Urbana inks residential deal with electricity supplier

Urbana inks residential deal with electricity supplier

URBANA — After bids for a city program that will save residents money on their power bills were finalized Tuesday, an administrator said Urbana got a "fantastic" price and customers should start seeing savings on their August bills.

Officials signed a contract with Homefield Energy, which will supply 100 percent renewable electricity to Urbana residents at a rate of 4.08 cents per kilowatt-hour, said Mike Monson, Mayor Laurel Prussing's chief of staff.

That is about 35 percent less than what most residents are currently paying on the energy supply portion of their power bills.

That price includes five-hundredths of a cent per kilowatt-hour as compensation for a consultant that helped the city obtain the bid and one-tenth of a cent for the city. The fees could generate $110,000 for the consultant and $220,000 for the city during the term of a two-year contract.

The city will also, in effect, pay a small premium for choosing 100 percent renewable energy — bids for a traditional power supply came in around 4 cents even, Monson said.

But using green energy was an important issue for city officials, he added.

"Our council and a lot of our residents felt pretty strongly about that," Monson said.

The program is part of the "municipal electric aggregation" initiative, which voters approved by a 2-to-1 margin during a March referendum. Most electric customers will be automatically enrolled in the program and need to do nothing to experience the savings.

In Illinois, residents have the ability to shop for better electric supply prices, but the vast majority do not. Those customers pay a default rate, which currently stands at 6.3 cents per kilowatt-hour.

The city program will switch most residents over to the new supplier at the 4.08-cent rate. All customers will have the opportunity to "opt-out" of the program in the coming months — the city is required to send two letters to residents explaining and notifying them of the changes.

The first round of those letters should be going out within the next couple weeks, Monson said.

Residents will continue to be billed by Ameren Illinois, and though the new rate is 35 percent lower than the default rate, customers should not expect to see their overall bill decrease by that much. Ameren Illinois bills for electricity on behalf of the supplier, but does not actually supply the electricity itself — that section of the bill is usually 60 to 70 percent of the total and will drop by 35 percent.

Customers also pay Ameren Illinois for the delivery of the electricity — that section of the bill will not change, and residents should still call Ameren Illinois if there is a problem with their service.

The bottom line is that customers should expect their total monthly bill to drop by roughly 20 to 25 percent.

The savings generated by the municipal electric aggregation program are expected to diminish over time as the market draws the default rate closer to the aggregate rate. The contract with Homefield Energy includes a clause that guarantees the lowest price should the default rate drop below the aggregate rate.

Voters in the city of Champaign also approved the municipal electric aggregation program, and city officials there are still working toward collecting bids for the program.

This story was updated on May 9 to reflect updated estimates which Monson gave to The News-Gazette regarding the revenue the city and Good Energy stand to collect from the fees added to the new price of energy.


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topaz wrote on May 09, 2012 at 9:05 am

As usual several things were left out of the article that would have provided a more complete look at this issue.

"Homefield Energy" is owned by Ameren Energy Marketing. Communities receiving so-called renewable energy from this agreement are in reality just paying Ameren to purchase energy from whatever renewable resources are available in the market whether it is solar, wind, biofuel, hydro etc and intergrate this energy into their established transmission system. Unless the generating source is actually nearby and directly connected to the end users, they are most likely still going to receive energy produced with traditional methods ie coal or nuclear both of which are not renewable.

In reality this arrangement is just a shell game being run by Ameren who has played the system to maintain it's monopoly. Homefield Energy was formed around the time of the primary election most likely in response to the potential threat of competition from other energy suppliers bidding in the power aggregation scheme. Although Ameren claims not to be a generator of energy they have subsidiaries that do provide energy production and appear to have benefited greatly from the Future Gen project.





bb wrote on May 09, 2012 at 10:05 am

Interesting...  I don't really care if Ameren makes money or not as long as they keep providing good service and I sort of assumed the "renewable" thing was kind of goofy (like we all could still use just as much power on days when the wind speed drops to 2-3 mph LOL).  I don't have AC and I have gas heat, so it's not much savings for me, but I calculated it will be enough to cover the new stormwater fee.  Bottom line, there will be more money floating around Champaign Urbana (though I still don't quite understand who exactly is giving up that money).