Municipal Electric Aggregation POWER IS MONEY Your Vote Your Choice
www.powervotecu.com Is a joint website by Champaign and Urbana promoting public awareness.
Q: What is municipal electric aggregation?
A: Municipal electric aggregation allows Illinois cities to pool or aggregate residential and small commercial accounts and negotiate for lower electricity prices with alternative retail electric suppliers. Buying bulk can mean substantial savings for residents and also gives cities the opportunity to purchase cleaner, renewable energy (wind or solar) if a city desires.
Q: How is municipal aggregation different from what we're doing now?
A: Right now, about 4.7 million residential and small commercial customers in Illinois, including Ameren customers, receive power through wholesale supply agreements negotiated by the Illinois Power Agency, a state agency. The majority of those wholesale contracts were negotiated in 2007, when electricity prices were much higher than today. Those higher-priced 2007 contracts run through December of this year. Municipal aggregation will allow Urbana to negotiate contracts directly with a supplier for a lower price. The savings for residents will likely be greatest during the first year of aggregation, but should continue in subsequent years.
City-negotiated contracts can also reflect the priorities of a community, such as requiring a certain percentage, up to 100 percent, of renewable power.
Q: What are the steps to implementing aggregation?
A: The City has placed a referendum on the March 20 ballot asking voters to give the City authority to create an aggregation program. If the referendum is approved, the City will then, with public input, create an aggregation plan that includes procedures and goals for the program. The City will then negotiate a contract with a retail electric supplier to obtain competitive electricity rates for participants. If no bids are acceptable, there is no obligation for the City to accept them. A resident or small business can choose to opt out of the City’s program, meaning there is no obligation to participate in the program.
Q: How can municipal electric aggregation save customers money?
A: The current default rate for Ameren customers is 6.3 cents per kilowatt hour. Indications are that the city, through aggregation, could obtain a price lower than 5 cents per kilowatt hour. Retail electric suppliers will offer competitive rates because aggregation allows them to pick up thousands of new customers and to save money by avoiding marketing their services to each individual household. Electricity prices are nearing historic lows and aggregation will allow the city to lock in these low prices, instead of paying for older contracts when electricity prices were much higher.
If electricity prices don't go up over the next month, a typical resident using 10,000 kilowatt hours of electricity per year should be able to save over $125 annually on their electric bills, compared to current rates. Savings on the electric supply portion of the bill should be in the 20 to 30 percent range.
Q: When will aggregation go into effect?
A: Before the City can begin implementing the program, voters must approve a referendum on March 20 to allow municipal electric aggregation. If the referendum passes, the program will likely begin in July or August.
Q: What component of my electrical bill will aggregation effect?
A: Aggregation addresses only the electric supply portion of your bill, which is typically 60 to 70 percent of the bill. Ameren will continue to bill residents and answer service calls, and will continue to be responsible for the distribution portion of the bill (getting the electricity from the substation to the consumer’s meter).
Q: How many electric bills will I receive under aggregation?
A: You will continue to receive only one bill from Ameren. The retail electric supplier chosen under the aggregation program will bill customers through Ameren to minimize the number of bills received by participants and to avoid confusion.
Q: When will I start seeing a reduction in my electricity bill?
A: The earliest participants would receive bills with the new rates is likely July or August.
Q: Do I have to participate in the City’s aggregation program if I do not want to?
A: No. Residents and small businesses are free to opt out. Opt out notices will be provided through the mail to all eligible participants before the program begins. Even if a customer misses the opt-out period, Urbana does not intend to charge a termination fee, like many cities do, if a resident wants to leave the program.
Q: Who will I call if I have problems with my power or my bill?
A: All service and billing questions will continue to be directed to Ameren, as they will still be responsible for distribution of your electricity.
Q: How can I get more information about Urbana’s aggregation program?
A: The cities of Urbana and Champaign have combined efforts to create a new website, www.powervotecu.com, to inform voters about municipal electric aggregation. Public information sessions are forthcoming and city staff and elected officials will be reaching out to speak to local civic groups about aggregation.
Q: If I heat my home with electricity, can I save money with aggregation?
A: Probably not. Most residents who heat their homes with electricity already have a discounted rate structure, and aggregation most likely will not save them money on their electric bill. For that reason, these "space heating" customers will be excluded from the city's program.
If you are considering switching, it is important that you evaluate your annual usage and the rate being offered through aggregation in order to determine what electric supply option best suits your needs. For more information, go to the Illinois Commerce Commission web site, http://www.pluginillinois.org/, and click on “Utility Space Heating Rate.”
Q: Are there other types of customers which may not benefit from participation in a municipal electric aggregation program?
A: Yes. Residential customers on a real time pricing plan or a percentage of income payment plan (PIPP) will likely not benefit from aggregation pricing and will be excluded from the city's program.
Q: What are the risks of municipal electric aggregation?
A: The largest risk of municipal electric aggregation is that the default rate for electricity provided by Ameren could eventually fall below the aggregation supply rate. However, the City of Urbana will work with a knowledgeable energy purchasing consultant to minimize this risk and others. Such risk can be minimized by including appropriate contract language, forecasting future energy prices, and keeping the supply contract at or under two years in duration.
Q: I have received mailings from retail electric suppliers offering lower electricity rates now. What should I do?
A: The earliest the City’s aggregation program is likely to begin is this summer. Consumers who decide to switch to a retail electric supplier before the City’s program is available should consider several aspects of the retail electric supplier’s offer.
What to look for in an offer:
- Registered Suppliers: Make sure the supplier seeking your business is registered with the Illinois Commerce Commission, www.pluginillinois.org.
- Length of contract: Many retail suppliers require a minimum one-year contract, which would prevent a customer from getting the City’s aggregation rate until the contract ends.
- Termination fees: Look at the cost of early termination. Some companies charge fees and others do not.
- One bill or two? Under the City’s aggregation program, participants will still receive one monthly bill from Ameren and make one payment to Ameren. Some retail suppliers do not have this provision meaning customers may receive their regular bill from Ameren and a separate bill from the retail supplier.
Q: What types of small businesses will be included in the aggregation program?
A: Ameren defines a qualifying small business for the Municipal Electric Aggregation program as one that uses 15,000 kilowatt hours or less annually. This would typically be something like a small barber shop or one-person office.
Q: I heard about Ameren increasing electric rates due to a “smart grid” bill that passed in Illinois. Will municipal aggregation prevent such an increase?
A: Aggregation will not impact any potential increases by Ameren for distribution and transmission of electricity due to the smart grid bill, but cost decreases through aggregation could offset some of the potential increases.
Q: Can renewable power be purchased under municipal electric aggregation?
A: Yes. The City of Urbana can purchase renewable power (renewable energy certificates) through the aggregation electric supply contract. While the City cannot control the specific source of electricity coming through the grid, purchasing renewable energy certificates (or RECs) equal up to 100 percent of the amount of electricity purchased qualifies as a renewable energy purchase. RECs help generate demand for the construction of new renewable energy generation facilities such as solar and wind.
Q: Can municipal electric aggregation help the City of Urbana meet environmental goals?
A: Yes. If the aggregation supply contract includes the purchase of renewable power, then emissions will indirectly be reduced and the City’s carbon footprint will decrease. For more information on renewable power, visit the USEPA’s Green Power Partnership web site, http://www.epa.gov/greenpower/.
Q: How can I vote on municipal electric aggregation?
A: To vote, an Urbana resident must be registered as a voter with the Champaign County Clerk’s Office. For information on voter registration or polling locations, please contact 217/384-3724 or visit www.champaigncountyclerk.com.
Since the March 20 election is a primary election, you may ask for a political party ballot or a non-partisan ballot at the polling place.
Q: If I vote to in favor of aggregation, will be I be required to participate? If I vote against aggregation, will I be allowed to participate?
A: Your vote on the March 20 referendum will have no impact on your ability to participate, or opt out of participating, in the aggregation program.
Q: How can I get more information about municipal electric aggregation in general?
A: Contact the Mike Monson with the City of Urbana at 217/384-2455. The following website also offers more information: Illinois Municipal League, www.iml.org/page.cfm?key=7234
