Electric rates about to change again

Electric rates about to change again

CHAMPAIGN — Most electric customers are going to want to examine their bills to make sure they are getting the best energy rates after surprising numbers released this month have city officials everywhere taking another look at their electric-pricing programs.

Contrary to all the expert advice during the past few months, Ameren Illinois will likely drop its electric-supply rates nearly 7 percent next month, and another price drop beyond that is scheduled for October.

The news has, in a way, turned the downstate market for electricity prices upside-down. Whereas customers once had the opportunity for big savings by switching from Ameren to an alternative electric supplier, it now appears that Ameren will offer the best prices.

Customers can turn this into good news or bad news, depending on the choices they make during the next month or so.

In Champaign, which had not yet signed a contract to renew its program, it means that 26,000 customers will get two letters within the coming weeks — one from the city explaining that the city's municipal electric aggregation program will be shelved for at least a year and one from Ameren Illinois explaining that customers' electric supplier is about to change.

Your options are a bit different depending on where you live. In some cases, particularly in Champaign, doing nothing might be the best option for you. In others, switching to a different electric supplier — or back to Ameren — could save the average customer at least a few dollars per month, if not more.

But if municipal electric aggregation experts have learned anything over the two years the program has been in existence, it's that nothing is certain.

"This is a brave new world that everyone's entered into," said Mike Monson, chief of staff for Urbana Mayor Laurel Prussing.

The prices

Ameren's proposed default rate for June through September is lower than what many cities have brokered for their residents, and the rate that will go into effect in October is even lower than that. Another price adjustment, which equalizes the difference between what Ameren pays for its electricity versus what it sells for, can make the price even lower — by at least half a cent per kilowatt hour during the next year, if you believe Champaign city officials.

"We think it's going to be consistently lower than 4 cents" per kilowatt hour, said Champaign Public Works Director Dennis Schmidt.

In Champaign-Urbana, customers are not on Ameren's default rate. They have been covered under municipal pricing programs for the past two years. Those programs are now turning over, and what happens next depends on where you live. Champaign residents will be kicked to Ameren default rates — which may be the lowest price anyway — if they do nothing.

Urbana residents will continue on the municipal program, as will many other central Illinois residents.

What changed?

For one thing, the Ameren price has gradually come down during the past couple years while contractual prices remained relatively fixed. City officials expected this. The savings were so large in the first few months of the contracts that, in the long run, the two-year contracts saved customers money (30,000 Champaign customers have saved $1.6 million since June 2012). But that could change if the current trend continues.

The bottom line

While the Ameren price will fluctuate a bit from month to month, Schmidt thinks it will average somewhere around 3.876 cents during the next year. To compare: The absolute best price Champaign could have gotten for its residents is 5.192 cents per kilowatt hour, but city officials chose not to sign a contract. Urbana's contractual price will be 4.746 cents.

Based on a resident who uses about 10,000 kilowatt hours in a year, it means Champaign residents will pay $131.60 less than they otherwise would have during the next year when they are off municipal electric aggregation and are automatically kicked to the Ameren rate.

On the other side of Wright Street, Urbana residents could pay $87 more if they stay on the city's price, provided by Homefield Energy. They need to take action if they want to switch to another provider or Ameren's default rate.

"If residents want to go with the lower rate, we're sympathetic," Monson said. "Just a simple phone call, and it'll be done."

Homefield Energy's number is 866-694-1262.

The good news

In many cases, there's a good chance you can lower your power bill. In Champaign, rates will automatically switch from the municipal rate (currently 4.315 cents) over to the Ameren default rate, which city officials believe will be under 4 cents once all the price adjustments kick in. That's a roughly $44 annual savings.

In Urbana, residents who do nothing will stay on the municipal rate (currently 4.055 cents, but it will rise to 4.746 cents next month). Still, they can drop out of the program without penalty and switch to the Ameren rate. It could save them a little under $20 per year.

The better news

At least we're not in Commonwealth Edison territory in the upper third of the state, where electric-supply prices are about to go up about 38 percent. Cities are locking into contracts as high as 6 and 7 cents per kilowatt hour.

"What we're rejecting, they would love to get," Schmidt said.

The bad news

All these prices are for electric supply, and your monthly electric bill has two parts: supply and delivery. Ameren is really in the electricity-delivery business — it owns and maintains the lines that run to your house — and it plans to raise delivery charges in January 2015 by about $8 to $10 per month, Schmidt said.

All the savings on the supply side will be just about offset by the increases on the delivery side.

Other considerations

Champaign city and elected officials have decided that the bottom line is what matters most to them, and with the default rates being the best option, that's why they have chosen to suspend the program for at least a year.

But Monson reminds Urbana residents that the city bought renewable-energy credits to offset 100 percent of its electric use. It's an important part of meeting the city's sustainability goals.

Champaign residents might want to consider that, too, if they value green energy. Within 60 days of the municipal program expiring, they can find their own supplier to sell them electricity with renewable-energy credits. They will just pay a little more for it.

And, oh, by the way: The same price equalizer that has consistently lowered the Ameren price can also raise the price. That hasn't happened recently and is not expected to very soon, but it very well could at some point in the future.

Urbana's price, by contrast, is a fixed rate. It won't change for two years — the Ameren price will, and no one can say for sure what will happen beyond the next few months. Urbana's rate is not at all bad, either. Cities elsewhere are signing contracts for 5 cents and above.

"Things can change," Monson said, "if there's a mass migration back to the default rate, which there may well be, and they have to purchase more power." That would mess with the default rates.

"Our rate next year may be very competitive," Monson said.

Do your research

There are a lot of factors that go in to switching to an alternative electric supplier. You'll have to sign a contract, some of which have early termination fees and other requirements.

"If you want to choose your own and not go back to Ameren, go to the website, do your research, ask the provider questions," said Champaign public works spokesman Kris Koester.

That website is pluginillinois.org. It's provided by the Illinois Commerce Commission and lists all the retail electric suppliers you might choose from. The website also offers price comparisons and other information you'll want to consider before you switch.

Beware of solicitors

There are more than 20 alternative retail electric suppliers in Illinois, and a lot of them are going to contact you with promises of savings.

Remain skeptical, Champaign city officials say. In fact, if you didn't initiate the conversation, it is best to end it early. Some electric suppliers have used manipulative tactics during the past two years.

Schmidt said that, if customers encounter particularly aggressive solicitors, they should inform the police.

"My best advice to them is you terminate that conversation, thank them, hang up the phone, close the door," Schmidt said.

Upcoming prices

Proposed Ameren Rates

June through September: 4.467 cents per kWh

October through May 2015: 4.275 cents per kWh

Municipal Rates

Danville 4.333

Mahomet 4.48

Bloomington 4.539

Champaign County 4.56

Vermilion County 4.57

Decatur 4.58

Normal 4.646

Savoy 4.66

Peoria 4.746

Urbana 4.746

Note: Proposed Ameren rates are not final and do not reflect monthly price adjustments. Officials think they will be considerably lower than what is shown here for at least the next year.

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Cost comparison

Month Champaign price Urbana price Ameren price
June 2012 4.149 4.055 6.065
July 2012 4.149 4.055 6.03
August 2012 4.149 4.055 6.008
Sept 2012 4.149 4.055 5.985
Oct 2012 4.149 4.055 5.203
Nov 2012 4.149 4.055 5.036
Dec 2012 4.149 4.055 5.029
Jan 2013 4.149 4.055 5.027
Feb 2013 4.149 4.055 5.022
March 2013 4.149 4.055 5.094
April 2013 4.149 4.055 5.031
May 2013 4.149 4.055 4.986
June 2013 4.315 4.055 4.121
July 2013 4.315 4.055 3.746
August 2013 4.315 4.055 3.561
Sept 2013 4.315 4.055 3.344
Oct 2013 4.315 4.055 4.15
Nov 2013 4.315 4.055 4.166
Dec 2013 4.315 4.055 4.249
Jan 2014 4.315 4.055 4.271
Feb 2014 4.315 4.055 4.221
March 2014 4.315 4.055 4.18
April 2014 4.315 4.055 4.124
May 2014 4.315 4.055 3.988

 

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