Palatine Referendum: Should Village Pursue Electric Aggregation?
A March 20, 2012 referendum will ask residents whether Palatine should pursue electric aggregation in an effort to lower power costs.
A March referendum will ask residents whether Palatine should pursue electric aggregation in an effort to lower power costs.
If voters approve the measure, the village and six other suburban communities would join forces in an effort to increase their buying power and get a better deal on electricity.
"Back in 1997 the state implemented a plan to deregulate the energy industry in Illinois," Palatine Village Manager Reid Ottesen said. "Since that point in time many of the larger users have been able to go out and switch their energy suppliers. The village has done that and we have saved money by doing that."
Ottesen said a new law passed in 2010 allows the village to transfer electric accounts to alternate suppliers – essentially its posslble now for residents to be grouped together into a larger energy user.
"It would allow us to to aggregate or combine every one's energy needs in order to get the greatest savings," Ottesen said.
Palatine would join with Arlington Heights, Buffalo Grove, Lincolnshire, Wheeling, Long Grove and Vernon Hills. Combined the communities have a population of about 263,000. Ottesen said Buffalo Grove would be the lead agency.
Ottesen said ComEd's rates have been about 7.9 cents per kilowatt hour during the summer and about 7.75 cents the rest of the year. Ottesen said other areas that have pursued aggregation have been able to reduce energy costs to residents by as much as 25.5 percent in the summer and about 24 percent the rest of the year.
Ottesen said that before the village can move forward, the law requires Palatine to go to referendum and ask residents if they favor aggregation. If approved, residents would not be required to leave their current energy supplier.
"This would not force anybody," Ottesen said. "A resident or small business would have the ability to say 'Leave me out of it I want to stay where I am."
If voters give the go ahead, Palatine and the other communities would have to decided if they wanted to use a consultant to assist in the bidding process. There also would be two public hearings on the issue.
ComEd would still be responsible for delivering the energy that would be coming from an alternate supplier.
Ottesen said that although approval of the referendum allows Palatine to move forward it does not require a switch to alternate energy suppliers if the bids that are received are not significantly lower.
Palatine Person
12:48 pm on Wednesday, November 9, 2011
The last time I checked the poll results for this article, all but 1 person voted to have Palatine pursue electric aggregation. It seems like a good idea, but are there any negatives? I would like to here the pros and cons (if any).
Scott Herr
6:19 pm on Wednesday, November 9, 2011
I'm the lone soul who voted no, so I'll explain my vote:
1. I'd like more information about the savings estimates. ComEd already charges electricity costs based on rates negotiated by the Illinois Power Agency (IPA), which aggregates the demand of most Illinois residents. If IPA is doing a good job it seems they should be able to negotiate lower rates than a local community could. If not, IPA needs to do a better job on behalf of all Illinois residents. I'll research this more before the referendum. FYI the IPA web site is at http://www2.illinois.gov/ipa/
2. The potential savings is somewhat misleading. The savings are quoted as 25% off the "Electricity Supply Services" part of your bill. But your ComEd bill has other parts. A more complete estimate of savings would be stated as a % off your total electricity bill. A 25% savings off Electricity Supply Services translates into about a 16% savings off the typical customer's total ComEd bill.
3. If residents don't opt out they would be locked in for the multi-year term of the contract. This would be good if the IPA rates increase and bad if rates decrease (as they have been recently).
[to be continued...]
Scott Herr
6:20 pm on Wednesday, November 9, 2011
[...continued from above]
4. Local government could provide greater benefit to their residents if they would help communicate the higher savings possible by (a) energy usage reductions, and (b) switching to hourly electricity rates (which reflect the actual cost of producing electricity: low for the 99% of the time that there is capacity available and high during hot summer afternoons when demand is greatest).
Our family has reduced electricity consumption by about 25% over the past couple of years. And there are some additional things we can do to reduce energy usage further.
In addition to the savings by using less electricity, we're saving another 25% (about $400/year) off our total ComEd bill by using ComEd's hourly rate plan. For an introduction to this see http://www.frugalnerd.com/blog/2010/02/comed-rrtp-intro/
More info about Community Aggregation can be found at the Citizen Utility Board's web site at http://www.citizensutilityboard.org/ciElectric_cubfacts_communityaggregation.html
Palatine Person
9:58 pm on Wednesday, November 9, 2011
Thanks for the explanation. I'll check out the links.
Sandra Levin
6:17 am on Sunday, November 13, 2011
We have been with Blue Star for years and saved on our electric costs. More savings is good for any small business owner. - Orbit Skate Center, owner
julieta
11:49 am on Wednesday, February 29, 2012
Why not make money while paying your utilities...not a lot of people know that this is possible...
Deregulation of energy is the biggest distribution of wealth..by Warren Buffet...we are on the expense side of the business...now is the time to be on the revenue side 224-678-4484
Taraxias
6:55 am on Monday, March 19, 2012
Why should we give the government power to "negotiate" power rates for us. This opens up our politicians to bribery should electric companies attempt to convince them to choose one over the other.
Vote NO !!!
Scott Herr
4:01 pm on Monday, March 19, 2012
It's important to understand that the referendum only changes which government body has responsibility for negotiating electricity supply contracts. If the referendum doesn't pass then the Illinois Power Authority (an Illinois state agency) continues doing this for Palatine residents. If the referendum passes then the Village of Palatine can negotiate for Palatine residents.
In either case customers can choose alternative suppliers. The Citizens Utility Board wrote more about this at http://www.citizensutilityboard.org/cubsGuideToMunicipalElectricityAggreation.html
Some "back of the envelope" calculations show Palatine residents would save roughly $5 million over the next year if the referendum passes. This assumes the difference of 2.2 cents per kWh continues between the IPA-negotiated rate and 7.7 cents per kWh and a 5.5 cents per kWh rate that is among the better community negotiated rates. It also assumes about 27,000 households in Palatine at 700 kWh per month. Annual savings would = 27,000 * 700 kWh/mo * 12 mo * (7.7 - 5.5 cents per kWh) = $5 million.
Mark
4:29 pm on Monday, March 19, 2012
I would sure like to know why the IPA at the State level is unable to negotiate a rate at least as good a some of their local communities. I think that is the million dollar question. As Scott points out this concept to negotiate in aggregate is nothing new, with the IPA already supposedly doing it for the entire State. We already have a choice to accept it or go off on our own. What make anyone think that simply another government agency is going to lower costs from some other government agency? Doesn't Illinois already lead the nation in number of governmental units, and now we want even more?
Shawn
5:34 pm on Monday, March 19, 2012
Everything goes up annually so if they negotiate a rate that is lower than now for multi year great.