Prepare yourself for some sticker shock on your electric bill before you crank up the A/C this summer.
That's the main takeaway from a recent announcement by the Midcontinent Independent System Operator, or MISO. That's the federal organization regulating the energy grid throughout much of the Midwest. A power capacity auction earlier this month cleared around $237 per megawatt day.
"That's 47 times higher than the $5 price last year," said Jim Blessing, Ameren Illinois's vice president of regulatory policy and energy supply. "So that's going to have some impacts on the price that our customers have to pay to cool their homes this summer."
Blessing said consumers will get hit by both higher supply and delivery prices starting in June.
"We're anticipating bill impacts on a typical residential customer in excess of $500 a year," he said, noting a typical residential customer uses about 10,000 kilowatt hours of energy per year.
David Kolata is the executive director of the Citizens Utility Board, a nonprofit advocacy group representing Illinois residential energy customers. He agrees Ameren customers will pay more this summer.
"It's about $15 to $20 a month, is what we're estimating. So I think that's consistent. Look, there's no question that that's a difficult situation," Kolata said.
Energy will cost about $89 a megawatt hour starting this June, up from $29 per megawatt hour last year. The higher rates will also affect the city of Peoria and Peoria County's municipal aggregation program.
Blessing blames the capacity price spike on a clean energy transition moving too slowly.
"There's a lot of fossil fuel generation, specifically coal generation, is retiring. And the renewable generation coming online is not coming on quickly enough to keep pace," Blessing said. "So more coal is retiring than what renewables are adding."
That's led to a situation where MISO is warning about broader grid reliability concerns. The north and central regions of MISO - which includes much of Illinois, Indiana, Wisconsin, and parts of Missouri - came up about 1,200 megawatts short of what's needed to shore up energy reserves enough to ensure reliability.
“The reality for the zones that do not have sufficient generation to cover their load plus their required reserves is that they will have increased risk of temporary, controlled outages to maintain system reliability,” said Clair Moeller, MISO’s president and chief operating officer. in a written statement “From a consumer perspective, those zones may also face higher costs to procure power when it is scarce.”
Brownouts are most likely to become a problem this summer, with warmer-than-average temperatures expected throughout much of the MISO region.
Blessing said much of the capacity gap created by retiring coal plants is currently filled by natural gas. He said that market pressure for more natural gas is driving prices up. Blessing said more natural gas generation could be a salve for lowering soaring energy prices, but he claims mixed signals are sent by the Illinois Climate and Equitable Jobs Act, or CEJA, signed into law last year.
"The market's saying 'build natural gas.' But the state is saying 'we don't want natural gas generation here,'" he said.
Jennifer Walling is executive director of the Illinois Environmental Council, a key CEJA backer. She disputes Blessing's reasoning.
"It is way too early to link those actions in that policy to price impacts in the entire grid, particularly price impacts that are being seen by states across the Midwest that have varying renewable energy policies," Walling said.
Walling said coal plants are shutting down because they're uncompetitive with natural gas, not because of clean energy policy. But she doesn't see expanding production of another fossil fuel like natural gas as a good solution, either.
"We are moving off of coal and natural gas. And we need to do these things before 2030 to make a big difference in the climate crisis," she said.
Kolata, the Citizens Utility Board's executive director, said while he believes CEJA will lead to long-term benefits for both consumers and the environment, the current pace of the clean energy transition will lead to short term pain.
"This price spike suggests that we need to move even faster than the timeline in that bill," he said.
Kolata said a rapid expansion of utility-scale energy generation, particularly solar, could offset MISO's capacity concerns.
"You're starting to see some real encouraging trends. I think Illinois is well positioned to take advantage of those, and is taking advantage of those, but that's not going to help all that much for this year," he said.
Blessing said while brownouts due to capacity shortfalls are a possibility this summer, he's not overly concerned.
"We're optimistic that the supply will be there when we need it. You know, we definitely have done a lot of work over the last 10 years to build a robust delivery system. So we're very confident that we will be there and ready to deliver the energy," he said.
Walling says she is worried about the hardships consumers will face, but said the blame for what's happening doesn't lie with renewable energy policy, but with volatility in energy markets caused by the war in Ukraine and a coal plant closure trend which preceded the passage of CEJA.
"I am definitely concerned about bill increases, and I'm definitely concerned about the timing of the bill increases being connected back to our other climate bill. But it's just not the case," she said.
"The reliability issues in the overall grid are caused by things that happened years ago. So I don't think we're gonna see rolling brownouts. I don't think those things are going to happen," Walling said. "I'm definitely concerned about them, because the latest energy policy we passed, I think it's going to be hard for people to disconnect those things. And having power off in these days is just real, real suffering for people. I mean, it can threaten peoples' lives."
Kolata said major price fluctuations should ease as renewable generation capacity expands, but that will take time.
"There's no question in the short run, this is a concern to Ameren customers, and we need to be doing everything we can to provide relief for them," he said.
Kolata said there are some ways consumers can be proactive, however.
"There's a surprising number of energy efficiency programs for example, where you're basically getting the service for free, and that can make a big difference on your bill. And everything helps here," he said. "(It's) going to be difficult, but there are things that can be done."
Ameren Illinois' Blessing said the company also offers options to help customers with burgeoning bills.
"Take advantage of our energy efficiency programs to help to get prepared for that. And to the extent customers are struggling with their bills, reach out to us. We can help you get into touch with agencies that can see if you qualify for some assistance on your bill," Blessing said.
Electric bills aren't likely to get cheaper soon. Earlier this month, Ameren requested an $83 million electric rate hike from the Illinois Commerce Commission. If approved, the new delivery rates will take effect on January 1 of next year. A new rate-setting formula system created by CEJA is set to take effect following this cycle.
The Citizen's Utility Board's website offers resources for coping with high energy prices, including financial resources, efficiency tips, and alternative suppliers. Click here for those resources, or click here for Ameren billing and energy efficiency resources.
