Jacksonville’s Municipal Electricity Aggregation Program Victim of Rising Supply Costs

By Benjamin Cox on October 12, 2022 at 5:46pm

Jacksonville City Clerk Skip Bradshaw says a painful increase is on the way for the city’s electrical aggregation program next year.

Bradshaw says the city participated in the aggregation bidding process last week and Jacksonville only received one bid.

He says the aggregate rate is going to see a steep increase: “It’s going to be very painful. For those people that went with a different supply company already, they went back on to Ameren at three times…almost three times what Ameren was currently, and I heard about it. Not that I had anything to do with it, but friends of mine, I heard about it through them. I knew that the city’s was going to go up. We were hoping for two bids. The current company that we have had told everyone right up front that they weren’t going to bid, which is unusual. We’ve had them for 13 years. We did get the one bid. It wasn’t a very good bid, but it is what it is. We can’t do anything about it. It’s right at what Ameren is currently charging, but in 6 months Ameren’s rate is going to go up, and we know that. Whereas, this contracted aggregation program will last 22 months beginning in March.”

The rate with Homefield Energy that is set to expire is at 4.039 cents per kilowatt hour. The new bid for the city’s aggregate program will be at 12.22 cents per kilowatt hour, a 302% increase. Bradshaw said during last night’s city council that he did calculations based on his own home’s usage, and the jump will be an $88 increase per month.

Bradshaw says that volatility in the electricity supply market is causing the increases, and he expects those who have Ameren as their electric supplier will see another dramatic increase in rates in June 2023.

Ameren is part of the Midcontinent Independent System Operator (MISO), which is one of many independent organizations that handle electric grid operations, market facilitation for certain electric markets, and bulk electric system planning. MISO is responsible for operating the power grid across 15 U.S. states including most of Illinois (excluding the Chicago area who have their own grid). As part of MISO, Ameren is required to purchase energy capacity at the price MISO sets. The annual MISO capacity auction surged to $236.66 per megawatt-day back in April from $5 a year ago for the Midwest region. MISO generating capacity was underestimated last year, and now costs are rising as a result of increased electricity demand as pandemic restrictions ease combined with a decrease in generation (renewable energy development is increasing, but is only partially weighted in the capacity market, and more coal-fired plants are going offline), and other market influences including inflation, the rising cost of natural gas, and the war in Ukraine.