Q&A about June 1 electric rate hikes in Central, Southern Illinois

Ameren customers, you could be in for a rate hike on June 1. Read this Q&A to get the latest details.

What’s happening?
Customers in Central and Southern Illinois who are paying Ameren Illinois’ electricity supply rates may see a significant increase in their power bills from June 1, 2015 through May 31, 2016.

How high will Ameren bills get?
It is not immediately known what Ameren’s new supply rates will be on June 1. (The company has yet to file the new supply rates.) However, CUB’s rough estimation is that this increase could force consumers on Ameren’s supply rate to pay up to $150 more over the next year.

Once CUB knows Ameren’s new supply rates, the consumer group will update this Q&A.

Who is impacted by this increase?
This increase will affect….

-consumers who pay Ameren for power supply;
-consumers shopping for an electricity supplier;
-consumers on an alternative supplier’s “variable rate,” which changes on a monthly basis.

The increase should not affect…

-customers already on fixed-rate alternative supplier deals negotiated by their community and continuing through the next year.

However, if a fixed-rate deal is set to expire over the next few months, consumers shopping for a new deal will see higher rates than what they paid before the capacity auction results went into effect.

What’s the reason for the increase?
It’s because of an increase in “capacity costs,” a key part of electric supply rates. Capacity costs, which are embedded in Ameren’s supply prices, are determined by a yearly auction run by the Midcontinent Independent System Operator (MISO), the power grid operator for Central and Southern Illinois.

What are ‘capacity costs’?
Capacity costs are what consumers pay energy generators to ensure that a power plant can deliver electricity on high demand days. Capacity costs are set by an annual auction run by MISO Energy, which manages the power grid in Central and Southern Illinois and 14 other states.

What were the results of the auction?
In the results released from MISO on April 14, capacity costs for a year beginning June 1 are set to increase by nearly nine times what they are now. Capacity cost for Illinois was roughly 50 times higher than the auction results for the other 14 states managed by MISO. CUB Executive Director David Kolata has called the results unjust and unreasonable.

“Illinois has a surplus of electricity, so the fact that Ameren customers might have to pay skyrocketing power rates on June 1 raises serious questions,” Kolata said. “This is another sign that the electricity market is not working for Illinois consumers, and we need to get to the bottom of it.”

What are consumer advocates doing about it?
Consumer advocates like CUB are considering filing a complaint with the Federal Energy Regulatory Commission (FERC), the federal body that has jurisdiction over MISO’s annual auction. CUB will work with any party—including Attorney General Lisa Madigan, the General Assembly and Illinois Commerce Commission—to find out what happened, and to make the process of setting electricity prices more fair.

Is Ameren profiting off of this increase?
No. By law Ameren the utility simply passes on the cost of electricity supply, with no markup. Because it is not a power generator, it is not profiting off this increase. In fact, one Ameren spokeswoman called the capacity auction results “nonsensical,” and said the company is asking MISO for an explanation of the results.

While Ameren the utility is not profiting, power generators like Exelon and Dynegy are making money off this increase. One of Exelon’s nuclear power plants is reportedly set to get a windfall of $40 million to $50 million because of the increase in capacity costs.

 

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About Jim Chilsen

Jim is director of communications for the Citizens Utility Board (CUB)
This entry was posted in Alternative electric/gas suppliers, Ameren, Capacity, Electric bills, Energy and tagged , , , . Bookmark the permalink.

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