Elgin picks ‘green’ company to handle aggregation and predicts 37% savings
By Dave Gathman firstname.lastname@example.org June 12, 2012 8:48PM
Updated: July 14, 2012 6:20AM
ELGIN — The biggest northern Kane County community that approved March 20’s electricity-source aggregation referendum has become one of the first to choose a power supplier.
Elgin officials announced that after reviewing proposals from eight companies with the help of a consultant, they have picked Direct Energy Services to provide the raw power for any Elgin homeowners and small businesses that don’t opt out of the aggregation and don’t already have a private provider of their own.
“The best part of the Direct Energy Services’ contract is that it requires 100 percent green, renewable energy” made from wind power, Mayor David Kaptain said.
The program is expected to go into effect Sept. 1. Residents and eligible small businesses that remain in the program will be charged a fixed rate of 4.915 cents per kilowatt hour compared to ComEd’s current average annual supply rate of 7.73 cents per kilowatt hour.
City Manager Sean Stegall said this means Elgin residents and eligible small businesses will initially receive an approximately 37 percent savings on their electric supply pricing, compared to the current ComEd supply pricing.
ComEd adds another fee on top of that to cover the cost of delivering the power, repairing the wires, billing the customer, etc., no matter whether ComEd itself provides the raw power or Direct Energy does.
Savings may change
However, Stegall noted that ComEd’s supply rate may fluctuate during the term of the two-year agreement, so the actual savings to Elgin customers may be more or less than 37 percent.
Citizens Utility Board spokesman Patrick Deignan said many experts expect ComEd’s price to come down as of June 2013, so the savings also would go down then.
According to city council documents, 27 suppliers were invited to bid, and eight responded. The city required the bids to include renewable-energy alternatives as well as fixed-rate and percent-discount (from ComEd rates) pricing proposals over one-, two- and three-year terms. The city council voted in May to give the mayor authority to negotiate a final deal. The options decided upon were all-renewable energy, a fixed rate and a two-year term.
“The results of the bid were very favorable for the city,” Stegall said. “The energy market is very competitive, so the city was not only able to negotiate a low rate, but our residents and eligible small businesses will also receive no penalty for early termination, even after the opt-out period ends. If residents or small businesses are not happy with Direct Energy Services’ pricing, they can revert back to ComEd or another supplier.”
Stegall said more information about the change will be available on www.cityofelgin.org and will be sent out to residents and eligible small businesses in the coming weeks.
As in all cities and villages using aggregation, residents and eligible small businesses will be given the opportunity to opt out of the program before it starts. ComEd will continue to be responsible for the delivery of electricity, maintenance and will respond to power outages.
“Bills will continue to come from ComEd, with Direct Energy Services being listed as the supplier on the bill,” said Stegall.
Stegall said only residents who currently have ComEd as their supplier will receive a notice about Direct Energy Services. He agreed, however, to make sure information about the rate and service is provided to city residents through the city’s various media outlets.
He said residents with suppliers other than ComEd may be allowed to join the city’s program at the discretion of Direct Energy Services, but they may face “early exit” fees from their current suppliers if they terminate their contracts early.
“They will need to check with that supplier and Direct Energy Services to determine what steps are necessary to make this transition,” Stegall said.
Direct Energy is a subsidiary of the British corporation Centrica PLC. It operates in 46 states and 10 provinces in Canada.