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Aggregation creates value at Illinois utilities


From the May 2, 2013 issue of Public Power Daily

Originally published May 2, 2013

Municipal utilities can compete on more than cost with third-party aggregators who boast low energy prices in cities served by investor-owned utilities in Illinois, according to a Public Power magazine article by Alice Clamp.

High rates coupled with a deregulation amendment opened utilities to customer choice in many Illinois cities five years ago. The environment was ripe for competition, Clamp writes. Third-party power suppliers began approaching communities to offer a lower price for energy than customers were paying to their investor-owned utility.

Cities and towns put referenda on their ballots, asking whether residents wanted them to negotiate with a third-party supplier to obtain the best price for energy. Under such an arrangement—known as municipal aggregation—utility customers would be billed by their IOU, but the energy portion of that bill would reflect the price negotiated with a third-party supplier. 

Under Illinois laws, municipalities that own and operate an electric distribution system were exempted from aggregation. But in fact, aggregation is nothing new for these municipalities, said Doc Mueller, senior vice president of government affairs at the Illinois Municipal Electric Agency (IMEA).

"Municipal utilities have been aggregating their load for decades, whether they built their own generation or negotiated contracts with power suppliers," he said. 

Mark Curran, the electric director of Naperville’s public utilities department, said it is simply a natural duty for municipal utilities. "As a municipal utility, we aggregate for our customers." The city’s power purchase contract with IMEA is comparable to the third-party power contracts secured by other cities, he said.

Clamp’s article is posted online now and will be published in June in the magazine’s print edition.

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