Switch in electricity supplier may save Pingree residents $500,000 annually
By Ryan Klassy For The Courier-News May 31, 2012 11:28AM
Updated: July 6, 2012 9:42AM
PINGREE GROVE — Residents will get a lower electricity rate under an agreement the village has entered into with Akron, Ohio-based First Energy Solutions.
The village locked in a two-year term at a rate of 4.94 cents per kilowatt hour that should save the average single family homeowner around $320 annually, officials said.
“We really are ecstatic about the whole process,” Village President Greg Marston said. “We estimate that the combined annual savings should be somewhere around a half-million dollars for our residents.”
To put the savings in perspective, Marston noted that it is nearly a third of the village’s general fund budget for the current year.
According to a village release, the effective rate of their current supplier, Commonwealth Edison, was expected to hit 8.5 cents per kilowatt hour today.
Residents will continue to get their bills from ComEd. And because the 42 percent dip is only on the supply portion, residents will not see a change on delivery rates or taxes. Electric bills can be expected to drop about 30 percent starting in September.
The contract also includes a price match guarantee, should ComEd’s rate fall below that of First Energy during the two-year term.
The village’s bottom line will receive a boost, too. First Energy will pay the village an annual civic contribution in the amount of one-tenth of a penny per kilowatt hour. Based on the 2011 usage, that would amount to about $12,000.
Marston said trustees have not discussed the allocation of those funds but will do so at a strategic planning session scheduled for June 23. He also said the contribution was not a deciding factor in picking a supplier.
“They gave us the lowest bid, so that additional offer was just a win-win for the residents,” Marston said.
Marston added that he did get slightly lower, one-year-term bids, but because of market volatility he and village trustees wanted to lock in a rate for two years.
“We’ll continue to explore other opportunities for cost savings for our residents,” Marston said. “That’s a high priority for our board.”
According to Village Administrator Ken Lopez, calls have started to come in to village hall. “Most residents are calling to see when they will see a change on their bill,” Lopez said.
“One gentleman actually called to opt out of the program; but once I told him about the savings, he decided he’d wait a little while.”
Pingree Grove was able to throw the switch on its supplier because Illinois has a deregulated energy market. That allows municipalities to consolidate residents’ bills and purchase energy at a volume discount.
Voters gave village officials the go-ahead to start the bidding process by approving a referendum in March.
First Energy’s bid was one of six presented to village officials by representatives of Northern Illinois Municipal Electrical Cooperative, the company the village chose to manage the referendum, notify the community, provide information and negotiate rates with energy suppliers.
Residents and small commercial accounts will be switched to First Energy, unless they have already contracted with another supplier, are on ComEd’s Residential Real-Time Pricing program, or opt out.
Residents will receive two letters explaining their right to opt out of the program, and will have 14 days to do so. After that, a termination fee will be charged — $25 for homeowners and $50 for businesses.
There is no fee for entering the program, but residents who have a different alternate supplier already and want to make a switch may be subject to that company’s termination fees.
Sharon Durling, director of marketing at NIMEC, said electrical rates have fallen right along with other economic indicators since 2008.
“It’s a commodity, so the price fluctuates,” Durling said. “One of the main factors in determining the price is that communities with big houses that use a lot of electricity get lower rates.”
Durling noted that Pingree Grove’s usage is slightly below average for single-family homes.
According to Durling, a renewable energy option available to Pingree Grove residents would reduce their savings by about a tenth of a cent.
“A rough estimate might be about $10 more per year to go with green energy,” she said.
Residents who request that option would be supporting energy sources such as solar, wind and hydro-electric.