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City staff warn of rising electric costs; council asked to consider longer aggregation term
Summary
An energy consultant told Lima City Council that wholesale 'capacity' costs have spiked and recommended the council consider a 3–5 year aggregation contract and give the consultant authority to transact when market conditions are favorable.
An energy-market consultant updating the Lima City Council on the municipal electric aggregation program said wholesale electricity costs are expected to rise for several years because of a supply-demand mismatch and increased capacity auction prices.
Erin Schmarshchneider of Trey Bell Energy presented program results and market context, telling council that since September 2023 the aggregation program produced collective savings of about $2,442,082 and roughly $500 per participating account year-to-date. She said 4,882 participants are enrolled in the city program, representing about 65% of eligible accounts.
But Schmarshchneider warned that two factors are pushing rates higher: the energy commodity price and a separate auction component called capacity. She said the most recent capacity auction cleared at $277 (auction unit not specified in the presentation), up from $28.92 the prior year, a roughly ninefold increase that she said takes effect June 1 and will raise the capacity share of retail bills from about 4% to roughly 29%.
She recommended the council consider a longer (three- to five-year) aggregation contract as a cost-avoidance strategy for the commodity portion and decide whether to authorize Trey Bell Energy to monitor market conditions and execute a purchase on the city’s behalf. Schmarshchneider said the city could lock the commodity portion even if capacity remains uncertain, and that any contract that attempts to lock capacity now has proven risky in other communities.
Councilors asked for additional data. Councilor Thompson requested the consultant provide data showing the mix of renewable generation in the city’s supply; Schmarshchneider said she would provide state-level renewable percentages and additional materials after the meeting. The mayor and some councilors discussed whether new large energy consumers should bear more capacity cost responsibility; Schmarshchneider said regulators and utilities are still debating allocation.
No formal action was taken; the council did not vote to authorize a multi-year contract or to delegate transaction authority to Trey Bell Energy during the meeting. The mayor noted the current aggregation agreement expires in May and said the city will bring pricing options back to council if it decides to seek new contracts.
