Electricity deal on the way

Electricity deal on the way

The prospect of lower electrical rates has powerful political appeal.

After Champaign-Urbana voters overwhelmingly approved a plan by which they can receive discounted electricity rates, elected officials in both cities acted quickly to make it happen.

Officials in Champaign-Urbana recently approved discounted electrical rates — roughly 33 percent — from what residents currently pay. Further, people won't have to do a thing to take advantage of this opportunity to save a few dollars each month.

The plan is called "municipal electric aggregation," and it allows communities to collectively negotiate electrical utility rates for their residents.

Urbana negotiated a 4.06 cent per kilowatt hour rate with Homefield Energy while Champaign agreed to a slightly higher rate of 4.15 cents per kilowatt hour with Integrys Energy Services. Those figures compare favorably to the 6.3 cents per kilowatt hour people now pay. Municipal officials say that consumers should start seeing savings from the new arrangements in their August bills.

While Champaign-Urbana residents will receive discounted rates, each city will receive a payment of about $100,000 from their electricity providers.

The problem with the program is that the discounted rates won't last all that long, roughly until the end of the year. That's when contracts big utility companies have to purchase electricity at higher rates from their suppliers expire. Presumably, they then will negotiate rates similar to those their competitors are now using to attract customers.

This is a big business, one that encouraged electricity providers to join together into the Northern Illinois Municipal Electric Collaborative to use the election process to sign up customers.

During the March primary election, people in hundreds of Illinois communities voted on the same electrical aggregation proposal as did those in Champaign-Urbana. It was a huge and expensive electoral undertaking, but one that attracted voter support by offering discounted utility rates.

Under the arrangement, consumers will receive their electrical power through independent energy companies that have contracted with their local communities, even though it will continue to be delivered by Ameren. It also will continue to be billed by Ameren.

Residents will be automatically included in the program unless they choose to opt out.

From all appearances, it's a win-win arrangement. The electrical suppliers get new customers, municipalities gain a new source of revenue and consumers — at least for a while — get a substantial discount on their electricity.

Still, there are nagging concerns.

Electorally speaking, this proposal was dropped on voters at the last minute, and there was nothing approaching a well-rounded discussion. People were simply told that they had the chance to vote for lower rates, and they did. Perhaps it's as simple as that, but it's not clear it's as simple as that.

Another problem is that city officials didn't get the lowest electrical rates they could get. In an effort to salve their collective environmental conscience, they got the lowest renewable energy rate they could get.

So consumers will pay more than they could have because, to quote Champaign City Council Member Deb Feinen, "it's the right thing to do."

Really? Says who? Obviously, that is Feinen's opinion as well as the opinion of others. But everyone might not agree that they should pay more so that a handful of politicians can demonstrate their moral superiority.

People can, of course, opt out. They can stick with Ameren or find the lowest-rate supplier and make their own deal. But inertia is a powerful force, and most people will play the hand they're dealt.

Fortunately, it's not a bad hand. But its brief shelf life makes it something less than a full house.

Sections (2):Editorials, Opinion
Categories (2):Editorials, Opinions

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