by Diane Benjamin

As reported previously (http://blnnews.com/2012/12/18/aggregation-follow-the-money/), Electricity rates were deregulated in Illinois in 2007.  Many smaller companies formed to give consumers choices in suppliers – thus competition led to lower rates.  Ameren and Co-Ed saw their monopolies disappearing, so they talked Springfield into aggregation.  Since so many cities have approved it, monopoly restored!  The cities are also happy because they get a cut of the bills.  Congratulations citizens.  McLean County voted against aggregation in the last election, it probably wasn’t smart to allow Corn Belt customers who don’t qualify for aggregation to vote, but that’s another story.

Corn Belt customers receive a magazine every month called Illinois Country Living.  The May 2013 issue has an article on the long term outlook of power supply, but it also discusses aggregation.  The entire article is at: http://icl.coop/the-importance-of-being-prudent/

Quotes from the story:

Meanwhile, those of us on the not-for-profit (cooperative and municipal) side of the electric utility industry have continued to exercise a level of planning and control over both the delivery services and supply side of the equation. Most of the municipal systems in Illinois, and many of the distribution cooperatives (through their generation and transmission cooperative suppliers), have made significant investments in new state-of-the-art generation facilities that will serve our customers well for years to come.

Investments of that kind are not cheap. As my friends at the American Public Power Association like to say, no one builds a power plant on spec.

This has created a temporary period where alternative suppliers may have some cost advantage. But temporary is the key word. Even now we are ­seeing aggregated prices for alternative suppliers moving up. Those customers, the cities and townships and ­counties that entered into short-term contracts a few months back, will be forced to return to the market in which they may well find significantly higher costs. That today’s deals are predominantly short in term reflects the uncertainty of the markets. That uncertainty is justified, given that new environmental regulations will close existing power plants in this and adjoining states and as the price of natural gas inevitably moves up from what are historic lows.

This has created a temporary period where alternative suppliers may have some cost advantage. But temporary is the key word. Even now we are ­seeing aggregated prices for alternative suppliers moving up. Those customers, the cities and townships and ­counties that entered into short-term contracts a few months back, will be forced to return to the market in which they may well find significantly higher costs. That today’s deals are predominantly short in term reflects the uncertainty of the markets. That uncertainty is justified, given that new environmental regulations will close existing power plants in this and adjoining states and as the price of natural gas inevitably moves up from what are historic lows.

Don’t be shocked when your “savings” from aggregation disappear.  But by then the small distributors, that have provided competition and lower prices, will be out of business.  The best approach now is to “Opt Out” and sign with one of the numerous providers that I’m sure have been sending you information and making those obnoxious phone calls.