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West Central Reporter

Sunday, December 22, 2024

Macomb City Council considers energy price lock to eliminate 'volatility,' relieve inflation pains

Macomb

Macomb city officials | City of Macomb, IL/Facebook

Macomb city officials | City of Macomb, IL/Facebook

The Macomb City Council is considering an agreement that would put into place an energy price lock. The move is in response to rising costs for families in the city as a result of inflation and other driving causes. 

"And then you can have a third party supplier where the actual commodity is traded on the commodities market, like soybeans or petroleum, other kinds of fuels," Becky Thompson, representative for Nania Energy Advisors, said. "And so what that helps you achieve as a city is eliminate some of the price volatility. You may have seen your bills at home. The rate is different every single month. And when we talk about volatility, that means it can go really, really high up in times of peak usage. And you really have no control over that. And when you have a strict operating budget to operate within, it can create a lot of risk for you. So you have the opportunity in the great state of Illinois to purchase your commodity, the natural gas and the electricity through a third-party supplier."

Nania is an independent third-party advisory group, meaning they are not connected to any energy suppliers or utilities and are not part of any partnerships that could bias their advice.

Thompson explained that when purchasing energy directly from the grid operators, there is a high chance of price fluctuations due to current market conditions. Establishing a price lock agreement with a trusted third party could help protect Macomb's residents and city budget from such uncertainty by setting a fixed rate for the length of the contract, she said. This would allow them to plan ahead more confidently and accurately for their energy needs.

Thompson, the city's adviser, has recently gathered bids from third-party energy suppliers for the city's natural gas supply and electricity. She presented the options to the city along with associated prices for one-, two- and three-year term lengths. The city previously had used Amerin to provide its natural gas supply and AEP for electricity services. Through her research and negotiation, Thompson has been able to deliver competitive bids that could potentially save the city money.

After careful consideration, Scott Coker and the city council concluded that a two-year contract with Nania was the best choice for the city. This would lock in a good market price, while providing some protection against potential volatility or changes in the marketplace. The decision could provide up to $140,000 of savings across two years, primarily from electricity costs. This approach was deemed preferable to a three-year contract, as it carries the highest perceived risks and resulting prices. By opting for a two-year agreement, the city can maintain flexibility while still benefitting from lower prices during this period of uncertainty.

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