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City Decides on Chicago-based Electricity Provider

MC2 chosen as residents' alternative to ComEd. Households and small businesses can expect to see savings of about 43 percent, consultant says.

It's not official until the ink is dry on the contract, but Elmhurst has chosen a new electricity provider to compete with ComEd.

By the time Elmhurst's Finance, Council Affairs and Administrative Services Committee members got to City Hall Tuesday to discuss a new provider, aggregation consultants had obtained the cost for one-, two- and three-year contracts from every electricity aggregation company in the state. They also had the cost broken down in terms of the percentage of renewable energy requirements, between zero and 100 percent.

After spending some time trying to predict what electricity rates will look like in the next couple of years, the committee decided to enter into a two-year contract with Chicago-based MC2 at a rate of 4.83 cents per kilowatt hour. ComEd rates currently are about 8.5 cents per kilowatt hour.

That MC2 rate includes a 50 percent green energy requirement. This does not mean that 50 percent of Elmhurst's electricity will come directly from renewable sources. MC2 still gets its power mainly from coal and nuclear sources, as do all of the energy aggregators in the state. What the city actually is purchasing are green energy credits toward the future development of renewable sources of energy.

At the 4.83-cent rate, each Elmhurst household can expect to see a savings over ComEd of about $429 a year, said David Hoover, executive director of Northern Illinois Municipal Electric Collaborative, the city's aggregation consultant.

If the city had opted to go for zero renewable energy, the rate would have been 4.79 cents per kilowatt hour, saving residents an additional $4 a year. Committee member Kevin York also pointed out that from a citywide perspective, each 1/10th of one cent difference in rate is equivalent to about $150,000.

"The decrease in savings to residents to move from zero to 50 percent (renewable energy) is $4," York said. "At the 50 percent rate, we are still saving the overall community $5.4 million in the first year of this program."

York said there is misinformation going around town not only about the cost of the aggregation program, but about what is being purchased. One commenter referred to the program as an investment in "financial derivatives."

"That couldn't be further from the truth," York said. "When something so drastically wrong (is stated), that upsets me. That's just sensationalism. They're trying to equate it to the JP Morgan Chase debacle of last week, and that's simply not the case."

Residents who feel that 50 percent green energy is not enough may opt to increase their contribution to 100 percent once MC2 comes on line in the fall.

Since residents will be able to opt for more green energy credits, committee member Mark Mulliner asked why the city doesn't just go with zero green energy in the contract and let residents decide any green requirement independently.

"Our goal when we originally did this was to get the lowest possible rate," Mulliner said. "The whole concept was to get the rates as low as we can."

But committee member Stephen Hipskind said that after two public hearings, they already have promised residents a green component.

"We presented to the community wholeheartedly that we would look at this," he said. "We heard a lot of support for that and little opposition. When we are looking at the numbers here, they are not that significant."

Committee members agreed 50 percent renewable energy is a fair compromise.

"I just can't support anything higher, even though it's only $3 or $4 a year," Mulliner said. "It's a balancing act."

York said sometimes the city needs to take on an extra expense to be good stewards of the environment.

"It may not always be the cheapest thing, but it's the right thing to do," he said. "I think this is a great step."

Hoover noted that if residents do opt for 100 percent green energy later, they will likely pay slightly more than the rate MC2 is offering today for 100 percent green energy because of the added administrative costs. But it will likely be only a fraction of a cent, he said.

Information on how to increase the green energy contribution will be provided in a letter the city will send out to residents this summer. The information will be part of the letter that also offers residents the option to decline MC2 as an electricity provider and stay with ComEd.

That letter, which has the potential of being confusing to residents, will be discussed at the next committee meeting on Tuesday, May 29.

In the meantime, the consultants will work quickly. The rate is held only until 1:30 p.m. today, Wednesday, May 23. Hoover said residents who stay in the aggregation program will most likely see lower rates—and MC2 listed as their new provider on their ComEd utility bill—in September.

"It's beautiful from the residents' point of view," he said. "It's so seamless some people might not even know the city did anything."

Jack May 24, 2012 at 12:29 PM
John - Great data and you are completely right. The city should publish all the costs to the residents so they can make a correct choice for them. Finally on RECs - We voted to enable the city to get the lowest possible rate. Clearly they have not chosen that rate for the people of Elmhurst. If individuals in Elmhurst want to pay money to fund alternative forms of energy then they can buy them on their own and not expect all residents to subsidize an already extremely overly subsidize industry.
John Lussow May 24, 2012 at 09:08 PM
Here is a link to the ICC site that discusses power aggregation. Also notice that the rate to use for ComEd comparison IS NOT $0.085 per kWh. Just really poor writing or research done here. The real rate is $0.0734. 1.2 cents might not sound like much but for my agency that would be over a $528,000 difference. http://www.pluginillinois.org/offers.aspx?said=1 Select ComEd from the drop down box about 3/4 down the page. Then go see if you believe that what you just did was really worth $40,000 a year.
John Lussow May 25, 2012 at 06:42 PM
Here is a link to all of the Illinois communities that have already aggregated and the fixed rate price they have received: http://www.icc.illinois.gov/ORMD/MunicipalAggregation.aspx
Karen Chadra May 26, 2012 at 03:37 PM
Larry, I deleted your comment because you are calling someone out by name as a commenter here, and making accusations about that person, when I have no proof that person is who you say he is. If you'd like to re-frame your comments without the reference to the individual, please do.
Jim Court June 03, 2012 at 02:08 PM
Karen, I did not read the comment but honestly, why is that such a big deal? Just curious.

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