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Q&A: June 1 Electricity Price Spike in Central and Southern Illinois

What’s happening on June 1? 

On June 1, the price for electricity will more than double for Ameren customers across Central and Southern Illinois, costing customers hundreds of dollars in higher power bills over the next year.

How much will this price spike cost me? 

Ameren’s summer “price to compare”–the supply rate you compare with alternative supplier offers–is rising to 10.628 cents per kilowatt-hour (kWh). That’s a 120 percent increase over last June’s supply rate. Ameren says: “The typical Ameren Illinois residential customer will see a $626 annual increase on the power supply side of the bill, or an average of $52 or more per month throughout the year.” The increase could be even more for electric heat customers.

How long will prices stay elevated? 

At least for the next year, from June 1, 2022 through May 31, 2023. Ameren will announce a new supply rate on Oct. 1, but it also will be painfully high. We don’t know when energy markets will stabilize.

Why is this price spike happening? 

This is related to several factors, many of which have impacted energy markets across the world.

Capacity costs–what we pay power plant operators to have adequate reserve electricity–skyrocketed in an April auction held by the power grid operator for Central and Southern Illinois, which is in Zone 4. These capacity costs are wrapped into the price we pay for electricity and are a major reason for the June 1 price spike.

  • Natural gas prices have been at extremely high levels for more than a year because of multiple factors, including, most recently, the Russian invasion of Ukraine. The high gas prices have now led to high electricity prices–because natural gas is often used to generate power.
  • Adding to the high energy price is a recent electric “capacity” auction held by the Midcontinent Independent System Operator (MISO), the power grid operator for all or parts of 14 states, including Central and Southern Illinois. Capacity costs, which are wrapped into the price we pay for electricity, are payments we make to power plant operators to have adequate reserve electricity. The capacity cost is determined by a yearly auction, and in the most recent auction, in April, the price rose from $5/MegaWatt (MW)-day to $236.66/MW-day in several Midwestern states, including Illinois (part of MISO’s Zone 4). The increase was “driven by an uptick in projected electricity use and a dip in power supply,” Utility Dive reported.

What part of my electric bill is going up? 

This will impact the supply portion of bills, what we pay for the actual electricity. The supply cost takes up a half to two-thirds of electric bills.

The price we pay for electricity (the charge labeled “Purchased Electric Summer”) is going up significantly on June 1. (Note: This is a bill from June of 2021, so the prices are outdated.)

Ameren Illinois, the electric utility in Central and Southern Illinois, is only responsible for delivery and not supply. Thus, it does not profit off the supply portion of bills–Ameren simply passes along what they pay for supply, with no markup.

Is there anything I can do about this price spike? 

While there is no way to avoid paying higher electric bills this summer, there are several actions consumers can take to soften the blow of the high prices:

  • See if you qualify for LIHEAP assistance before the May 31 deadline. The Low Income Home Energy
    Assistance Program, or LIHEAP, still has funds and can be contacted at 1-877-411-9276, or people can visit LIHEAPIllinois.com for more information.
  • Practice energy efficiency at home. For tips and information about helpful Ameren energy efficiency programs, visit CUB’s Clean Energy page.
  • Consider a community solar deal to help ease costs this summer. Community solar deals right now guarantee some savings compared to Ameren’s supply price, but be a careful shopper. Get more information at our special website, SolarInTheCommunity.com. (Note: Several of the offers have a waitlist–check with the companies.)
  • Contact your utility. If you are having trouble affording your energy bills, it is vital that you contact your utility. Ask if you qualify for energy assistance; see if you can set up a payment plan to give you a longer time to pay off your bills; and inquire about no or low-cost energy efficiency programs the company offers. (Read about special protections CUB has helped negotiate for consumers.) 
  •  Visit CUBHelpCenter.com for more information about energy assistance, tips on cutting your bills and your rights to avoid disconnection.

Should I switch to a new electricity supplier to avoid Ameren’s high prices? 

Warning: Alternative suppliers purchase power in the same electricity market – so they will also pay higher capacity prices and also charge higher prices. But it doesn’t hurt to inquire if your community has negotiated a “municipal aggregation” or “community power” deal with an alternative supplier at a lower rate than Ameren’s June 1 price. Just make sure to find out what the true price of the offer is, and when it expires. (Municipal aggregation is when community leaders negotiate with an alternative supplier to try to secure an electricity price that is lower or comparable to the utility price.)

If you also want to consider other alternative supplier deals–beyond community aggregation–we advise you to be cautious. Be careful about getting lured into a long-term bad deal. A company may offer a low introductory rate that will skyrocket after a short period. (Before signing up, ask how long a rate lasts and what the new rate will be after the current price expires.) Also, be wary of add-on fees that can raise the cost of the plan. Finally, be careful of multi-year deals. Ameren’s price will eventually come down so you don’t want to get locked into a long-term deal that goes sour a year or two into it.

Will a drop in power supply lead to power outages? 

MISO has said the auction results signal that the power grid operator may have to order temporary blackouts–in the unusual event of extremely high demand combined with a shortfall in supply. However, Ameren has said it is optimistic it can avoid such outages, and it is “confident that our delivery system is stable and reliable and power will be there when it is needed this summer.” Still, it is always wise to be prepared. Read these tips on how to prepare for an outage, and what to do during an outage.

Does this problem signal we need to reform the energy system in Central and Southern Illinois?

Yes. The MISO region relies too heavily on coal and natural gas power plants.

This is a major reason why CUB fought for the Climate & Equitable Jobs Act, which was passed last September. Seeing the growing capacity problems in Central and Southern Illinois, CEJA includes careful, long-term planning to help Illinois in the future avoid the very price spikes that the region is experiencing this summer. It emphasizes the expansion of renewable resources (such as wind and solar), energy efficiency, demand response (programs that help reduce electricity demand) and the development of adequate transmission and energy-storage technology.

CEJA gives Illinois a blueprint over the next few decades to help the state implement a measured and steady transition to power sources that are cleaner, more reliable and more affordable. Because of CEJA, Illinois is increasing the development of electricity generation projects in Central and Southern Illinois communities, with 1,050 MW of wind and solar already under construction. Over 6,000 MW of solar projects are awaiting various points of approval from Ameren and MISO, and CUB urges the acceleration of these projects.

Does this price spike have anything to do with Ameren’s $83 million rate-hike request? 

No. Ameren’s $83 million rate-hike request impacts another part of our bills–the delivery section. While Ameren doesn’t profit off the supply portion of bills, it does profit off the delivery section–what they charge customers to deliver electricity to homes. Currently CUB is challenging Ameren’s proposed $83 million increase of delivery charges. State regulators will rule on Ameren’s delivery rate hike in December, and new rates would take effect Jan. 1, 2023. While Ameren’s delivery rate-hike request is separate from the June 1 price spike, given the extreme increase in supply prices the rate-hike request is bad timing.

What is CUB doing about the price spike? 

  • CUB has set up CUBHelpCenter.com, a free resource that has tips on cutting your bills, information about energy assistance and details about your rights to avoid disconnection.
  • We look forward to working with Ameren and policymakers to do everything we can to deliver short-term relief to electricity customers and implement the long-term electricity improvements called for by CEJA.
  • CUB calls for:
    • An expansion of energy assistance—including an infusion of shareholder money from Ameren.
    • An expansion of Ameren’s money-saving efficiency and demand-reduction programs, like Peak Time Rewards. These programs are often limited, or closed to new participants. This summer, efficiency and demand-response programs could help soften the blow of ballooning bills while helping curb peaks in demand that are expensive and can harm reliability.
    • Better payment plans from Ameren Illinois to help more customers pay off their debts and stay connected.
    • The acceleration of 6,000 MW of solar projects that are awaiting various points of approval from Ameren and MISO in Central and Southern Illinois. This could help close the capacity gap.