URBANA -- City council members on Monday night heard from the former head of the Illinois Power Agency on how municipal electric aggregation may be able to save residents money on their energy bills.
Mark Pruitt, now with the Illinois Community Choice Aggregation Coalition, warned council members that there are some risks and the savings to individuals might not be staggering. But if the city acts as a broker for electric customers, it could save the city as a whole an estimated $1.4 million annually.
He estimates Urbana residents could see as much $80 in electric savings annually in the early years. As the difference between default electric rates and city-negotiated rates diminishes, though, that savings could be considerably smaller.
"I'm not saying that's not worth getting, because you folks have about 20,000 households in your community," Pruitt said.
Illinois is a "deregulated state," Pruitt said, which means electric customers have the ability to "shop" for better rates. The vast majority of residents do not do that, and they pay a default rate.
That default rate is negotiated by the Illinois Power Agency, which acts as the broker for residents who do not shop for their electricity. If Urbana were to purchase electricity for its residents in bulk, the city would become the broker.
Pruitt said city residents, as one group, would be likely to get better rates on energy than they would by purchasing electricity as 20,000 individuals at the default rate.
"This is worthy of consideration, but it needs to be seriously considered whether this is the right fit for where the community wants to go," Pruitt said.
Mayor Laurel Prussing said last week that officials from Urbana, Champaign and Savoy have been working together on the initiative. If city officials decide they want to move forward, residents would vote on the next ballot in spring 2012.
Council members asked Pruitt whether the savings will be noticeable if energy distribution costs increase. The state of Illinois, for example, recently gave electricity distributors the green light to develop a "smart grid," and charge customers more for its cost.
Pruitt said there is not much city officials could do about the distribution costs, but they could at least take action on the price of energy.
"You can do nothing, and you're completely entitled to do nothing," Pruitt said. "Or you can do something and try to mitigate those cost increases, at least in the front end."