A mini bidding war between wholesale electricity providers should certainly benefit the City of Marceline and may even eventually give Marceline ratepayers a much needed break on their electricity bills.
As a member of the group of four cities—Marceline, Hannibal, Kahoka, and Centralia, collectively called Missouri Municipal Group— that have engaged in collective bargaining to secure the best wholesale price for electric power possible, the City of Marceline has secured a better deal from Ameren than it got three years ago.
During Tuesday evening’s meeting of the Marceline City Council, Mayor Bill Stuart went as far as saying, “If we could have gotten this price three years ago, we probably wouldn’t be getting sued now.” Stuart was referring to the pending lawsuit against the City for allegedly violating the Hancock Amendment of the Missouri Constitution by levying what the plaintiffs believe is, in effect, a tax without voter consent. Missouri Auditor Susan Montee had previously expressed her opinion that charging ratepayers more for electricity than administrative costs of providing that utility would justify is a violation of the Hancock Amendment. Three Marceline citizens have since filed a lawsuit against the City of Marceline in an effort to establish a legal precedent that would prohibit the City from continuing to use electricity revenues to provide municipal services such as police and fire protection.
As the City of Hannibal will receive about 70 percent of the electric power bargained for while the other three cities will only receive about 10 percent each, it appropriately took the lead in negotiating for a new three-year contract. However, Marceline City Manager Liz Cupp is quick to point out that Marceline was directly involved in the negotiations process from the very beginning, and Marceline’s acceptance of the final bid was necessary to close the deal.
Last week, Hannibal and its Missouri Municipal Group partners were fully prepared to accept the $49.02 per megawatt hour (MWh) bid submitted by American Electric Power Service Corp (AEP), even though another bid from Ameren Energy Marketing (AEM) was lower at $47.79 per MWh. The reason Hannibal was willing to accept the higher bid had to do with the fact AEP’s contract couldn’t be reopened in the event new carbon emissions taxes were approved at the federal level (i.e., the MWh rate couldn’t be raised to recover lost revenue from federal climate legislation). In contrast, the original AEM contract left room to raise the price by $7 to $20 per MWh, should the climate legislation become law. But before the Hannibal City Council could meet to accept AEP’s bid, AEM reversed its position, promising to not reopen its contract to accommodate the additional expense of a new carbon tax. AEM also guaranteed the City of Hannibal $5 million in the event AEM went bankrupt or was absorbed by another provider. Stuart describes AEM stock as being “one step above junk bonds.” The $47.79 per MWh offer from AEM was also contingent on the participation of the Cities of Marceline, Kahoka, and Centralia. Like its other two minor partners in the collective bargaining group, the City of Marceline gave its nod of approval so the deal could go through. Although AEM and Marceline’s current provider, Ameren UE, are both members of Ameren Corporation, UE advised it couldn’t offer the assurances AEM gave, leaving AEP as AEM’s only competitor in the brief bidding war that worked to the benefit of Marceline, Hannibal, Kahoka, and Centralia.
See today's LCL for the full story
