like gasoline and natural gas, electricity prices continue to rise due to global supply and demand dynamics," Anne Pramaggiore, executive vice president of Customer Operations, Regulatory and External Affairs, ComEd said in a release.

"The good news is that the price for about 80 percent of our power supply has already been locked in through previous contracts, which will help mitigate the impact on customers," Pramaggiore added.

Beginning in 2009, the Illinois Power Agency will administer the process under which ComEd purchases electricity for its customers. The law required ComEd to conduct the new RFP procurement process this year as an interim step until the Illinois Power Agency is up and running.