Effingham Daily News, Effingham, IL

June 8, 2014

Ameren electric rate drop prompts some to question aggregation

Tony Huffman
Effingham Daily News

EFFINGHAM — Despite a projected electricity rate drop by Ameren Illinois, City of Effingham officials plan to continue with the aggregate rates the city receives from Homefield Electric Company.

After a referendum a few years ago gave the city permission to purchase electricity in bulk, residents and small businesses were given the option to go with a cheaper provider.

Effingham City Administrator James Arndt still believes in that course of action because he said “it saved people a lot of money.”

“We are going to hold the course,” said Arndt in response to Ameren Illinois projecting a 8 percent drop in its electrical rate this month. “People can opt out and go with another electric provider at any time.”

Currently, city residents pay .04480 per kilowatt hour, while Ameren Illinois rates are still higher at .04554, said Arndt. He added the Ameren rates aren’t locked in, while the Homefield Electric Company rate is set until June of 2016.

“People had a 30 percent savings when the initial change to Homefield Electric Company occurred,” said Arndt.

Ameren Illinois sets its electric rates based on factors provided by the Illinois Power Agency, said Ameren Illinois Spokesperson Marcelyn Love.

“The power agency conducts a procurement process,” said Love. “Based on that procurement, our supply prices are expected to decline by 8 percent.”

The drop in Ameren Illinois prices is based on a load-use study conducted by the power company and the Illinois Power Agency, added Love.

According to Anthony Star, director of the Illinois Power Agency, the whole issue of electrical aggregation came about after large regulated power companies, such as Ameren, significantly raised their prices following the end of an electric rate freeze that held prices steady from 1997 to 2007. That price increase led to the electrical aggregation, which municipalities throughout the state transitioned toward.

Star believes because Effingham’s current rate is set under contract until 2016, unlike Ameren, it will likely be a competitive rate for customers.

“I don’t speculate on specific rate prices but if the contract in Effingham is set, it does make them an attractive option,” said Star.

Star went on to say he believes Ameren’s projected 8 percent price decrease is a way to return revenue to customers after excess power was sold over the winter.

“This is a very strange process,” said Star, who said the power agency he helms isn’t a regulating body but does serve as an oversight to state power prices.

Star figured the difference between the .04554 offered by Ameren and the .04480 offered by Homefield Electric Company, using the average estimated 10,000 to 12,000 kilowatt usage a year per typical family home, amounts to about $10 a year.

“Some municipalities are leaving the electric aggregation because of issues with unregulated power companies and the Ameren rate decrease,” said Star, who added that Homefield Electric Company is reputable company.

More information about electric rates can be found at www.pluginillinois.org for more information about the electric rates.