Power Smart Pricing - A Smart Electricity Rate from Ameren Illinois



Power Smart Pricing Update for Fall/Winter 2014

November 5, 2014

This newsletter will help you understand the ups and downs of market-based electricity pricing, including answers to some commonly asked questions about high electricity prices this past winter and a discussion on the long term outlook for Power Smart Pricing. Click here to download the Power Smart Pricing Fall/Winter Update.

Make the Shift to Fall and Winter Price Patterns

The weather has a big impact on the hourly price of electricity, and as the seasons change, so does the daily price pattern. During the summer, hourly electricity prices tend to be highest in the afternoon. During the cooler months of the year, prices have historically remained low most of the time, with a small increase in prices in the morning and again in the evening. To manage your costs this fall, winter, and spring, keep the typical price pattern in mind and shift some of your usage to lower-priced hours. You can keep track of prices using the Power Smart Pricing website, mobile app, or phone line. You can also follow @PowerSmart to get the high and low day-ahead price through Twitter.


Understanding the Ups and Downs of Market-Based Electricity Pricing

Historically, the hourly electricity prices used for the Power Smart Pricing program have been lower than the standard fixed price more often than they have been higher. This has allowed customers to save money by shifting electricity use to times when the price is low. Of course, while hourly pricing has clear advantages, there are also some risks associated with a market-based rate. The hourly electricity prices used for the Power Smart Pricing program are set in the regional, wholesale market. This means prices fluctuate along with market conditions. When changes occur in the market, customers on the market-based rate are the first to see that reflected in their bills. This has been the case during 2014, when extreme weather resulted in unusually high winter electricity prices. Below, you will find answers to some commonly asked questions about savings results for 2014. We hope that this information will help you understand your costs and your electricity rate options.

Why were electricity prices so high this past winter?

This winter, extremely cold weather resulted in record-high electricity use and a spike in the price of natural gas. In addition, some generation units in the Midwest experienced unplanned outages during the extreme weather. As a result, the average hourly price of electricity was higher than what has typically been seen during the winter months. Keep in mind that while market conditions can never be guaranteed, the winter of 2014 was not typical of what has been seen in the past. Since Power Smart Pricing started in 2007, this was the first year when average winter prices were higher than the Ameren Illinois fixed-price rate.


How did the higher market prices this past winter impact other electricity rate options?

While customers on the market-based rate were the first to see the impact of the higher-than-average winter electricity prices, other customers have seen higher prices as well. Many customers who purchase their electricity from third party suppliers saw their rates increase this year once their initial contract or introductory rate expired. Elevate Energy, the nonprofit organization that administers Power Smart Pricing for Ameren Illinois, conducted research to see how Power Smart Pricing compares with offers from other electricity suppliers. This research found that, from April 1, 2014 through August 11, 2014, Power Smart Pricing participants paid 20 percent less for electricity supply than they would have paid with the lowest rate available from an alternative electricity supplier.

Third party supplier rate information was collected from Plug In Illinois (www.pluginillinois.org) and is current as of August 22, 2014.

What is the long term outlook for the Power Smart Pricing program?

Since the polar vortex ended, hourly prices have stabilized and followed more typical seasonal trends. However, in June, Ameren Illinois decreased the standard fixed-price rate. The decrease was tied to contract prices that were set in 2012, when market rates were the lowest they have been since 2007. The decrease means a lower price to compare for Power Smart Pricing participants and for other customers looking to save with alternative rate options. Keep in mind that with market-based, hourly pricing, it is important to weigh both the risks and the benefits, and to consider savings over the long term. While most Power Smart Pricing customers have not saved money compared to the fixed-price rate during 2014, since 2007, participants have saved an average of 20 percent. That includes the results for 2014. Due to the recent decrease in the Ameren fixed price, it could continue to be difficult to save on Power Smart Pricing in the short term. However, the long term savings outlook could still be positive once the Ameren Illinois fixed-price is adjusted again in June 2015. In the meantime, the Power Smart Pricing team will continue to provide you with the tools you need to manage costs and understand your options. Questions? Call us at 877-655- 6028 or email us at info@PowerSmartPricing.org.

Electric Vehicles and Hourly Electricity Pricing

Plug-in electric vehicles are becoming increasingly common, and the Power Smart Pricing program can be a great fit for customers looking to charge their vehicles for less. By plugging in during off-peak times such as nights and weekends, electric vehicle owners can reduce the overall cost of car ownership. Learn more about the benefits of electric vehicles at www.ameren.com/Environment/electric-vehicles.

Find Rebates and Incentives for Energy-Saving Home Improvements

Ameren Illinois offers a variety of rebates and incentives to help reduce the cost of making energy-saving improvements to your home. You can find discounts on everything from small purchases such as energy efficient lighting, to bigger home improvement projects such as insulation, air sealing, and central air conditioner replacement. You can even get paid $50 to recycle an old refrigerator. Learn more at www. actonenergy.com/for-my-home/explore-incentives or call Ameren Illinois at 866-838-6918.