AGENDA MEMO
City Council
June 21, 2010
ISSUE STATEMENT
Consideration of a resolution
to authorize the City Administrator to approve a contract with the lowest cost
electricity provider determined on June 22, 2010.
BACKGROUND/HISTORY
The deregulation of
Commonwealth Edison was completed in January of 2007. This effectively separated ComEd from Exelon and allowed for competition among energy
suppliers. Customers now have an option
to go with any one of approximately 20 vendors.
A private company has formed
NIMEC, which has brought together 110 members that pay a combined $20 million
for electricity. This bid group includes
three suppliers (Mid-America, Integrys and Exelon)
who then pay the private company a fee for bringing them customers. During the last bid process, the City of
The process of deregulation
has taken several steps. The first steps
were to force the largest accounts to contract for competitive pricing. This was done by putting the largest accounts
on an “hourly rate” program which charged extra for electric usage. As this is completed, smaller and smaller
accounts become eligible to be forced onto an “hourly rate” program if they are
not contracted out individually. In May
some of our street light accounts were eligible to be moved to the hourly rate
program. The price we had been paying
for these accounts was 3.3 cents per kilowatt; the average hourly rate over the
past year was 3.8 cents. Recent
contracts have estimated a price of 3.3 cents to 3.5 cents for a one to three
year term. Staff’s intention is to enter
into a three year arrangement to lock in cost certainty at the current market’s
favorable pricing.
This is a similar process to the
last two bids in that the City Administrator signs the lowest price on a
specific day. It is required for energy
purchasing because the energy companies will only lock in the pricing for one
day, as commodities rise and fall.
STAFF/COMMITTEE RECOMMENDATION
The Administrative/Finance
Committee recommends approval of this resolution.
ALTERNATE CONSIDERATION
Not approving and staying on
an hourly rate would be an alternate consideration
DECISION MODE
This item will be on the
agenda for the June 21, 2010 City Council Meeting for formal approval.