Utility watchdog warns Central, Southern Illinois of 30 percent electricity hike

The Citizens Utility Board (CUB) on Monday alerted consumers in Central and Southern Illinois about a 30 percent increase in Ameren electricity supply rates, and gave consumers tips on how to cut electric bills during the summer air conditioning season.

According to the Illinois Commerce Commission (ICC), as of June 1, power prices for Ameren customers are jumping 30 percent from about 4.5-4.6¢ per kilowatt-hour (kWh) to:

  • Rate Zone 1: 5.974 cents per kWh
  • Rate Zone 2: 5.911 cents per kWh
  • Rate Zone 3: 5.966 cents per kWh

Those prices will last through September 2015. Prices for the non-summer period, October 2015-May 2016, are projected to be higher, but have not been finalized.

The price spike is due to an increase in capacity costs— what consumers pay to ensure power plants are able to deliver electricity on the highest-demand days of the year.  Every spring, the Midcontinent Independent System Operator (MISO)—the power grid operator in Central and Southern Illinois and 14 other states—holds an auction to determine capacity costs for the next year (June 1 through May 31).  In the latest auction, Illinois’ capacity cost turned out to be roughly 50 times higher than the other 14 states in MISO territory.

It is estimated that average Ameren customers on the company’s supply rates could pay more than $130 extra over the next year. New alternative supplier deals also are expected to reflect higher costs. The increase has generated questions, given that Illinois has a surplus of electricity, and power generators are expected to receive millions in extra revenue because of the new prices.

It’s worth noting that Ameren, the distribution utility, isn’t a power generator so it doesn’t profit off these supply rates. The utility, which is in charge of delivering electricity to customers, has been publicly opposed to the increase in power prices, and its actions aren’t in question in this case.

CUB applauded Illinois Attorney General Lisa Madigan’s recent filing asking the Federal Energy Regulatory Commission (FERC) to investigate the electricity auction that sparked the increase in rates. State legislators also have joined the call for a review of the auction.

CUB and other consumer advocates have called on federal regulators to investigate the price spike, and last week Attorney General Madigan and the advocacy group Public Citizen filed complaints with FERC to investigate what went wrong in the auction. The Attorney General’s office said Houston-based Dynegy’s dominance in the Central and Southern Illinois power market led to the price spike.

Also, over the weekend, the Illinois Senate unanimously passed a resolution (Senate Resolution 623) urging FERC, the ICC and the Illinois Power Agency to independently review capacity auctions and determine why “the rules and market design have not protected Illinois ratepayers from significant increases.”

“This increase in power prices is unjust and unreasonable, and we join Ameren customers and other consumer advocates in urging federal regulators to get to the bottom of it,” CUB Executive Director David Kolata said. “It’s not right that many Ameren customers could struggle to pay their bills this summer, while big power generators make a windfall off these skyrocketing prices.”