R-1083 - 01/11/2011 - ELECTORS - Resolutions Supporting Documents ITEN 10.13.1)
a
OF Oq�
69
v O
A
OOUNZ't'
AGENDA ITEM
Regular Board of Trustees Meeting
of
January 11, 2011
SUBJECT: Electric Aggregation Referendum Resolution
FROM: David Niemeyer, Village Manager rr�'
BUDGET SOURCE/BUDGET IMPACT: N/A
RECOMMENDED MOTION: Village Board approve Resolution 2011-EL-REF-R-1083, a
Resolution Providing For The Submission To The Electors Of The Village Of Oak Brook,
DuPage And Cook Counties, The Question Whether The Village Of Oak Brook Should
Have The Authority Under Public Act 096-0176 To Arrange For The Supply Of Electricity
For Its Residential And Small Commercial Retail Customers Who Have Not Opted Out of
Such Program.
Background/History:
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. It allows municipal
corporate authorities to adopt an ordinance under which it may aggregate residential and small
commercial retail electrical loads located within their jurisdiction and solicit bids to enter service
agreements for the sale and purchase of electricity.
The law requires the corporate authorities of a municipality or county board to submit a
referendum to its residents to determine whether or not the aggregation program shall operate as
an opt-out program for residential and small commercial customers prior to the adoption of an
ordinance for the aggregation of these loads.
I have attached a question and answer fact sheet from Energy Choices,the consultant who we
work with on electric power issues. Some other facts:
• If the referendum is approved,the Village would then have to develop a plan of operation
and governance for the aggregation program. Two public hearings are required before
the Village can adopt this plan. Once this plan is adopted the Village can solicit bids.
• If the Village cannot find cheaper electricity, it could opt to keep the current system and
everything would remain status quo. If the Village Board accepts a bid, all residents
would automatically be enrolled to get electricity from the new source, but a resident
could also opt out and keep the current Com Ed rate structure.
• The Village would not be the energy company, which other municipalities such as
Naperville have done. ComEd will continue to deliver the power, manage the
infrastructure, and take care of billing, but a new electric supplier could disconnect the
Village from ComEd's parent company, Exelon.
• There is no guarantee that residents and businesses will see savings. However, going to
an alternate supplier is a low risk venture, as the Village could agree to a short term
contract with an independent source but go back to Exelon energy if the alternate supplier
does not work out. Other states such as Ohio have had opt out alternate electric supply
plans for years for municipalities and have seen rates go down.
Since this is relatively new legislation,to my knowledge only a few Chicago area municipalities
are considering this referendum in April. Darien and Oak Park are putting this initiative on the
ballot. As Oak Brook has always been a leader in finding ways to reduce budgets and save costs
for residents and businesses,this initiative is something the Village Board may want to consider.
To get this on the April ballot,this resolution must be approved at this meeting.
Recommendation:
That the Village Board approve Resolution R-1083, the question whether the Village of Oak
Brook should have the authority under public act 096-0176 to arrange for the supply of
electricity for its residential and small commercial retail customers who have not opted out of
such program.
RESOLUTION 2011-EL-REF-R-1083
A RESOLUTION PROVIDING FOR THE SUBMISSION TO THE ELECTORS OF THE
VILLAGE OF OAK BROOK, DUPAGE AND COOK COUNTIES,THE QUESTION WHETHER THE
VILLAGE OF OAK BROOK SHOULD HAVE THE AUTHORITY UNDER PUBLIC ACT 096-0176 TO
ARRANGE FOR THE SUPPLY OF ELECTRICITY FOR ITS RESIDENTIAL AND SMALL
COMMERCIAL RETAIL CUSTOMERS WHO HAVE NOT OPTED OUT OF SUCH PROGRAM
WHEREAS, the Illinois Power Agency Act, 385 5/1-1 et seq. (the "Act') was recently amended by
the adoption of Public Act 96-176; and
WHEREAS, under the Act if the Village seeks to operate the aggregation program under the Act
as an opt-out program for residential and small commercial retail customers, then prior to an adoption of
an ordinance to establish a program, the Village must first submit a referendum to its residents to
determine whether or not the aggregation program shall operate as an opt-out aggregation program for
residential and small commercial retail customers; and
WHEREAS, the President and Board of Trustees hereby find that it is in the best interests of the
Village to operate the aggregation program under the Act as an opt-out program and to submit the
question to the electors in a referendum pursuant to the Act.
NOW THEREFORE, BE IT RESOLVED BY THE PRESIDENT AND BOARD OF TRUSTEES OF
THE VILLAGE OF OAK BROOK, DU PAGE AND COOK COUNTIES, ILLINOIS as follows:
Section 1: The foregoing preambles are incorporated herein by reference as though fully set forth
herein.
Section 2: The Village President and Board of Trustees finds and determines that it is in the best
interests of the Village to operate the aggregation program under the Act as an opt-out program.
Section 3: In the event such question is approved by a majority of the electors voting on the
question at the regular election on April 5, 2011, the Village may implement an opt-out aggregation
program and if the Village adopts the program the Village shall comply with all the terms and provision of
the Act.
Section 4: The Village Clerk is directed to certify and submit the following question to the
DuPage and Cook County Clerk to be placed on the ballot for the general election to be held on April 5,
2011, in the following form:
Shall the Village of Oak Brook have the authority to arrange for the supply of YES ❑
electricity for its residential and small commercial retail customers who have not
opted out of such a program? NO ❑
Section 5: This resolution shall be in full force and effect from and after its passage, approval and
publication as required by law.
Section 6: All resolutions or parts thereof in conflict with the provisions of this resolution be and
the same are hereby repealed to the extent of such conflict.
Resolution 2011-EL-REF-R-1083
Submission to Electors re:Electricity
Page 2 of 2
APPROVED THIS 11th day of January, 2011.
John W. Craig
Village President
PASSED THIS 11th day of January, 2011.
Ayes:
Nays:
Absent:
ATTEST:
Charlotte K. Pruss
Village Clerk
energy(j ch
iC.
707 Skokie Blvd., Ste. 600
Northbrook, IL 60062
(847) 418-3888
www.energychoices.com
Municipal Aggregation of Residential Electricity Accounts
Several municipalities in northern Illinois are preparing for municipal aggregation of residential
electricity accounts. Aggregation allows residents of a municipality to cooperatively seek non-
utility electricity supply in hopes of paying less than rates they pay ComEd for equivalent
service. Securing third party supply is what municipalities already undertook for their non-
franchise electricity accounts, starting in 2007, to reduce and control electricity expense.
The following are frequently asked questions with answers:
How is this going to provide electricity at a cost lower than ComEd's supply?
ComEd's supply comes from a procurement process carried out by the Illinois Power Authority
(IPA). The IPA buys future contracts to satisfy electric demand created by residential and small
business customers. The IPA has to adhere to several rules that make the process of procurement
less than optimal. With municipalities making their own decisions regarding electricity supply
for residents, they are free to implement different strategies and take advantage of market timing.
Is the electric bill going to look different from the bill residents currently receive from
ComEd?
Assuming the third party provider takes advantage of all newly created opportunities for serving
residential customers, the monthly electric bill will still come from ComEd. And the customer
will still make a check out to ComEd. The only difference will be that the bill will indicate that
the customer is purchasing electricity from the third party provider the municipality approved.
What is timing for action?
There is a 75-day period between the time a village/city board acts in approving a resolution
putting municipalization of residential electricity be put on as a referendum on the April ballot.
The date in which the municipality has elections this spring dictates by the date in which
municipalities must act. This date for most municipalities is January 18,2011. If a municipality
misses the date the year,the referendum can be put on a future ballot.
Why is this possible for residential customers now to aggregate?
There were two laws enacted that make this possible:
1) In 2007 Public Act 95-0700 became law. This requires the electric utilities in Illinois to
provide utility consolidated billing (UCB) and purchasing of receivables (POR). UCB
requires the electric utilities to provide one bill (issued by the utility)to residential
customers that would include charges from a third party electricity supplier. POR allows
the third party suppliers to sell the supply portion of the bill to the utility at a discount,
thereby eliminating any bad debt expense or customer credit issues. The combine effect'
of UCB and POR is that more suppliers will be able to offer residential customers third
party supply options, thereby creating more competition for buyers.
2) In 2009 Public Act 096-0176 was signed into law. This allowed municipalities to
aggregate (bring together) residential customers to purchase third party electricity supply
as a group. Aggregation makes these municipalities more attractive to third party
suppliers,thereby increasing competition.
What other opportunities exist for municipalities with electricity aggregation?
Aggregation can give a municipality the opportunity to implement other programs such as
community energy efficiency, education and renewable energy-to name a few. A funding
stream can be provided by aggregation that will lower costs for residents over time through
energy efficiency and not just cheaper energy. This can provide greater value to residents and
improve the environment at the same time.
Page 1 of 2
Post a story
News More News >
Oak Park considers plan to purchase own power
ay Jim Jaworski TribLocal reporter Tuesday at 2:05 p.m.
• Share on Facebook
• Share on Twitter
• Print
• Email
The Oak Park board will be asking voters for the opportunity to seek electricity on the open market,
which officials believe will lower prices and possibly bring in more green energy.
The plan, known as Community Choice Aggregation, would allow the village to seek bids for residents
and commercial retail business owners from independent power sources, instead of continuing to rely on
set rates from ComEd. Village sustainability manager K.C. Poulos believes this will yield cheaper, and
possibly cleaner, electricity on the open market.
"This is one of those rare opportunities where a referendum can offer an economic benefit without
incurring substantial financial costs," said Poulos, who added 34 percent of Oak Park energy comes
from coal burning, while only 3 percent comes from renewable sources, like wind and solar. She said
she expects a 5 to 10 percent savings for consumers
The plan is allowed by a state law revised in 2009. The proposal would need to be approved in a binding
referendum in the spring.
If passed, the village would go out to bid for electricity,the same way they would seek the cheapest
rates for a construction project. All residents would automatically be enrolled to get electricity from the
new source, but anyone could opt out at any time and keep the current ComEd rate structure.
If the village cannot find cheaper or greener electricity, it could opt to keep the current system and
everything would remain status quo, with no noticeable change for the consumer.
"If no bids are acceptable, there is no obligation to accept them," Poulos said.
Two public hearings are required before the village can begin going out for bids.
The village would not be the "energy company," so to speak, which has been done in other
municipalities like Naperville. ComEd, which delivers the power and manages the infrastructure,would
continue to manage the system and take care of billing, but the plan could disconnect the village from
ComEd's parent company Exelon, which is the electricity supplier.
Such opt-out plans have been available in Ohio for 10 years, said Brenda Fargo of Akron-based First
Energy Solutions, an energy provider. She said 151 communities went to the ballot to approve such a
plan, with 144 passing.
"These typically pass without a lot of hoopla," she said.
Trustee Colette Lueck said residents might remember when phone companies were deregulated and
rates went up, but Fargo said that is not what happened in Ohio.
"That's not been the case, that's not been the experience we have had in Ohio," she said. "In fact, rates
have gone down."
While the main purpose is to save money, Poulos said, the village would also pursue alternative or
renewable energy sources if economically feasible.
Officials said the plan is low-risk, as they can go back to Exelon energy if they feel it is not working out.
Poulos said the biggest risk is if they sign a contract for an independent source, only to see Exelon prices
drop mid-way through the deal. She said this could be mostly avoided by only signing one-year
https://www.oak-brook.org/owa/?ae=PreFormAction&a=Forward&t=IPM.Note&id=RgAA... 1/7/2011
Page 2 of 2
contracts.
Poulos said the savings would not be offset by increases from ComEd's distribution, as they are
prevented from doing so by the state.
"Many people don't realize the distribution is one side of the business, and ComEd is guaranteed a
certain amount no matter where the electricity comes from," said Village Manage Tom Barwin. ComEd
gets one-and-a-half to two cents per kilowatt-hour for distributing the electricity.
The plan received strong support from the board, which needed to approve the measure quickly to get it
on the April ballot. It passed on a 5-1 vote, with the only nay coming from Trustee John Hedges. He said
he supports the plan in theory, but believes the time frame is too tight and feels the village may be
rushing the issue forward.
Village President David Pope disagreed, and said they could get the best rates if they are one of the first
communities in Illinois to do so. With village constantly pushing green initiatives, he said it also sends
the right message to Oak Parkers and other Illinois residents.
"If ComEd comes in with lowest price, then nobody has lost anything, but if they don't, we've achieved
gains for the community
https://www.oak-brook.org/owa/?ae=PreFormAction&a=Forward&t=IPM.Note&id=RgAA... 1/7/2011