How the hourly price of electricity is determined

As a Power Smart Pricing participant, the prices you will pay for electricity are set by the hourly wholesale electricity market run by the Midwest Independent System Operator (MISO). This means that the prices will vary from hour to hour, depending on the actual market price.

Power Smart Pricing uses the day-ahead prices, meaning that the prices for each day are set the previous evening. These day-ahead prices are the actual prices that will be used to calculate your bill. Each evening, you can check prices for the following day online or by calling 1- (877) 655-6028.

How real-time prices compare to standard rate prices

The following chart lists the average day-ahead prices for 2007 and 2008, along with standard rate prices. Because the day-ahead, hourly prices change throughout the day, your actual costs with hourly pricing will vary depending on the time of day when you use electricity. See the Power Smart Pricing Program Guide for more information about price patterns and saving strategies.

*Prices in cents per kilowatt hour. Please note that past prices are not necessarily a predictor of future prices.

**Former AmerenUE customers now served by AmerenCIPS in the Metro East: 0-800 kWh non-summer is 8.549¢/kWh and over 800 kWh non-summer is 1.148¢/kWh, regardless of heating type.

*** Applies only to existing premises served under AmerenCIPS Rider 5 or AmerenIP’s space heat provision under SC2 as of 1/1/07. The Space Heat category is not available for new electric heat installations.

Factors that Impact Hourly Market Prices

Season and Day of the Week
Hourly, market-based electricity prices typically change as the demand for electricity changes; prices tend to increase as demand rises. As a result, average prices tend to be higher on weekdays and lower on weekends and holidays, when some businesses and factories shut down. Hourly price patterns also vary by season, as described below.

Summer Price Patterns
Electricity prices typically fluctuate most during the summer. This is because electricity demand fluctuates considerably as businesses and households turn air conditioners on and off. Normally, the highest prices in the summer will be in the late afternoon and early evening. Depending on weather and other conditions, some days will have higher overall prices than others. Prices tend to be highest when the weather is especially hot.

Fall, Winter and Spring Price PatternsCompared with summer prices, average fall, winter and spring prices are generally lower. This is because overall demand is not driven by air conditioning as it is during the summer. During the cooler months, there tends to be a small price spike in the morning (when business are opening and people are getting ready for work) and another slightly larger spike in the evening (as people return home and turn on lights and appliances). However, the highest prices of the day are generally lower than the highest prices during the summer.

Weather, Technical Problems, and Fuel Costs
The weather can have a big impact on the wholesale real-time price of electricity, particularly during the summer when air conditioner usage drives up demand for electricity. This is why summer electricity prices tend to be highest during the afternoon. This is also why hot days tend to have higher overall prices than cooler days.

Prices can sometimes increase in the spring or fall if a heat wave occurs during a time when some power plants are shut down for maintenance.

During the winter, electricity prices can also spike when sudden and significant temperature drops, or extended cold snaps push up natural gas prices, increasing the cost of operating gas-burning power plants.

There can also be unexpected and brief price spikes if multiple power plants have technical or mechanical problems at the same time, or if there are problems in parts of the regional transmission network that is used to transport electricity from the power plant to Ameren’s distribution system.

Natural gas and coal prices also impact the market price of electricity, so when the costs of these and other fuels increase, those changes can be reflected in hourly electricity prices.

High price alerts

CNT Energy will alert you in advance when prices will be high. You will receive a high price alert by phone or e-mail between 5 p.m. and 10 p.m. if the day-ahead price of electricity will be 13 cents per kWh or higher for any number of hours during the following day. You can use these alerts to plan ahead and use energy wisely during high priced hours.

High price alerts are most likely to occur during the summer, when air conditioning pushes up demand for electricity. The frequency of alerts depends on the weather and other market conditions. In 2007 there were only 18 days when participants received high price alerts. Electricity prices were higher than 13 cents per kWh for periods of one to five hours on each of those 18 days.

More Information

For more information about seasonal price patterns, see the Power Smart Pricing Program Guide at www.powersmartpricing.org/program-guide.