Lake Forest Contact:
January 6, 2012
CARINA WALTERS,
817.810.3680
or
waltersc@cityoflakeforest.com
Alternative Residential Electricity Supply Services
Referendum Question
on
March 20, 2012 Ballot
Lake Forest, Illinois
– On August 10, 2009,
Governor Quinn signed into law Public Act 96-176,
amending the Illinois Power Agency Act to allow
municipalities to arrange for the provision of
electricity to residential and small commercial retail
customers by alternative electric suppliers (instead of
ComEd). Under the new law, a municipality may seek bids
for the provision of aggregate electricity supply
services to residential and small commercial customers,
in hopes that the selected rate will be lower than the
standard rate offered by ComEd. The legislation
contemplates an “opt-out” program in which all
residential and small commercial retail customers would
be switched automatically to the alternative supplier
selected by the City, unless a customer affirmatively
opts out of the program and continues service through
ComEd or another provider. However, in order to seek
competitive prices for an opt-out electricity
aggregation program, the City must first obtain approval
from residents through a referendum.
On
September 26, the City Council approved a resolution to
authorize placement of a referendum regarding an opt-out
electricity aggregation program on the March 20, 2012,
primary election ballot. Voters will be asked if the
City should be given the authority to seek competitive
pricing bids for electricity services and to enter into
a single contract that would include residents and small
businesses if lower electric bills can be realized.
The City is a member of the North
Shore Electricity Aggregation Consortium, a group of
eight north suburban municipalities working together to
identify potential electricity cost savings. The other
members of the Consortium are Deerfield, Glencoe, Lake
Bluff, Highland Park, Northbrook, Park Ridge and Skokie.
Collectively, the Consortium’s members will collaborate
for the duration of the bidding process and seek prices
for the aggregated electricity load of the
municipalities that approve the referendum. If the
referendum is approved in Lake Forest, the City will
proceed with the bid solicitation process, even if the
referendum is not approved by the voters of any of the
other Consortium members.
If the
referendum is approved in March, bids will be solicited
for the Consortium’s aggregated electricity load. The
Consortium intends to seek proposed pricing for one-,
two- and three-year terms. The bids will be compared to
ComEd’s current rates, and the City only intends to
approve a bid that will result in lower electricity
prices than the current ComEd rates. Approval of the
referendum does not obligate the City to implement an
opt-out electricity aggregation program. If a program is
implemented, all residential and small commercial retail
customer accounts will automatically be moved to the new
supplier; however, information will be provided in
advance of the change to residents and commercial retail
customers who may choose to opt-out of having their
account transferred to another supplier and prefer to
remain with ComEd.
Please
note that, under an opt-out electricity aggregation
program, ComEd will remain the distributor of
electricity in the City; the selected alternative
supplier will merely generate the electricity provided
and deliver it to ComEd for distribution. Additionally,
customers will continue to receive electricity bills
from ComEd. Likewise, ComEd will remain responsible for
all distribution system issues, including power outages.
Electrical Aggregation:
Frequently Asked Questions
In November 2011, the Lake Forest City Council approved
Resolution 11-23 authorizing that a question regarding
electrical aggregation be placed on the March 20, 2012
election ballot. This question is as follows:
“Shall The City of Lake Forest 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 a program?”
As a homeowner or small business owner, you may be
wondering what this question means, and how it may or
may not impact you. Below are several Frequently Asked
Questions (FAQs) that will help you better understand
electrical aggregation and what it means for consumers.
1. What is electrical aggregation?
On August 10, 2009, Governor Quinn signed into
law Public Act 096-0176 which allows municipalities
to arrange for the provision of electricity to
residential and small commercial retail customers by
alternative electric suppliers (i.e. suppliers other
than ComEd). Under the new law, the City may seek
bids for the provision of aggregate electricity
supply services to these customers, in hopes that
the selected rate will be lower than the standard
rate offered by ComEd.
Electric aggregation combines the retail electric
loads of customers, in this case with thousands of
customers from eight communities. By combining the
electrical loads, the community can leverage the
buying power of thousands of residents and small
businesses.
2. What is the referendum on the March 20, 2012
election ballot?
As indicated above, voters will be asked whether The
City of Lake Forest should 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 a program.
Should the Referendum pass, the City will then seek
competitive bids utilizing the North Shore
Electricity Aggregation Consortium (a joint
purchasing cooperative consisting of eight
communities: Lake Forest, along with Deerfield,
Glencoe, Highland Park, Lake Bluff, Park Ridge,
North Brook and Skokie) in an effort to obtain bids
that would secure a lower electrical rate for
residents and small commercial users. Once bids are
received and it is determined that savings can be
realized for consumers, a contract will be
negotiated to lock in the rate. Once the contract is
approved, the City will work with ComEd and the new
provider to ensure that all individuals eligible for
the new rate are automatically transferred to the
new supplier unless they have previously opted out.
If the Referendum does not pass, the City will not
be able to participate in the Consortium's joint
purchase.
3. When would the City seek competitive bids?
If the Referendum passes, the City, along with the
North Shore Electricity Aggregation
Consortium, will seek competitive bids in the spring of
2012. It is expected that the new
rate
would be effective during early- to mid-summer, 2012.
4. Will there be a public information process?
The City will provide information regarding both the
referendum and, if the referendum is approved, the
bidding process, through its normal communication
outlets including the
City’s website (http://www.cityoflakeforest.com),
Dialogue! newsletter
and
Facebook page. In
addition, the City will host two public hearings as
a component of the aggregation process during the
City Council meetings on Monday, February 6 and
Tuesday, February 21.
5. Are all residential units
in the community eligible?
All residential customers would
be eligible (except those receiving ComEd's
Residential Space Heat Rate - see question 8 below;
those participating in hourly pricing programs; and
those with existing supply contracts with an
Alternative Supplier) unless they choose to "opt
out" of the City's bidding process
6. I have a small business – does this impact me?
It may. The Act designates that residents and small
commercial retailer customers are eligible for
aggregation. Small retail customers have been
defined as having a peak demand of less than 100 kW.
7. What if I have already switched to a new provider
prior to the City seeking bids?
A number of electricity providers have been
soliciting individual customers regarding opting out
of ComEd’s rate on an individual basis. If you
already have done so, you have likely been locked
into a rate and into a contract with that provider.
Should the City bidding process realize lower rates
than you have through your own provider, you will
still be able to opt-in to the City’s competitively
bid rate, but only within the structure of the
existing contract with your provider. In addition,
unlike those users who are still receiving their
electricity supply from ComEd, you will not be
automatically switched over to the new provider. You
may also be subject to early termination fees or
other restrictions with your current provider. You
should check with your provider to better understand
any restrictions or policies that might apply.
8. What if residents / small businesses don’t want to
participate in the City’s rate?
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 from the City and be
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. Additionally, ComEd will also
contact residents to ensure that they intend to
allow their accounts to be enrolled in the program.
Residents using a third party supplier or residents
moving to Lake Forest from outside the community
would not be automatically included; they would have
to “opt-in”.
9. I live in a building that currently receives ComEd's
Residential Space Heat Rate. Will the Consortium's joint bid process impact me?
No, residents of buildings currently receiving the
Residential Space Heat Rate will not participate in
the joint bid due to the fact that the Residential
Space Heat Rate is heavily subsidized by ComEd and
likely lower than the joint bid rate. Check your
bill to determine if this impacts you.
10. What component of the electrical bill will
aggregation effect?
Aggregation addresses only one of the three
components of an electricity bill. The three
components are supply (where the power comes from),
transmission (getting the supply from its point of
origin or from the high voltage grid), and
distribution (getting the electricity from the
substation to the consumer’s meter). Aggregation
concerns only the supply component, which is
typically at least 50% of the electricity bill. The
transmission and distribution parts of the bill will
be unaffected by aggregation.
11. Will there be any difference or disruption in
service because of aggregation?
No, there will be no disruption in service. The only
difference will be that the energy received will be
from a different supplier at lower, more stable
rates. ComEd would continue to deliver energy to
homes and businesses. Residents and businesses would
also continue to receive a ComEd bill and utilize
ComEd payment options such as Budget Billing and
Automatic Payment. Any outages or requests for
service would continue to be directed to ComEd.
12. What if my power goes out – who should I call?
ComEd is responsible for ensuring that electricity
flows through its distribution network to all homes
and businesses in Lake Forest. Aggregation would not
change how ComEd responds to outages. Outages should
still be reported to 1-800-EDISON-1.
13. Will there be a "green energy" component to the
newly-bid rate?
All bidders will have to
provide at least 7% of cleanly-produced energy to
comply the 2012-2013 Renewable Portfolio Standard.
The request for proposals that the North Shore
Electricity Consortium communities will use will
solicit offers for higher levels of less polluting
energy sources, up to 100%, and the cost associated
with those higher levels. If the Referendum passes,
and a contract is brought to the City Council for
approval, the Council will determine what percentage
of less polluting energy and the associated rate
that will be provided to the community.
14. ComEd has
indicated
that it will be making system improvements to deal with
reliability. Does this change any of those commitments?
No. This process does not impact ComEd's commitments
to the City to improve its system and to deal with
reliability issues.
For more information, please contact Assistant City
Manager Carina Walters at (847) 810-3680 or
waltersc@cityoflakeforest.com.
