Residential energy bills this summer are expected to increase about 20% beginning in June. 

On April 28, the grid operator in central and southern Illinois, the Midcontinent Independent System Operator (MISO), released its 2025 auction result. The summer electricity capacity price surged more than 21 times, a jump that will be directly reflected in Champaign-Urbana residents’ electricity bills. 

This capacity price reflects the rate paid to the operator to ensure there is enough power generation to meet peak demand. The annual capacity price in Illinois is now $217 per megawatt-day (MW-day), with a sharp seasonal spike to $666.50 per MW-day in the summer. By comparison, the summer price in 2024 was just $30 per MW-day. 

On May 8, the Citizens Utility Board warned of widespread electric and gas rate increases across the state.

“As a result of the increase in summer capacity charges, starting on June 1 through September 30, the typical residential customer’s summer monthly bill is expected to increase by approximately 18% to 22%, depending on their usage,” Ellie Leonard, communication executive from Ameren Illinois, said in an email.

This isn’t the first time in the past five years that Champaign-Urbana residents have faced electricity price hikes. 

A City of Champaign program that saved residents millions on their electric bills was suspended last year because city officials weren’t able to secure a favorable bid from retail electricity suppliers. 

The city’s Municipal Electricity Aggregation (MEA) Program has been suspended since July 2024. The program saved Champaign residents over $11.8 million during the Illinois electricity price hike between 2021 and 2023, city records showed. 

The city will seek a new electric supplier this August to reinstate the MEA program.

The City of Urbana contracted with two retail supplier companies for its own municipal program, with pricing 9.98 cent per kWh from July 2024 to Dec. 2024 and 8.036 cents per kWh from Dec. 2024 to May 2025.

The MEA Program is a result of the Illinois Power Agency Act passed in 2010. The act allows municipalities to purchase electricity for residents and eligible small businesses from retail suppliers through negotiated bids.  

City of Champaign Program Specialist Jamie Vermillion said the city did not receive competitive pricing from retail electricity providers compared to the utility supply service provided by Ameren Illinois (hereafter referred to as Ameren), the assigned energy delivery provider in central and southern Illinois. Delivery service charges typically make up 30% to 40% of the total bill.

During the suspension of the program, the city plans to reinstate the procurement process for the next MEA term in early August 2025. 

“The electricity market is very volatile, and electricity rate bids submitted by a retail electricity supplier for the city’s MEA Program will likely only be valid for a few hours,” the City of Champaign wrote in last year’s update on the suspension.

On average, the electricity supply charge accounts for 65% of the total price. From July 1, 2024 to May 31, 2025, Ameren’s electricity price was 8.277 cents per kilowatt-hour (kWh) for the first 800 kWh, and 7.693 cents for usage beyond that. 

The typical annual electricity usage for an Illinois resident is about 10,000 kilowatt-hours. During the electricity price spike, residents paid an additional $626 per year for supply costs, and even more during peak usage hours. 

The deregulated electricity market in Illinois offers residents options to purchase electricity supply service from retail suppliers. In February 2025, approximately 1.25 million residents used alternative suppliers.

Downstate capacity shortfall triggered prior electricity price spike

Electricity bills residents receive include charges for delivery service and electricity supply — the delivery charge covers the cost of bringing electricity to homes, while the supply charge covers the cost of the electricity used.

The grid operator in Central and Southern Illinois, the Midcontinent Independent System Operator, or MISO, oversees the regional transmission system that ensures an adequate supply of electricity flows from power generators to the grid in Illinois, where it is delivered to homes and businesses.

The operator conducts a capacity auction to set the price paid to power generators to have enough reserve electricity available during peak demand periods, such as 100 degree summer days. 

In April 2022, MISO’s annual auction raised the capacity price in Central and Southern Illinois — Ameren’s utility zone — from $5 per megawatt-day to $236.66 per megawatt-day.

In the auction, MISO also indicated capacity constraints in downstate Illinois. The sharp increase in capacity price was then built into the overall supply price. In June 2022, the rate reached 10.62 cents per kWh, nearly double than the month before. The price hike lasted the whole year, once dragging the rate to 12.236 cents per kWh.

Ameren provides electricity supply at its fixed rate through its Basic Generation Service, which is procured by the Illinois Power Agency through competitive auctions. This rate consists of the cost of wholesale electricity, electric capacity and transmission charges.

According to the Citizens Utility Board, an Illinois watchdog group that advocates for consumer protection, Ameren Illinois is a delivery-only utility. It does not profit from power supply, passing through the price of power to its customers dollar for dollar.

According to Ellie Leonard, a communication executive at Ameren Illinois, the energy supply price increase in 2022 was driven by several factors, notably a rise in natural gas prices.

Natural gas is the primary source of fuel used to produce electricity during peak hours in Central and Southern Illinois, and gas prices in 2022 were at their highest since 2008.

Another crucial factor was attributed to the post-pandemic demand and a shortage of available electric generation capacity.

“Downstate Illinois is a net importer of energy, we’re bringing in more energy to our region than we are producing,” Leonard said.

In 2021, Illinois passed the Climate Equitable Jobs Act, which set the goal to transition to 50% clean energy by 2040 and 100% clean energy by 2050.

The act aims to retire fossil fuel and coal power plants by 2045. In 2022, about 2,700 megawatts of coal-fired generating capacity were shut down in response to stricter environmental regulations. Coal plants stepped down from their position as the second-largest source of electricity generation.

From 2021 to 2024, renewable and solar power plants in Illinois began increasing, contributing at least 10 million megawatt hours to the state’s electricity supply. However, the growth has been slower than the pace of fossil fuel plant retirements.

Overall, electricity generation from power plants fell by nearly 7.5 million megawatt hours from 2022 to 2023, resulting in the lowest net generation since 2020. The decrease in energy supply thus directly influences residents’ electricity bills. 

“When there is not enough energy available to meet that demand, that’s when we see energy prices increase,” Leonard said.

Electricity price expected to increase in Illinois

“While the 2025 auction prices reflect a tightening supply-demand balance during the summer months, there is sufficient capacity throughout the MISO footprint,” MISO said in its press release.

In 2023, Ameren’s price dropped to 7.877 cents per kWh when MISO conducted its new round auction. Starting from August, the city contracted with Constellation for the program with a slightly lower price at 7.863 cents per kWh. 

The electricity price hike through 2021 to 2023 impacted the Ameren Illinois electricity market with more lasting effect, compared to another electricity delivery company ComEd in Northern Illinois, which relieved its price level before the spike. The Citizens Utility Board tracks supply charges over time on its website for both companies.

ComEd, the electricity delivery company in Northern Illinois, operates in a different wholesale market that relies more on nuclear power plants for generating electricity. Five of six state nuclear power plants are located in ComEd’s territory, generating the territory’s main supply of electricity.

Though Northern Illinois has recovered from the 2022 price hike in recent years, the latest auction from its grid operator PJM Interconnection sent prices skyrocketing again from $28.92 per MW-day to a record $269.92 per MW-day. The record high capacity price is expected to affect ComEd’s electricity supply price beginning June 2025. 

Champaign seeking new program supplier this summer

Typically, the Municipal Electricity Aggregation (MEA) program secures lower electricity supply rates than the Illinois Power Agency secures for Ameren Illinois customers who elect to take their power supply from the utility. Customers can also opt out of the municipal program to receive their power supply from an alternative electricity supplier.

The City of Champaign made a two-year contract with Energy Harbor to supply the municipal program from 2021 to 2023, with an electricity supply rate of 4.89 cent per kWh. The City said the program saved $11.8 million for customers in 21 months during the electricity price hike. 

According to Vermillion, the city’s program specialist, the average number of billed accounts on the program during that time was 25,687, and each saved about $460 on average.

To select retail suppliers for the program, the city established a Plan of Operation and Governance to authorize the procurement process. The plan requires that bids from retail suppliers must be lower than Ameren’s rate. 

Last summer, the city did not receive bids eligible for the selection criteria. During the suspension of the program, the city plans to reinstate the procurement process for the next program term in early August 2025. 

Citing the complexity of the electricity market, the city said staff require assistance from professionals to evaluate suppliers and manage purchases. The city approved a not-to-exceed budget of $42,000 this year for the company to assist in finding a new supplier for the next program cycle. 

According to the city, once an electric supplier contract is executed, the selected supplier must reimburse the city: $50,000 for a one-year contract, $55,000 for a two-year contract and $60,000 for a three-year contract. The increasing amounts reflect the added staff time required to manage longer-term contracts.

After a new contract is successfully executed, the city said the reimbursement from the supplier will offset the cost of counsel.