Collinsville residents and small business owners will see lower electricity rates next summer if voters approve a March referendum authorizing the city to negotiate a better supply rate.

The City Council last week unanimously approved an ordinance to place the referendum about electricity rates on the March 20 primary election ballot. The City Council also unanimously approved hiring the New York-based energy consulting firm Good Energy L.P. to handle the bidding process.

The move is a result of recent deregulation of the electricity industry that allows consumers to competitively choose a supplier. In addition, Illinois enacted a law in January that gives local governments the authority to use "municipal aggregation," which allows several municipalities to group together to find the best electricity supply rate for residents.

"We're going to a consultant and buy through a group of buyers electric at a cheaper rate than what Ameren is able to supply at this time," said Mayor John Miller.

Good Energy spokesman Philip Carr said the company has already secured competitive rates with an alternate supplier for 130,000 households in the state and Collinsville customers would be joining that group. Carr said those households have seen an average savings of $125-$150 a year since using an alternate supplier.

Carr said that if the referendum passes, the city would be required to hold two public hearings on the matter before bids can be let out; the bidding process could be complete in May and the new rate could go in effect in July.

Carr said Ameren would continue to deliver the electricity, but would not be the supplier of the power. Customers would still see only one bill from Ameren, but the bill would indicate the new supplier and the new lower rate, Carr said.

Miller said that if individual customers do not want the lower rate that the city has arranged with another supplier, they can keep their Ameren service. There will be two opt-out periods: before the service is begun and five days after the first bill is received.

Good Energy will be supplying its consulting services at no cost to the city, even if the referendum fails. The company will receive compensation in fees from the new supplier.

Contact reporter Ramona C. Sanders at 618-344-0264, ext. 136