Residents and businesses often see increased energy bills during the summer months, but the city of Peoria and Peoria County urge community members to prepare for upcoming increases in summer cooling costs.
Residential Ameren utility rates are expected to increase more than $500 a year for average residential accounts. The rate increase, effective with the June billing period, reflects dramatic market price increases throughout all forms of energy. The utility previewed the rate increases in a recent news release and has just released its preliminary rate calculation. This reflects an annual average rate of more than 11 cents per kilowatt-hour, more than doubling the current rate.
On April 14, Midcontinent Independent System Operator (MISO) held the Midwest capacity auction and the results were unexpectedly high. Capacity is the component of power rates that provides payments to generators to maintain operations for grid reliability. The soaring capacity auction prices signal a shortfall of generation reserves across the entire Midwest region. This affects all parties in the energy space, including Ameren’s utility default rates and aggregation contract prices. MISO stated that Illinois is one of 11 states where there is not enough owned or contracted capacity by local electricity generators, and therefore these areas will pay increased prices for limited supply.
One reason cited for the shortfall is that as fossil fuel plants are phased out, renewable energy sources, while increasing, have not come online fast enough to replace the lost capacity. Additional contributing factors include the high demand for energy globally as well as the market turmoil caused by the conflict in Ukraine. MISO also said brownouts, which are an intentional lowering of voltage by a utility for a short period of time, are possible.
“We urge both residential and commercial customers to examine their energy usage and plan ahead for these increases,” said Scott Sorrel, Peoria County Administrator. “Ameren’s website and energy.gov are two great resources for energy and cost-saving advice.”
The higher rates will affect Peoria and Peoria County’s municipal aggregation program. With the volatility in the electricity market, the municipal buying group is working to seek the best rates for its residents as the current term ends. The municipal aggregation program provides its participants a hedge against the rising costs of energy in the marketplace. Participation in the aggregation program, offered to residential and small commercial customers, is voluntary. There is no cost to enroll or leave the program. Newly eligible accounts (e.g. new residents moving into Peoria, or within Peoria) are offered the opportunity to participate in the program via an opt-out letter providing the price and terms.
“We realize that the increase in energy costs could pose a financial burden on our community members and the cities and counties engaged in our buying group are working hard to provide the best possible alternative for our residents,” noted City of Peoria City Manager Patrick Urich, “As more information becomes available on the pricing and term we will be able to provide our residents, we will make that available to all.”