So far, a boon for consumers
More electric customers in the area are about to get a break on their electric bills, but the substantial savings may not last that long.
Ameren's residential and small-business customers in Champaign and Vermilion counties soon will see substantial savings on their electric bills as a result of electric aggregation programs approved by voters in November and bids approved last week.
And in Champaign County, they'll even get a slightly better deal than the cities of Champaign and Urbana got last summer.
The aggregation program allows communities to use the combined purchasing power of all of their residents to negotiate lower prices from suppliers. They also may pursue social goals by choosing an electric supply offer that includes "green" power at a slightly higher cost. For their part, suppliers negotiate the lower prices to have access to a pool of customers without marketing costs for a specified period.
Customers in Champaign-Urbana have seen lower bills since August after approving the arrangement in a referendum last March. On average, the savings amount to about $20 a month for customers, varying slightly depending on the location.
Champaign-Urbana and other areas of Champaign County have "opt out" programs, in which most electric customers are automatically enrolled in the program and need to do nothing to experience the savings unless they notify officials they don't want to participate.
The situation is more complicated in Vermilion County, where Illinois Power Agency officials ruled that the electric aggregation program with Integrys Energy Services could not apply to incorporated areas such as Danville even though voters gave their approval in November. Those cities and villages would have to put their own questions on the ballot to participate in the county's program with Integrys or another opt-out program.
So Integrys is moving forward in the unincorporated areas of the county only with the opt-out program, where customers will receive the Integrys rate of 4.26 cents per kilowatt hour. And in the incorporated areas, Integrys has decided to offer that same rate, but customers will have to sign up voluntarily.
In unincorporated Champaign County, and some communities such as Mahomet and Savoy, Homefield Energy was awarded a 17-month contract to supply electricity in a bid process that included other parts of central and southern Illinois. Ironically, Homefield Energy is a subsidiary of Ameren that works with municipalities to offer discounted, aggregated electricity.
The 3.999-cent rate to be paid by those living in unincorporated Champaign County is actually a slightly better deal than the rates the city of Urbana negotiated earlier this year with Homefield (4.055 cents per kwh), and the rate Champaign negotiated (4.15 cents per kwh) with Integrys Energy Services. Ameren's current base rate is 5.6 cents per kilowatt hour, although that is expected to drop in June when several long-term power purchase contracts expire.
Mahomet got the best rate in Champaign County at 3.909 cents per kwh because it is not specifying renewable energy and also is not collecting an administrative fee.
We had some initial concerns with the electric aggregation program before the vote last March in Champaign-Urbana because the proposal was dropped on voters at the last minute with little discussion. Also, city officials didn't get the lowest electrical rates they could get, instead opting for a slightly higher rate for renewable energy and adding a small administrative fee totaling about $100,000 for each city from their electricity providers.
But from all appearances, it's been a win-win arrangement. The electrical suppliers get new customers, governments gain a new source of revenue and consumers — at least for a while — get a substantial discount on their electricity.
But contracts the big utility companies Ameren and ComEd have been locked into since 2007 that require them to purchase electricity at higher rates from their suppliers expire in May. Presumably, they then will negotiate rates similar to those their competitors are now using to attract customers, and the savings will decrease for consumers.
So it's a great deal for consumers for now. But keep your eye on electric rates a few months down the road.