Effingham County’s consultant for the municipal electric aggregation program, SIMEC, LLC, has announced that the program will resume in April under a new contract with Constellation NewEnergy at a fixed rate of 11.924 cents per kilowatt-hour.
The new contract will only impact rural Ameren customers, including residents and small businesses, within the aggregation program that reside or operate beyond the boundaries of any of the county’s municipalities.
The program was paused by the county back in March 2022 as it was unable to find an electricity rate lower than that of Ameren.
Effingham County Board Chair Josh Douthit discussed the county’s decision to resume the aggregation program under Constellation.
“We were looking to lock in more of a fixed rate situation that wasn’t necessarily based on the market so much, and we were able to lock in the 11.924 cents per kilowatt-hour which put us below what Ameren’s current rate is,” Douthit said.
Douthit said the county could lock the fixed rate with Constellation, in part, because it had already been in a portfolio contract with the company.
“We could not have just randomly went with a different provider,” Douthit said. “We had to choose Constellation because we were already in the portfolio contract with them and they allowed us out of that contract to go to a fixed rate only because we were already with them.”
According to SIMEC President Reg Ankrom, the decision to resume the aggregate under Constellation was influenced by multiple market factors.
“We saw, in the market, a number of things that told us it’s a good time to be back in the market,” Ankrom said. “We watch natural gas prices because electric prices tend to mirror gas prices.”
Considering this correlation, Ankrom said the recent drop in gas prices indicated to SIMEC a drop in electricity rates.
He also explained that one reason for the recent rise in electricity rates is a decrease in capacity.
“The second thing we looked at was capacity prices which have risen from roughly $10 per megawatt per day last year to $233 per megawatt per day,” Ankrom said. “Our belief was, capacity is so stretched that power rates are going to continue going up because there’s less capacity to serve an ever-growing demand.”
Considering these factors and after seeing indicative prices go down, SIMEC decided that locking into Constellation’s fixed rate would be the county’s best option.
Although Ameren’s current 11.833 cents per kilowatt-hour, 0.09 cents lower than the fixed rate of Constellation, Ameren customers have also had to pay for electricity purchased by Ameren that causes the rate to fluctuate.
This rate adjustment is often referred to as a purchased electric adjustment.
“And because of that capacity shortage, the purchased electric adjustment, which reflects that, is a positive,” Ankrom said.
According to Ankrom, Ameren has been charging an average of about 3.4 cents per kilowatt-hour more than the regular rate over the past six months.
“When we add that to it, Ameren’s price, even now, is higher than what we were able to get for Effingham County,” he said.
Additionally, he said SIMEC expects Ameren electricity bills to increase even more when Ameren adjusts its rates in June.
Although the county will remain locked into Constellation’s fixed rate for 18 months, beginning in April, Ankrom said SIMEC will continue searching for better rates to consider when that period comes to an end next year.
“So, even though our contract for Effingham County will start in April, we could, in March, see something in the market that says, ‘Let’s look for something that will begin in October 2024,’” he said.
Constellation will be responsible for supplying electricity for customers within the aggregate program, but Ameren will still be handling all service calls from customers.
“All of those things will continue to be done by Ameren, and that’s not temporary, that’s permanent,” Ankrom said.
Ankrom emphasized that the switch to constellation will only impact the county’s unincorporated Ameren customers that are included in the aggregate.
Constellation sent letters to eligible residents with additional information, including the option to opt out of the aggregation program.
Ameren will also send letters to customers this month informing them of their right to opt out of the program.
Customers can opt out of the aggregation program at no cost by calling Constellation’s customer care center at 833-999-4862.