The County Board of Vermilion County, Illinois has selected a supplier for a yet-to-be-approved opt-out municipal electric aggregation program, an action which has been criticized because the no-bid process removes the potential for competition to lower the electric rate available to customers.

Vermilion County is located in the eastern part of Illinois, with a population of about 80,000.

As SaveOnEnergy.com has previously noted, municipal aggregations are programs that switch all electric customers in a municipality to the government's chosen electric supplier, unless the customer takes an affirmative action to "opt-out."  While municipal aggregation programs are touted as providing savings to customers, and do provide marginal savings versus the utility's electric rate, the programs "leave money on the table" in many cases, for a variety of reasons.

Under the aggregation programs, individual electric customers may not get the lowest rate because they are "pooled" with higher-cost customers (in effect, socializing the cost to serve all customers), or because the municipal government, not being an expert in electricity markets, does not negotiate the best rate.

However, the most dangerous risk to customers under a municipal aggregation occurs when the municipality puts its own interests ahead of customers, such as by "skimming" savings made available under the aggregation by making the aggregation's supplier make direct contributions to the city's treasury (rather than all money going to customers through lower rates), or by municipal leaders favoring their preferred supplier despite other suppliers offering lower rates.

According to the News-Gazette, the Vermilion County Board has approved a municipal aggregation program and a chosen supplier without seeking bids from competing electric suppliers, which means customers won't get the lowest electric rate possible.

The News-Gazette notes that under the municipal aggregation program (which still must be approved by voters), the county's chosen electric supplier would pay the county a certain amount of money per month, which is estimated to be as much as $150,000 to $200,000 a year.  Rather than use this money to provide customers with even lower electric rates, the county board is considering using the funds for other purposes.

It's yet another example of how municipal aggregation deals sound good until you look at the details, and why customers are better off shopping for a lower electric rate themselves, where they can get competing energy suppliers to bid against each other to maximize savings.