Urbana savings in electric rates top $500,000

URBANA — Residents and very small businesses saved just more than $500,000 in the first three months of a program for which city officials negotiate residents' electric rates.

According to numbers provided by Homefield Energy, the electricity supplier, the average Urbana customer saved about $15.14 per month between July and September, when electric supply rates dropped as a result of the city program.

The savings totaled $502,451 for between about 10,000 and 12,000 residential and small business customers in Urbana.

Those numbers are based on the negotiated rate that the vast majority of residents are now paying — 4.05 cents per kilowatt hour — compared to what they would have been paying during that three month period under the old default rate, which was 6.16 cents.

The margin of savings will have dropped after September — the 4.05-cent rate that residents pay stayed the same. But the default rate, which is what most people would pay if the city program did not exist, dropped in October to 5.45 cents.

After voters approved the municipal electric aggregation program in a March referendum, Urbana city officials accepted the low bid from Homefield Energy to produce electricity for residents at a rate lower than the default rate that the vast majority of customers were paying.

Except for letters they received from the city informing them of the changes and their opportunity to "opt-out" of the program, as well as the lower bottom line on their monthly bills, residents likely will not have noticed a difference. Ameren Illinois' role has not changed — it still manages billing, maintenance of electric lines and the delivery side of getting power to homes.

The Citizens Utility Board, a consumer watchdog group, says the biggest savings associated with the hundreds of new municipal electric aggregation programs across the state will be heavy on the front end. Ameren Illinois has been locked into some higher-than-market-price contracts for several years, but the effects of those contracts on consumer prices are expected to disappear by June 2013.

That means electric rates from Ameren are expected to drop significantly, which will narrow the difference between what residents pay on the aggregation program and what they would pay by default if they were not on the program.

Earlier this year, before the program launched, city officials estimated that the average Urbana customer would save up to $125 annually. The city as a whole was expected to save roughly $1.4 million.

In Champaign, where most residents are paying 4.15 cents per kilowatt hour under a municipal electric aggregation program, officials estimated that the city as a whole would save $3.9 million annually.

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