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HomeMy WebLinkAbout3. Electrical Aggregation Memo 11/22/2011Village of Mount Prospect Mount Prospect, Illinois INTEROFFICE MEMORANDUM TO: VILLAGE MANAGER MICHAEL E JANONIS FROM: ASSISTANT VILLAGE MANAGER DATE: NOVEMBER 9, 2011 SUBJECT: ELECTRICAL AGGREGATION Background There have been a number of recent articles in the local newspapers regarding electrical aggregation. Many of these articles and aggregation discussions among different communities is most likely a direct result of the numerous extended power outages during this past summer and the soon to be implemented rate increases as a result of recent legislation. It should be noted that even if electric were to be supplied by an alternative provider instead of ComEd any future outages would NOT be eliminated through the use of an alternative supplier. The electric service would still be transmitted over existing ComEd lines. Municipalities may undertake aggregation of electrical loads locally under the Illinois Statute 20 ILCS 3855/1 -92 (attached). A current example of intergovernmental aggregation is group of Grayslake, Lincolnwood, Oak Brook who banded together to obtain the necessary volume for electrical pricing. These three communities accounted for approximately 16,000 customers and 300 million kW. Representatives from Grayslake acted as the lead agency in submitting and evaluating the bid materials on behalf of the group. Each community undertook a separate referendum to measure resident interest in the aggregation. The communities are currently in the residential opt -out phase with electrical service supplier changeover soon after the first of the year. They estimate an average annual savings for a residential customer to be $285 and $950 for a commercial customer. A number of local Northwest suburban communities have also been in the newspaper recently about pursuing aggregation as a group, including Arlington Heights, Buffalo Grove, Lincolnshire, Long Grove, Palatine, Vernon Hills, and Wheeling. These communities are actively placing referendums on the March 2012 ballot and anticipate a savings between 11 % and 23% depending on the length of the supplier contract. ELECTRICAL AGGREGATION November 9, 2011 Page 2 Consideration There are several different options available regarding electrical aggregation. Residents can individually decide to obtain their electric supply from an alternative provider besides ComEd at this time. However, there are economies of scale which could benefit the residential customer and commercial customer more favorably through group purchasing. In order to obtain group purchasing the municipality has two options, a contract could be entered into with an alternative supplier in which customers have to actively opt into the program to obtain the savings. As one might imagine this would only have limited value in terms of savings since the number of customers would be solely dependent on an active interest by the customers. The other option available is an opt out procedure in which the municipality obtains referendum authority to enter into a contract for alternative power supply on behalf of all municipal customers. If any customers wanted not to take advantage of such pricing the customer would have to actively opt out within a predefined window. If for example a single vendor contract were entered into on the half of the village residents any residents who already had an alternative power supplier could continue with that supplier until the end of that contract period and choose to join into the village supplier contract or remain with the existing provider. All the alternative power suppliers have already been vetted by the Illinois Power Agency so there is no need to go through a vendor qualification procedure and the determination of an alternative supplier could rely primarily on price. The steps necessary to undertake this process are already defined in the state statutes, but would require significant staff involvement to complete the process. The first step in the process would be a determination by the Village Board whether a referendum should be placed on the March 2012 ballot regarding electric aggregation. If the referendum were to be successful then staff would undertake the process of drafting intergovernmental agreements as necessary, ordinances relating to aggregation, bid documents, public hearing process, and coordinating the opt out process. It should also be noted that even if the referendum were to be successful and the bids were not favorable in terms of cost savings the village is under no obligation to enter into an aggregation contract. The village staff has been approached by several area communities inquiring as to the level of interest as to entering into an intergovernmental agreement for aggregation purposes. Again, there is value for economies of scale among groupings of municipalities for better pricing. i KLEIN, THORPE & JENKINS, LTD. I Attorneys at Law 20 N. Wacker Drive, Ste 1660 Chicago, Illinois 60606 -2903 T 312 984 6400 1`3129B413444 DO 312 984 6468 gawagner@ktjlaw.cam MEMORANDUM TO: Dave Strahl Mount Prospect Assistant Village Manager FROM: George A. Wagner DATE: November 9, 2011 RE: Referendum timing — Electric Aggregation 15010 S. Ravinia Avenue, Ste 10 Orland Park, Illinois 60462 -5353 T 708 349 3888 F 708 3491506 www.ktjlaw.com As requested, the following is a summary of the timing requirements to place a binding public question regarding Electric Aggregation on the March 20 ballot: 1. The Village must adopt a resolution or ordinance authorizing the submission of the binding public question to the Village's qualified electors not less than 79 days before the regularly scheduled election. Due to the holidays, that date is January 3, 2012. 2. The election authority (County Clerk) must give notice of the election not more than 30 nor less than 10 days prior to the date of the election by publication in a local, community newspaper having general circulation in the Village, and must post a copy of the notice at the principal office of the election authority at least 10 days prior to the date of election. 3. The Village Clerk must post a copy of the notice of election at least ten (10) days before the date of election at the Village Hall and may post a copy on the Village's website. Please note that, in order for the referendum to be placed on the March 20, 2012 ballot, the resolution or ordinance needs to be adopted by January 3, 2012. Upon adoption, a certified copy must be filed with the Cook County Clerk no later than January 12, 2012. If you have any questions, please contact me. Cc: Michael Janonis, Village Manager Everette M. Hill, Jr., Village Attorney 277238_1 .20 ILCS 3855/ Illinois Power Agency Act. 0 ILCS 3855/1 -86) Se . 1-86. General Assembly approval. For proje s costing the Age cy $1,000,000,000 or more, in addi on to the provisions f Section 1 -85, the General Asse y must adopt a joint resol ion of the House of Repres tatives and the Senate approvi the construction of the f ility. (Source: P.A. 95 81, eff. 8- 28 -07.) (20 ILCS 3855/1- ) Sec. 1 -87. Manag ent and operating agreements. For projects costing the Age y $1 00,000,000 or more, the Agency shall enter into manageme nd operating agreements for the relevant facility or faci ies. Solicitation for any such management and operatin agr ement shall be pursuant to a request for proposals. The ag em must comply with the Internal Revenue Cc and its egulations and shall not jeopardize the to - exempt status of any bond issued in connection with project for which he Agency entered into the agreement. (Source: P.A. 5 -481, eff. 8- 28 -07.) /itie S 3855/1 -90) 90. Distribution and transmission fa 'lities. The l not own or acquire distribution or t ansmission except as necessary to connect an Agency facilit y ric transmission or distribution system. A. 95 -481, eff. 8- 28 -07.) --� (20 ILCS 3855/1 -92) Sec. 1 -92. Aggregation of electrical load by municipalities and counties. (a) The corporate authorities of a municipality or county board of a county may adopt an ordinance under which it may aggregate in accordance with this Section residential and small commercial retail electrical loads located, respectively, within the municipality or the unincorporated areas of the county and, for that purpose, may solicit bids and enter into service agreements to facilitate for those loads the sale and purchase of electricity and related services and equipment. The corporate authorities or county board may also exercise such authority jointly with any other municipality or county. Two or more municipalities or counties, or a combination of both, may initiate a process jointly to authorize aggregation by a majority vote of each particular municipality or county as required by this Section. If the corporate authorities or the county board seek to operate the aggregation program as an opt -out program for residential and small commercial retail customers, then prior to the adoption of an ordinance with respect to aggregation of residential and small commercial retail electric loads, the corporate authorities of a municipality or the county board of a county shall submit a referendum to its residents to determine whether or not the aggregation program shall operate Page 53 of 59 http:// www. ilga .gov /legislationlilcs /ilcs5. asp ?DocName= &ActID= 2934 &ChapterID =5 &SegStart... 11/9/2011 20 ILCS 3855/ Illinois Power Agency Act. as an opt -out program for residential and small commercial retail customers. In addition to the notice and conduct requirements of the general election law, notice of the referendum shall state briefly the purpose of the referendum. The question of whether the corporate authorities or the county board shall adopt an opt -out aggregation program for residential and small commercial retail customers shall be submitted to the electors of the municipality or county board at a regular election and approved by a majority of the electors voting on the question. The corporate authorities or county board must certify to the proper election authority, which must submit the question at an election in accordance with the Election Code. The election authority must submit the question in substantially the following form: Shall the (municipality or county in which the question is being voted upon) have the authority to arrange for the supply of electricity for its residential and small commercial retail customers who have not opted out of such program? The election authority must record the votes as "Yes" or "No". If a majority of the electors voting on the question vote in the affirmative, then the corporate authorities or county board may implement an opt -out aggregation program for residential and small commercial retail customers. A referendum must pass in each particular municipality or county that is engaged in the aggregation program. If the referendum fails, then the corporate authorities or county board shall operate the aggregation program as an opt -in program for residential and small commercial retail customers. An ordinance under this Section shall specify whether the aggregation will occur only with the prior consent of each person owning, occupying, controlling, or using an electric load center proposed to be aggregated. Nothing in this Section, however, authorizes the aggregation of electric loads that are served or authorized to be served by an electric cooperative as defined by and pursuant to the Electric Supplier Act or loads served by a municipality that owns and operates its own electric distribution system. No aggregation shall take effect unless approved by a majority of the members of the corporate authority or county board voting upon the ordinance. A governmental aggregator under this Section is not a public utility or an alternative retail electric supplier. (b) Upon the applicable requisite authority under this Section, the corporate authorities or the county board, with assistance from the Illinois Power Agency, shall develop a plan of operation and governance for the aggregation program so authorized. Before adopting a plan under this Section, the corporate authorities or county board shall hold at least 2 public hearings on the plan. Before the first hearing, the corporate authorities or county board shall publish notice of the hearings once a week for 2 consecutive weeks in a newspaper of general circulation in the jurisdiction. The notice shall summarize the plan and state the date, time, and location of each hearing. Any load aggregation plan established pursuant to this Section shall: (1) provide for universal access to all applicable Page 54 of 59 http:// www. ilga .gov /legislation/ilcs /ilcs5. asp ?DocName= &ActID= 2934 &ChapterID= 5 &SegStart... 11/9/2011 • 20 II.,CS 3855/ Illinois Power Agency Act. residential customers and equitable treatment of applicable residential customers; (2) describe demand management and energy efficiency services to be provided to each class of customers; and (3) meet any requirements established by law concerning aggregated service offered pursuant to this Section. (c) The process for soliciting bids for electricity and other related services and awarding proposed agreements for the purchase of electricity and other related services shall be conducted in the following order: (1) The corporate authorities or county board may solicit bids for electricity and other related services. (2) Notwithstanding Section 16 -122 of the Public Utilities Act and Section 2HH of the Consumer Fraud and Deceptive Business Practices Act, an electric utility that provides residential and small commercial retail electric service in the aggregate area must, upon request of the corporate authorities or the county board in the aggregate area, submit to the requesting party, in an electronic format, those account numbers, names, and addresses of residential and small commercial retail customers in the aggregate area that are reflected in the electric utility's records at the time of the request. Any corporate authority or county board receiving customer information from an electric utility shall be subject to the limitations on the disclosure of the information described in Section 16 -122 of the Public Utilities Act and Section 2HH of the Consumer Fraud and Deceptive Business Practices Act, and an electric utility shall not be held liable for any claims arising out of the provision of information pursuant to this item (2). (d) If the corporate authorities or county board operate under an opt -in program for residential and small commercial retail customers, then the corporate authorities or county board shall comply with all of the following: (1) Within 60 days after receiving the bids, the corporate authorities or county board shall allow residential and small commercial retail customers to commit to the terms and conditions of a bid that has been selected by the corporate authorities or county board. (2) If (A) the corporate authorities or county board award proposed agreements for the purchase of electricity and other related services and (B) an agreement is reached between the corporate authorities or county board for those services, then customers committed to the terms and conditions according to item (1) of this subsection (d) shall be committed to the agreement. (e) If the corporate authorities or county board operate as an opt -out program for residential and small commercial retail customers, then it shall be the duty of the aggregated entity to fully inform residential and small commercial retail customers in advance that they have the right to opt out of the aggregation program. The disclosure shall prominently state all charges to be made and shall include full disclosure of the cost to obtain service pursuant to Section 16 -103 of the Public Utilities Act, how to access it, and the fact that it is available to them without penalty, if they are currently Page 55 of 59 http:// www. ilga .gov /legislationlilcs /ilcs5. asp ?DocName= &ActlD= 2934 &ChapterlD= 5 &SegStart... 11/9/2011 • 20 ILCS 3855/ Illinois Power Agency Act. receiving service under that Section. The Illinois Power Agency shall furnish, without charge, to any citizen a list of all supply options available to them in a format that allows comparison of prices and products. The Illinois Power Agency shall provide assistance to municipalities, counties, or associations working with municipalities to help complete the plan and bidding process. This Section does not prohibit municipalities or counties from entering into an intergovernmental agreement to aggregate residential and small commercial retail electric loads. (Source: P.A. 96 -176, eff. 1 -1 -10; 97 -338, eff. 8- 12 -11.) (20 ILCS 3855/1 -95) Sec. 1 - 95. Insurance. Upon the Authority's issuan e of rev ue bonds for an Agency facility, the Agenc shall purch e an insurance policy to cover those constru ion and operati n costs associated with the facility. The p icy shall remain i effect for the time period under whic the Agency may accrue any liabilities associated with the f ility. (Source: P. . 95 -481, eff. 8- 28 -07.) (20 ILCS 3 5/1 -100) Sec. 1 -100. imely payment to Agency Any party receiving electricity shall make timely payment o all bills rendered by the Agency. Any olation of contra ual terms by a party receiving electrici from an Agency facility is grounds for cancellation and ter 'nation of the ontract. (Source: P.A. 95 -481, f. 8- 28 -07. (20 ILCS 3855/1 -105) Sec. 1 -105. Deposit oX8-28- e. All revenue from contracts described in Section 1 -hall be deposited into the Illinois Power Agency FacFund. (Source: P.A. 95 -481, eff.) (20 ILCS 3855/1 -110) Sec. 1 -110. State Police reimbur reimburse the D epar ment of State F associated with s rity at facilities Agency Facilities und. (Source: P.A. 95- 81, eff. 8- 28 -07.) ent. The Agency shall ice for any expenses kom the Illinois Power (20 ILCS 3 55/1 -115) Sec. 1 -1 Revenue from real estate. All Xabaonment, rom any sale, cony ance, lease, exchange, transfer, or other disp sition of real property shall be deto the Illinois ower Agency Facilities Fund. (Source• P.A. 95 -481, eff. 8- 28 -07.) (�0 ILCS 3855/1 -120) /Sec. 1 -120. Protection of confidential and propriet r� ormation. The Agency shall provide adequate protection f fidential and proprietary information furnished, delivered, Page 56 of 59 http:// www. ilga .gov /legislation/ilcs /ilcs5. asp ?DocName= &ActID= 2934 &ChapterlD =5 &SegStart... 11/9/2011 � Y unicipal Electric Agg gati had it Means for Yol FOUNDER AND PRESIDENT, BLUESTAR ENERGYMUTIONS } MUNICIPAL ELECTRIC AGGREGATION Electricity supply is one area to consider as municipalities look for ways to reduce costs, provide additional value to their communities and enhance their environmental impact. As you may know, Illinois is one of several deregulated states, offering businesses and the public the opportunity to purchase energy from a retail electric supplier. In fact, Illinois is a prime location where municipalities can make the most out of the deregulated energy market. Through Municipal Electric Aggregation, Illinois municipalities can help residents and small businesses maximize their savings by reducing energy costs and furthering energy efficient practices for the community. It is the method by which municipal or county governments can enter into electricity purchasing agreements on behalf of consumers within their jurisdiction. By aggregating the buying power of a large number of small customers, a non - profit municipal entity can get a better deal for those customers than they would if, they shop for electricity on an individual basis. In addition, it offers residents an opportunity to understand and take advantage of the benefits of a deregulated electric market. AGGREGATION PROGRAMS There are two ways for local governments to aggregate their communities for the purchase of energy – "opt -in" and "opt - out." Opt -in aggregation requires the individual to enroll in the program before being included in the aggregation pool of customers. Opt -out aggregation automatically includes each household in the aggregated pool unless the individual affirmatively "opts out," or decides not to participate. We believe the more viable option is to provide aggregation service on an opt -out basis — customers are much more likely to utilize this service if it is provided to them on a default basis. Additionally, in opt -out aggregation the aggregator has a more predictable energy load to use in negotiating with suppliers. Having a relatively predictable pool size of customers may increase an electric supplier's willingness to offer lower prices and enhanced services. BENEFITS OF AGGREGATION Properly implemented, municipal aggregation programs offer several benefits to the end -user, including: • COMPETITIVE OPPORTUNITIES: Suppliers generally compete harder for a large group of customers available through a single solicitation (such as municipal aggregation) than when approaching customers one -by- one. Suppliers are willing to provide extremely aggressive pricing in aggregation settings because of the opportunity to acquire a large number of customers quickly and at a relatively low cost per acquisition. • GREATER BUYING POWER: Aggregation of demand is a way to obtain services or products at favorable prices and terms. The same is true for the purchase of electricity. Because of economies of scale, load aggregation increases the buying power of participating consumers, particularly if they seek customized services. The competitive pressure created by this increased buying power drives prices lower. This process means greater savings for municipalities and their residents. • ENVIRONMENTAL BENEFITS: Municipal Electric Aggregation in Illinois is also a direct way to achieve meaningful environmental benefits. This provides an opportunity to identify environmentally - responsible energy sources, such as wind or solar, that will be part of the supply mix for the community. It is important to consider designing and implementing a meaningful energy efficiency and sustainability program that can be funded exclusive of municipal expenditures. MUNICIPAL ELECTRIC AGGREGATION CONTINUES ON PAGE 16 0C1001R 2011 1 ILLINOIS MUNICIPAL REVIEW i 15 N MUNICIPAL ELECTRIC AGGREGATION CONTINUES • OTHER TANGIBLE E(ONOMI( BENEFITS: Depending on how effective the program is managed, municipalities may be able to creatively apply the revenue streams for grants, free energy audits for local businesses, new energy efficiency projects, a new park or other uses. Municipal Electric Aggregation has been successfully implemented in several other states, with Ohio being a leader. Ohio introduced aggregation in 2001 and by 2003 it was responsible for 93 percent of the electricity switching over in the state. Some 200 municipalities in Ohio, via the Northeast Ohio Public Energy Council (NOPEC), demonstrated that it is possible to put a proposal for "opt -out aggregation" to their electorate. They received support, put municipal supply out to bid, and received a better price for electricity and/or gas supply than the standard price set by the incumbent utility. The procedure is now standardized, professional advice and expertise are widely available, and the whole process can be completed in a little over 12 months. Grants were made available from this program in Ohio. Those involved credit both the Public Utilities Commission of Ohio (PUCO) and the Ohio Consumer Counsel (OCC) for helping to make Municipal Electric Aggregation a success.' MUNICIPAL ELECTRIC AGGREGATION IN ILLINOIS Municipal Electric Aggregation became available in Illinois due to the 2007 passage of the Illinois Power Agency Act, which authorized municipal and county authorities to negotiate electric power supply arrangements for their residential and small business consumers. The Act allows local municipal or county governments to aggregate the electric loads of the residential and small business consumers within their boundaries, in order to negotiate terms with a power supplier. if accounts are transferred to a different energy supplier, the local utility (either ComEd or .Ameren) remains the distributor of all electricity, while the new supplier would actually sell the electric power. In 2011, 24 towns in the ComEd territory placed referendums on their ballots, 21 of which were approved. Below is a snapshot of communities pursuing Municipal Electric Aggregation at this time. Community Campton Hills Status Referendum Passed Crest Hill Supplier - Direct Energy, Rate - 5.89 cents per kWh through September 2013 Elburn Supplier - Direct Energy, Rate - 5.99 cents per kWh through October 2012 I Erie Supplier - Nordic Energy Services, Term - 3 years I Fox River Grove Supplier - Direct Energy, Rate - 5.99 cents per kWh through September 2013 Fulton Supplier - FirstEnergy Solutions, Rate - 6.23 cents per kWh (residential) through July 2014 Glenwood Supplier - Direct Energy Rate - 5.99 cents per kWh through September 2013 Grayslake Referendum Passed Harvard Supplier - Direct Energy Lincolnwood Referendum Passed Milledgeville Supplier - FirstEnergy Solutions, Rate - 5.90 cents per kWh, Term - 3 years Morris Referendum Passed Mount Morris Referendum Passed New Lenox Supplier - Direct Energy, Rate - 5.89 cents per kWh through September 2013 North Aurora Supplier - I ntegrys, Rate 5.75 cents per kWh (residential), Term - 2 years Oak Brook Referendum Passed Oak Park Referendum Passed Polo Referendum Passed Sugar Grove Supplier - Direct Energy, Rate - 5.99 cents per kWh through September 2013 Wo od Dols Referendum Passed ,"'; _. IIl po l • C_oimiiisslon(ICC) 16 1 ILLINOIS MUNICIPAL REVIEW I OCTOBER 2011 IMPLEMENTATION PROCESS While there is much more information to share on the process of Municipal Electric Aggregation, the top steps for implementation include the following: 1. Identify and retain a consultant or identify internal resources to manage program. 2. Submit referendum to be put to the electors at the next regular election in that location. 3. Receive affirmative vote of electorate. 4. Develop a plan of operation and governance for the aggregation program, and hold at least two public hearings on it. 5. Prepare an RFP and put it out to bid. 6. Notify electric utility customers in the city of the rates, conditions of enrollment and provide option to `'opt -out" of the aggregation. TIMELINE Below is a general timeline of the key activities for a community plan for 2012. CHALLENGES & CHOICES Most communities may lack the necessary expertise and staff to handle the aggregation process on their own. There may be challenges with managing the technical and legal aspects of analyzing load data, administering the RFP process, leading negotiations with suppliers, and providing ongoing management and monitoring on behalf of constituents. To help with the overall aggregation process, it may be prudent to consider working with a consultant with experience and capabilities to help get the job done. Municipalities typically work with a consultant to manage contracts and develop and implement energy efficiency programs, as well as to lead voter education efforts before and after the referendum. The consultant's role is to design an aggregation plan that both complies with applicable law as well as serves the agreed upon needs of the community. The consultant assists in administrative issues, solicits bids, and coordinates the selection of a supplier. After supplier selection and execution of a contract, the consultant's role is monitoring and administering the contract. The local electric utility is subject to the same laws, regulations and tariffs as the services used by other retail MUNICIPAL ELECTRIC AGGREGATION CONTINUES ON PAGE 18 Stage 1 Council Approval Marketing of Public Votes Yes /No Select , Create > of Placing 1 Program - ' Referendum Consultant Referendum Referendum Combined Effort During General on the Ballot Election Stage 2 - Assume eferendu,m is apt: r v c -c Council /Committee Create City Council /Committee Review Committee RFP Documents Schedule & Hold Approve Plan of Run RFP Two Public Hearings Operation & Approve 1 Bid Process Governance via Stage 3 Committee Committee Bid )-� Recommend >, Utility Rates & >1 Supplier Opt y Notice to Utility Selection to Mayor /Council Notify Winning Out Notices for July 1 Start Supplier ✓iJ May LURE Jarle OCTOBER 2011 i ILLINOIS MUNICIPAL REVIEW 1 17 MUNICIPAL ELECTRIC AGGREGATION CONTINUES customers; there is no degradation in utility service or bias against customers or communities utilizing municipal aggregation. In addition, the supplier serving the community is subject to strict oversight by the Illinois Commerce Commission, including licensing, consumer information and renewable portfolio standards. There are several attributes to look for when considering a consultant, such as: • INDEPENDENCE — It is important that the consultant is completely neutral in the selection of a supplier. This independence may lend greater credibility to the public perception of the program. • EXPERTISE /SOLUTIONS — The consultant should have a wide range of expertise with retail electric supply, wholesale energy markets, regulatory experience and demand -side management experience, especially if the municipality is considering energy efficiency and conservation programs in the future. as the first U.S. Environmental Protection Agency (EPA) Green Power Community in Illinois. Aurora has helped conserve natural resources by reducing the city's carbon footprint, supporting the creation of clean energy jobs in the U.S. and assisting in the generation of new renewable energy. + LOCAL PERSPECTIVE — It helps having a consultant who knows the essentials of electric supply and efficiency within Illinois. Each electric utility has its own nuances and restrictions with electric supply, rebate programs and other activities, which is why it helps to have a consultant who knows the area well. MOVING YOUR COMMUNITY FORWARD Municipal Electric Aggregation provides an opportunity to unlock savings for municipalities and their communities. It also can help support broader energy efficiency and sustainability efforts in the community, including solar generation of power. At BlueStar Energy, we believe that the cheapest and cleanest kilowatt hour is the one not used. Overall, this aggregation process can lead to lasting, meaningful change and real economic benefits to municipalities and their residents. One such example with an efficiency program is right here in Illinois. The city of Aurora developed the Go Footnote: Stephen Littlechild, "Municipal Aggregation and Retail Green Aurora campaign to increase renewable energy Competition in the Ohio Energy Sector," August 2007 purchases by households and businesses, and qualify 18 1 ILLINOIS MUNICIPAL REVIEW I OCTOBER 2011 Daily Herald print page Page 1 of 2 This copy is for personal, non - commercial use. To order presentation -ready ]Itd copies for distribution you can: 1) Use the "Reprint" button found on the top and DWILI bottom of eve article, 2 Visit re rints.the s roup.com /dailyheraid.asp for every ) p y9 9 Big picture . Local Focus samples and additional information or 3) Order a reprint of this article now. Article updated: 11/8/2011 3:50 PM Suburbs team up to find lower electric rates By Kimberly Pohl A ballot question next spring could lead to lower electric bills for residents and small businesses in seven area communities. Palatine, Arlington Heights, Buffalo Grove, Lincolnshire, Long Grove, Vernon Hills and Wheeling have partnered to aggregate their power needs in an effort to cut costs by switching energy suppliers. Voters in the March 20, 2012, primary election must first grant each municipality the authority to solicit competitive bids for electricity. "This is a pure example of governments getting together to get a better deal and better leverage," Palatine Councilman Kollin Kozlowski said. From the customer's perspective, nothing will change in the way electricity is delivered. Although the energy will come from one of about 20 suppliers approved by the Illinois Commerce Commission, ComEd remains responsible for service, reading meters, billing and restoring power in the event of an outage. Residents would be able to able to opt out of any program and stick with ComEd if they wish What will change is the monthly bill, officials said. They're following the lead of Grayslake, which teamed with Oak Brook and Lincolnwood to purchase energy from De Pere, Wis. -based Integrys Energy Services. Effective Jan. 1, about 16,000 eligible customers in that trio of communities are expected to save 29 percent in residential usage charges and 30 percent in commercial charges. That's based on fixed rates Integrys locked in through 2013 of 5.52 cents per kilowatt hour for residential and 5.45 cents for commercial. ComEd's rates were 7.733 and 7.768 cents, respectively, said Mike May, assistant to the Grayslake village manager. A condition is built into the contract that if ComEd rates drop below Integrys' rate, the Wisconsin company will either match the rate or return customers back to ComEd. As of Tuesday, only 112 of about 8,500 customers in Grayslake have opted out of the program, May said. "It will be a totally seamless transition," he said. The same safeguard will be in place for the seven municipalities going to referendum next spring. If the cost savings are only nominal, nothing mandates them to accept a bid. Buffalo Grove Village Manager Dan Bragg said it wouldn't be economical to pursue a cost savings program alone, so officials there reached out to Vernon Hills because of its similar demographics and households. The others soon followed and Bragg anticipates more may show interest. The combined population of the seven communities is about 263,000, which Palatine Village Manager Reid Ottesen said is an ideal size to maximize buying power. Daily Herald print page Page 2 of 2 "We wanted to strike a balance of wanting to have large enough numbers to attract a lot of bidders, (but) not be so big that some of the smaller providers might not be able to meet the energy need," Ottesen said. After each board passes a resolution to go to referendum, they're expected to form an intergovernmental agreement to achieve the greatest buying power. They'll also consider whether to hire a consultant to assist with the bidding process. A minimum of two public hearings is required, and officials say they'll launch a public information campaign before the election. Copyright © 2011 Paddock Publications, Inc. All rights reserved.