Electrical aggregation — the next steps

Brandon Schatsiek

The Question 

Now that the electrical energy aggregation referendum passed in the March election, what are the next steps the City of Washington will be taking and how will those decisions affect us as owners of businesses and/or homes in the area?

The Answer

With the passage of the referendum, all of the surrounding communities that passed the referendum including Morton, East Peoria, Pekin, Peoria and others, are now in the operational stages of the aggregation undertaking. 

Cities have to comply with the state law that outlines the parameters on how each city goes about doing this. One component of this process is each entity participating basically needs to prepare and adopt a plan of operation and governance. 

How will the cities be implementing this program?

• Each city has already had its first reading of the ordinance (Washington also had its second reading at its April 16 council meeting) and city staffs are currently working on reviewing the list of all the customers Ameren has provided them, so the cities can identify customers who are within corporate city limits and to also add customers who are in the limits, but weren’t included on the list.

• Once the operation is approved, along with the consultants and every partner, there is a competitive bidding process that will happen within 30 days or so whereby the entire grouping of partners will go to the market and seek competitive bids for the purchase of the electric commodity.

Washington City Administrator Bob Morris said had the city been able to lock in prices last week, there would have been a 30 percent savings over the current Ameren price. However, he said prices do fluctuate and that percentage can change by the time bids are let.

• Once the bids are back to the cities, each individual community will need to enter into a contractual agreement for the purchase of its piece of electricity required for their individual jurisdiction.

Morris said there will probably be a 24-month commitment on the pricing, but the length will be decided on the day bids are taken.

• Then there will be a meeting between all of the participating entities to review the bids with a consultant, but each individual city needs to make its individual commitment to purchase the power. It will be from the same supplier and probably the same terms, but that’s the process.

• Once that is done, the cities will have officials select their Alternative Retail Electric Supplier and the process will be set in motion.

• Customers in each of the cities will then receive a letter on city official letterhead indicating the cities have decided to move forward with the new rate; this is considered to be a customers’s first chance to opt-out.

• Once that is done, probably within a month according to Morris, Ameren will be sending out a letter saying within a certain date the customer will be transitioned to the new ARES rate. The customer will then have a second chance to opt out.

Morris added he believes as far as actually seeing savings on people’s actual bills, that is some time in June.

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That is the basic plan at the moment and cities will soon be adopting their ordinances for that same plan.

What this means to you

There are a lot of ways this can affect homeowners and/or their businesses in the next few weeks, but here is a brief overview of some other notes of which people should be aware.

• There are a lot of partners in this aggregation and most of the smaller central Illinois communities including Washington are not among the lead communities.

“You can’t get your 50 communities together and come to any decision on big things,” Morris said. “So there are five or six communities that are kind of the lead communities basically because of their size and they are the determining ones for the bidding and basically they are bidding — what I consider — green electricity.”

Morris said the rates for green electricity are currently much more competitive than in previous years.

• There will be a component of the pricing of the electricity that will return money to the municipalities for administrative, legal and other expenses.

The portion of the revenues that comes back to the municipalities is all based on the per kilowatt hour usage.

In Washington’s case, based on its estimated demand, the city will receive $4,000 per month basically to cover costs associated with administration and implementation.

• Educating the public on the plan’s next steps is important from the cities’ side and Ameren’s as well.

Fundamentally, it is up to the supplier to have a support phone line and website set up for guidance and information. That contact information will be sent out to residents shortly.

• Residents’ bills will still come from Ameren. It will be providing the service to the home and businesses.

There is no extra fee on the bill for Ameren to be delivering the energy. Right now the bills from Ameren are broken down into energy and a distribution charge; that distribution charge will not go up as a result of this change.

• There is one group of customers who already get a lower rate from Ameren and will not get a much better deal from the new supplier and that group is for those people or businesses that have electric heat.

“What we are proposing to do is we are carving them out on the front end and they will have the opportunity to opt in, but most of those residents will be better served to stay with Ameren (depending on the usage),” Morris said.

• Small businesses are included in the opt-out program, but the cutoff is 15,000 kilowatts per year, so not all businesses are going to qualify, just the smaller ones.

• Mayor Gary Manier stressed that residents should not be locking into anything yet because other companies are trying to send letters or call and offer what look like great deals on energy up-front, but will probably be worse in the long run.

“If (the letter or phone call) is not from Good Energy, the city of Washington or Ameren, do nothing,” he said. “Sit and be patient. Don’t lock in with another company.”