Electricity markets are volatile again this year and that will cost Bloomington-Normal residents on their heating and cooling bills.
For the last two years, the so-called municipal aggregated rate negotiated by a group of cities and towns has seen a big increase — 30% this year alone. Last year's jump was more, 40%.
And for only the second time in 13 years, the municipal aggregated rate is higher than the base Ameren summer rate for electricity. Bloomington Deputy City Manager Sue McLaughlin said the other time that happened was in 2019.
“When we went out to market on the pricing, [it] was right on the cusp of the Iran situation,” said McLaughlin.
“You recall, I'm sure, how much gas prices went up…and then, of course, whether it's coal, whether it's solar, whether it's wind, all that's impacted across the market. I really think it's just the volatility.”
The Ecology Action Center has recommended people opt out of the aggregated rate this year to save about $140. That is even though Ameren’s rates change monthly, and the aggregated rate is locked in for more than a year.
Historically, the aggregated rate lasts a year. McLaughlin said this time they went for 14 months.
“We're trying to change the timing of when we go out to get the rate locked in, so that we can get a better idea what the summer rates are going to look like,” she said. “Usually, they're deciding in late March or April, and notifying people in May. Now we're going to wait and do it in the April May time frame … We're hoping it will be better next year.”
City Manager Jeff Jurgens said the city won’t discourage people from opting out this year and going with the Ameren price.
“Obviously, we want people to be able to go with the lowest rate that they can get. We want people to be able to save money, that's the whole concept behind aggregation,” he said.
If a whole bunch of people opt out, there are a couple ways to think about the potential consequences. First, it could send a signal to negotiators to try harder to get a better rate next time. The other framing of the issue rests on the principle that the power of aggregation lies in delivering a whole bunch of customers.
The thinking goes if the negotiator has fewer people to represent, maybe they won’t be able to swing a good price.
McLaughlin said she doubts there will be much impact either way. There’s usually not a lot of movement because less than half the people who get notification letters about their options respond in any way at all.
“They already kind of factor in that you're going to get about 70% of the total population of the 22 communities that are in this group,” said McLaughlin.
Dedicated solar sourcing
McLaughlin said there might eventually be a way to at least take the edge off peaking prices of electricity — buy solar.
This does not mean installing solar panels. She said the city is discussing whether to have its aggregation consultant, Stone River, offer a new program under which residents can, in part, select the source of the juice that powers their homes.
“You sign onto where the power that you're buying includes more solar power. It's diversified, and you can save 10% off of your rate right off the bat. if you're low income, there's a threshold, up to 20% on your rate,” said McLaughlin.
By signing up, the offering entity gets credits and passes some of that onto customers.
Corporations seek out source-specific electricity, too. For instance, Facebook parent Meta signed a pact to get credit for a portion of the electricity produced by the Clinton nuclear power plant owned by Constellation.
“We're looking at that as another option for people to look at. Hey, this is another potential way to save 10% off the entire bill using solar credits," said McLaughlin.
