Municipal aggregation program members may face higher electric bills this summer through Ameren
Residents participating in a regional municipal aggregation program recently received letters in the mail from Ameren saying after the current contract ends on June 1, they will be rolled back into the Ameren supply rate. That could mean higher prices.
These residents will be under Ameren’s rate for July and August this year.
Currently, households and small businesses a part of the municipal aggregation program are paying 4.3 cents per kilowatt of electricity. Though under Ameren’s supply rate, they will be paying nearly double that at 8.1 cents per kilowatt during summer months.
Robert Cole, Director of Buildings and Inspections for the city of East Peoria, said the City of East Peoria and other municipalities could not secure a new contract because of global spikes in energy prices and supply shortages.
“When our broker was trying to get pricing, it was too risky for the suppliers to even give the price because of the volatility of the market, and that would obviously be very risky for them to be able to throw a number that really wasn’t a reasonable number. It was all based off of an inflated market,” Cole said.
Cole said these letters from Ameren were a surprise to him and other East Peoria residents, though he said he and other East Peoria officials knew they had missed the deadline to file for a new contract, which would mean costly consequences for residents of these municipalities.
“At the end of the day, what this means is the municipal aggregation program is designed for times like these. They are times when we can pull all of our residents and small business users load and go out for competitive bidding,” Cole said. “I think the only thing that stands in our way right now is the market is extremely high right now, and we’re hoping to see some more favorable weather conditions and maybe not too much turmoil in the world.”
The electric aggregation program was started in 2014, and Cole said the program is designed to “bulk purchase” electricity using a broker on the open market.
“The group used to be somewhere around 41 municipalities, so a lot of our large regional municipalities all go out for competitive bids for electric supply,” Cole said.
Cole said the program is intended to save residents and businesses money and has typically been successful at doing so. However, Cole said a lot has changed on the market this last year, leaving the involved municipalities unable to secure the contract extension and now in the hands of Ameren.
“They will be then locked in for those ten additional months. In between, if that does happen and we’re not able to get a reasonable price, and it has to fall back into the Ameren supply rate, we will then have to look at the following anything after May 2023 to secure a better price than what the utility is offering.”
Cole continued, “We’re still hoping that the market corrects itself in the coming weeks, and we’re able to get a reasonable price from the suppliers to our broker for all of the municipalities and be able to present something to council for consideration.”
Cole said another reason why the market is so high is because temperatures jumped from cold to hot quickly, making ventilation systems to go from heating to air conditioning quickly and adding stress on the market.
“It seems to be we really didn’t have a spring. Believe me, I feel it too. I have a home, and it hurt to turn on the air conditioner this week already knowing that I was in heating the week before. It’s just a crazy time. We hope things settle down in the market, in the world, and we can get a contract with more reasonable pricing for our residents and small business owners,” Cole said.
Cole said the price increases from 4.3 cents per kilowatt to 8.1 cents per kilowatt of electricity is not Ameren’s fault because they too had to buy a higher price due to the state of the market.
Cole also said the 4.3 cents per kilowatt price was initiated in December 2020, during the height of the pandemic when the manufacturing industry was down. With that in mind, he says wat is too risky to lock into a contract on a fixed price when in a handful of weeks, it could drastically change.
“We’ve seen historical lows [for] our last purchase agreement. Now, it’s ending in the start of June, and we didn’t know that it was forecasted that the markets were going to be now instead of historically low, historically high,” Cole said.
Cole said as especially warm temperatures arrive, he has been encouraging residents to schedule cooling times in their homes during late evenings when prices are cheaper because “every little bit helps.”
“Most of the people I’ve talked to in East Peoria, a lot of them are on fixed incomes. They’re very concerned that here is another price increase for people that are on fixed incomes. They’re scared. They’re very concerned, and we hope that the market, like I was saying, that the suppliers come back with the more reasonable and cheaper rate than the utility is offering,” Cole said.