Electricity Purchase Options Available to Village Residents and Small Businesses

Residents and small businesses now have several options for the purchase of electricity and the Village may be providing an additional option next year. In summary, a law was changed permitting residential and small business customers (under 100 kWh) the option to select a power supplier from an Illinois Commerce Commission (ICC) list of approved electricity suppliers. The power generation portion of your electricity bill is about 65% of the total bill.

Other parts of the bill include the transmission of the electricity to your home or business. If you have not made a change at this point, it means that the power generation is supplied by Commonwealth Edison. It is important to note that if you change to a different power supplier, Commonwealth Edison will continue to distribute the electricity to your home and collect payment on a single bill, the way it is done now. Competition and lower energy rates today make it possible to lower the power generation portion of your bill. It is estimated that lower rates will be found at least through May, 2013.

Today, there are three (3) options to consider and a fourth one may be available next year. First, you can remain with Commonwealth Edison. Second, you may have received direct mail offers from power suppliers who have been certified by the Illinois Commerce Commission (ICC) to do business in Illinois. You can contract with one of these companies for your power supply. Terms can be different and often have an early termination fee if you decide to change providers before your contract has been completed (except for relocation out of the service area). Therefore, it is important to compare the details in the offers. The Citizens Utility Board (CUB) has a resource on their website about choosing an energy supplier as well as rate examples.

Third, the Metropolitan Mayors Caucus has created the Energy Savings Program. The power generation is provided by Integrys Energy Services. This program provides an 18% guaranteed savings through June, 2012 of the power generation portion of the bill. This translates into about a 12% to 13% savings of the overall electricity bill. Rates are guaranteed to be less than ComEd’s rates for the second year of the program through June, 2013. Also, customers will receive four (4) compact fluorescent light bulbs or have them donated to the needy through the Energy Choices Food Pantry program. More information and enrollment for this program can be found at www.integrysenergy.com/Marketing/MEC/default.aspx.

Municipal Aggregation

The fourth opportunity is called municipal aggregation. At the November 28th Meeting, the Village Board approved a resolution placing a referendum on the March 20, 2012 ballot that seeks authorization from our voters to “arrange for the supply of electricity for residential and small retail customers”. If the referendum is successful, it gives the Village the ability to obtain competitive bids from energy suppliers for all residents and small businesses who have not contracted directly for an alternative service. This is considered an “opt-out” program where all covered customers would be included unless they opt-out or have already entered into a contract. The referendum is the first step in the process and allows the Village to evaluate its options. Additionally, the Village has been discussing entering into an Intergovernmental Agreement with several other area municipalities in order to obtain even better pricing through the larger group purchase should the referendum be successful. These communities include Arlington Heights, Buffalo Grove, Long Grove, Palatine, Vernon Hills and Wheeling.

The referendum question on the March 20, 2012 election will ask Lincolnshire voters if the Village should have the authority to seek competitive pricing bids for electric services under a single contract. Specifically it asks:

Shall the Village of Lincolnshire 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 Village receives no financial benefit from this initiative. The purpose of pursuing this initiative is to lower electricity costs for the benefit of residents and businesses. If the referendum is approved, the Village would have the authorization to issue a Request for Proposal from Illinois Commerce Commission certified wholesale electric suppliers to seek proposals for this initiative. If pursued, and the resulting prices are lower than current prices from ComEd, the Village Board would accept the best bid. Each community in the group would enter into their own contract for service. Since electric prices would be lower, residents and business electric bills would decrease. If individuals do not want to participate in the program, they don’t have to change electric suppliers. Each electric customer would be contacted by the selected new electricity supplier. Any customer may opt out of the program and stay with their current electric supplier. If residents and small businesses already have a contract with an electric supplier other than ComEd, they could opt-in when their contract expires.

Listed below are some of the most frequently asked questions about municipal aggregation:

How is this possible?
On August 10, 2009, Public Act 96-0176 amended the Illinois Power Agency Act by providing for the aggregation of electrical load by municipalities and counties. This law authorizes municipalities to develop aggregation programs for the procurement of electricity supply to residential and small business customers. Local governments can now work with community members to purchase lower cost electricity, green or renewable energy, encourage local generation (solar or wind, etc.), and other community initiatives. Municipalities are able to include all residents and small businesses in a Request for Proposal to retail energy suppliers.

Which communities have passed referendums?

• Fulton
• Campton Hills
• Crest Hill
• DeKalb
• Dixon
• Elburn
• Erie
• Fox River Grove
• Glenwood
• Grayslake
• Harvard
• Lincolnwood
• Milledgeville
• Morris
• Mt. Morris
• New Lenox
• North Aurora
• Oak Park
• Oakbrook
• Polo
• Sugar Grove
• Wood Dale

Will residents notice a difference in service?
No, the only difference is the energy received from the selected supplier and lower, more stable prices. ComEd would continue to deliver energy to homes and businesses. Residents and businesses would also continue to receive a ComEd bill. If residents have an outage or need service, they would continue to contact ComEd.

What if my power goes out – will I need to call the company providing the power?
No. ComEd is responsible for ensuring that electricity flows through its distribution network to all homes and businesses in Lincolnshire. Aggregation would not change how ComEd responds to outages.

Where does the electricity come from?
Using forecasting and hedging methods, the selected supplier procures much of the energy supplied on the open market to find the best price for the aggregation group.

Can savings be guaranteed under an aggregation program?
The Village can structure its request for proposals so that bidders set their rates at a specified percentage under Exelon’s established rate. Market fluctuations make it impossible to guarantee that bids will come in under the current energy rate paid by ComEd customers. However, since that current rate is set every May, the market can react to it, and often provide a lower rate. Currently, residents and small businesses pay a higher rate than most large commercial, industrial and institutional accounts that have sought open market bids.

What if residents / small businesses don’t want to participate?
Residents and small businesses may “opt-out” of the program if the referendum is passed. Before the aggregation program begins, all residents and small businesses would receive an opt-out notice in the mail and given a date by which they must return the opt-out notice or call a number to request to be opted-out of the program. Residents using a third party supplier or residents moving to Lincolnshire from outside the community would not be automatically included; they would have to “opt-in”.

How does electrical aggregation benefit a resident and small business?
Electric aggregation combines the retail electric loads of customers in a community. By combining the loads of its residents, the community can leverage the buying power of thousands of residents and small businesses. This combined buying power typically provides lower, more stable rates and improved service from suppliers.

What if customers already have a contract with an electric supplier?
Residents and small businesses may “opt-in” to the Village’s program when their contract expires.

So, what options do residents and small businesses have?
Subject to approval of the referendum, when the Village selects a supplier, the supplier will contact each resident and small business property regarding the program. Customers thereafter will have the following options:

1. Opt-out – means the customer is not interested in the program.
2. No action – all customers would automatically be enrolled into the electric supply program if no action is taken. However, if you have already enrolled in a direct contract or program such as the Metropolitan Mayors Caucus, you can remain in that program through your contractual period.

If voters approve the referendum, how long will it be before the program is implemented?
State law requires certain steps be followed to approve and implement the Community Choice Aggregation Program. If voters give the Village the authority to pursue aggregation, two public hearings must be held to gather citizen input for an aggregation plan that outlines goals such as savings targets and the mix of energy generation sources. Once the plan is created and adopted, Village staff would seek competitive bids from energy suppliers via a formal Request For Proposals (RFP) process. If a bid is received that meets the goals of the plan, a contract would be negotiated and presented to the Village Board for approval. It is anticipated that the Village would have a program in the summer, 2012.