Natural-gas aggregation may be next up

URBANA — Municipal electric aggregation customers are happy enough that they want more, officials say, and the next step to lowering residents' utility costs could come in the form of savings on natural gas.

The Illinois Commerce Commission is shopping a plan that would allow cities and counties to sell their residents' natural-gas accounts to the lowest bidder, much like what Champaign and Urbana have already done with electric accounts.

The hang-up right now is that natural-gas aggregation is not legally possible, and the gas delivery systems would need to be set up to handle residents' abilities to choose their own gas supplier.

But natural-gas aggregation is nonetheless on the way, said Charles de Casteja, managing partner for Good Energy, which brokered the deal Urbana residents received on their electric bills. Gas aggregation could work in a similar way, he said, if state lawmakers eventually support legislation to make it happen.

"There's a groundswell of demand for it," de Casteja said.

Voters in Champaign and Urbana approved municipal electric aggregation in March of last year as part of the first round of cities to do so. A second round approved it in November, and voters in other communities will see the ballot question in the April 9 election.

Hundreds of Illinois cities, villages and counties have approved the program, and in most areas, the vote counts were not close.

Voter approvals give those communities the authority to find the lowest-bidding electric supplier to provide energy to residential and small-business customers. Selling the residents' accounts in bulk has brought prices below the default electric rate charged to customers who have not shopped for cheaper prices on their own.

Urbana residents, for example, are paying 4.05 cents per kilowatt hour compared with the 5.45-cent rate they would otherwise be paying. Champaign residents are paying 4.15 cents.

The city of Urbana would welcome legislation to allow gas aggregation, said Mike Monson, chief of staff to Urbana Mayor Laurel Prussing.

"We've saved a lot of money" on electric aggregation, Monson said. "The residents have saved a lot of money."

But Ameren Illinois spokesman Leigh Morris said natural-gas aggregation is a bit more complicated than electric aggregation. Its legalization is one thing, but since gas is delivered through dedicated pipes as opposed to electrons delivered on a grid system, the system needs to be set up so that it can handle aggregation.

"We're open to the concept," Morris said. "Anything that would benefit our customers, we certainly want to look at."

The natural-gas market in Illinois now is not open to individual choice or aggregation. Only recently have customers been able to pick their own electric supplier, and those policy and state law changes made individual choice and aggregation possible.

The same kind of policy and state law changes would need to happen to make the natural-gas market similar to the electric market. Currently, downstate customers have no choice but to get their natural gas through their utility company.

Just as with electricity, utilities such as Ameren Illinois neither produce their own gas nor do they make a profit on its sale. Utilities make their money in the delivery of energy, and that would not change under any aggregation program.

Whereas the price of electricity is regulated through the Illinois Power Agency, Ameren Illinois, for example, purchases and stores its own natural gas from a gas supplier and then sells it to customers at the same rate.

The price of gas is based on a complex hedging system Ameren Illinois employs to eliminate volatility, Morris said.

If the market were more open to competition or if customers could purchase gas in bulk through municipal programs, experts think there are savings to be had.

De Casteja said it is a program he believes state lawmakers would be eager to support.

As with electric aggregation, Ameren Illinois is taking a neutral stance on gas aggregation while it is in its very early stages of development. But Morris said the utility is deeply involved in studying the issue, and making sure the proper educational and practical systems would be in place.

"I don't believe that there are insurmountable problems," Morris said. "But I think that everybody, no matter who you are or what your view of it is, that you want it to work and work for the benefit of the customer."

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