Peoria residents should budget $500 for increased energy costs this summer, city manager says

PEORIA, Ill. (WMBD) — As summer approaches, Peoria city officials are warning residents about increased energy costs that are on the horizon.

Peoria City Manager Patrick Urich said energy supply rates increased from $5/megawatt to $238/megawatt at the regional energy capacity auction in April.

Capacity refers to the number of power plants in a region able to supply energy. The annual auction is conducted by the federal grid operator, Midcontinent Independent System Operator (MISO).

“So it’s considerably higher in terms of the cost. Now that won’t translate to a direct 4000% increase for homeowners, but energy prices will go up,” said Urich.

Urich said residents could see their bills jump by $500 this year. He said 85% of households in Peoria are part of a municipal aggregate program. The program allows the city to buy energy for approximately 38,500 households at a collective price with Peoria County, Tazewell County, Peoria Heights, Bartonville, West Peoria, East Peoria and Morton.

“We’re all part of this buying group and we buy at the same time,” Urich explained, adding municipal program households paid an average $34/month, compared with $41/month average at Ameren. He said Ameren customers could see their average bill jump to $88/month.

“When auction came in April, there wasn’t enough capacity in the area serviced by Ameren… so their prices all went up because of that inability to have enough capacity,” said Urich.

The municipal contract comes to an end in May. Urich said volatile factors like the war in Ukraine, inflation and gas prices are impacting negotiations with suppliers.

“What we’re looking to do is try and work with energy wholesalers in order to define the best time to enter in a new contract. Currently, the wholesalers have told us they’re not at point where they’re ready to give us a contract. There’s a lot of upheaval in the energy market right now, as the dust settles on the fact that the capacity auction was so increased…all those factors are playing a part in some of those costs,” he said.

Tucker Kennedy, director of communications at Ameren Illinois, said the price increase is out of their control because they are not an energy supplier, but a distributor.

“The energy supply… so it’s purchased for us. We get the energy we deliver to our customers and we pass those costs directly one to one Dollar for dollar without markup so this increase is not benefiting Ameren Illinois at all,” he said.

The Illinois Power Agency (IPA) procures wholesale electricity for Ameren customers. In a statement to WMBD, the IPA said they “procured roughly half of Ameren’s capacity obligation requirements, which will lessen the impact of the spike in MISO capacity prices.”

Urich added the Midwest does not have enough capacity to supply energy to meet demand because two coal fired plants, Edwards and Duck Creek, are out of commission as part of Gov. J.B. Pritzker’s energy policy to reach 40% renewable energy by 2030 and shut down all coal plants by 2045.

“When the auction prices, came, out, one of the areas of concern was that we didn’t have enough supply of energy in our Midwest region to be able to support that effort. So that’s causing some challenges as well, and all of that plays a role in why prices are going up,” he said.

Urich added their energy broker is working on their behalf to negotiate the best available contract with suppliers.

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