Electric rates going up, but cities still saving

Electric rates going up, but cities still saving

Residents again can opt out before new 2-year deal starts next June

URBANA — Power rates will go up 17 percent in Urbana next year, but the city's municipal electric aggregation program may still offer savings.

Those savings likely will not be as pronounced as they were in the first two years of the program, and residents again will have the opportunity to opt out before a new two-year contract begins in June.

Electric rates could rise in Champaign, too, but that city has not yet sought bids for a new contract.

Little will change in Urbana other than the electric rate. Residents will pay 4.746 cents per kilowatt hour when the new agreement begins in June. The city has opted to contract again for its residents' electricity with Homefield Energy, which won the first city contract before the program began in 2012.

Most Urbana residents are currently paying 4.055 cents. The new rate will be an increase, but is still lower than a number of other communities that recently awarded electric aggregation contracts.

The new rate is still 4 percent below Ameren Illinois' current default rate of 4.957 cents per kilowatt hour. That default rate — which is what residents would pay if they were not part of the city program and did not take it upon themselves to select an alternate supplier — will change and likely come down a bit before the new city rate takes effect in June.

The city has included a "meet-or-beat" clause in its contract with Homefield Energy. That allows the city to request a lower price from the supplier or leave the contract if the Ameren default rate dips below the aggregated rate. Ameren has yet to set its prices for next summer.

"If the regulated utility price drops below our aggregation price, we can choose to ask our supplier to meet it, or we can leave the contract," Tess said.

Individual rate payers will also be able to leave the program at any time.

Residents who receive an electric space heating discount on their Ameren Illinois rate should take note, as the default Ameren rate could be lower than the new city rate.

As officials in both Champaign and Urbana expected when they rushed to get their programs up and running, the gap between the city's aggregated rates and the Ameren default rate has narrowed compared with the much larger savings the program provided in its first two years. The good news is that much of the difference can be attributed to the Ameren rate coming down.

"It's really the different market conditions," said Urbana sustainability manager Scott Tess.

Urbana officials say residents and small businesses collectively saved an average of $62,000 per month in the first 15 months of the program — around $1 million since the program began in summer 2012. The savings will continue, city officials believe, but at a slower pace.

Customers will pay a small premium as the city chose to purchase 100 percent renewable energy credits at a rate of 0.166 cents per kilowatt hour. The agreement also includes a city fee of 0.1 cents and another 0.075 cents for the consultant which helped the city get the contract.

Residents will again have the opportunity to opt out of the city's program. They should start to receive those letters in the coming months.

To be automatically included in the program, residents should take no action when they receive that letter.

"If they want to be in the aggregation group and to enjoy that low fixed price for the next two years, they should do nothing," Tess said.

As usual, residents will continue to be billed by Ameren Illinois.

Champaign will need to find a new contract before long, too. Public works director Dennis Schmidt said the city council next week could authorize action that would allow city officials to seek bids.

Champaign's existing contract with Integrys Energy has residents paying 4.315 cents per kilowatt hour. It expires around the same time as Urbana's existing contract, so Champaign officials will need to seek bids within the next few months.

"When we think the market's right, we'll be ready to go out," Schmidt said.

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pattsi wrote on November 15, 2013 at 10:11 am

There is still the option of Power Smart Pricing, which still beats all prices--Ameren and aggregation.