Electric aggregation to be considered by city

PAXTON — Residents and small businesses in Paxton could see an average yearly savings of more than $200 on their electricity bills if the Paxton City Council moves forward with a municipal electric aggregation proposal.

Officials from Integrys Energy Services, a certified alternative electricity supplier headquartered in Chicago, will present the cost-saving proposal to the council during its next meeting at 7 p.m. Monday, Aug. 13, at City Hall, 145 S. Market St.

Integrys calls itself a leader in aggregation in Illinois, where it is supplying 32 communities with electricity at a lower rate, and the company also has 10 years of experience with electricity aggregation in Ohio.

Legislation was passed in late 2010 that gave Illinois municipalities the right to aggregate, or bundle, all eligible electric accounts together to arrange for lower rates for residents if approved by a majority vote through a referendum.

With aggregation, electric customers in a community pay the market rate for electricity — which is locked in for the duration of the program — instead of the default rate, which currently stands at 6.3 cents per kilowatt-hour.

“Most towns have locked in (the market rate) for two years,” said Dean Nicol, director of aggregation business development for Integrys. He said it would be the city’s decision how long the aggregation program would be in place.

Residents and small businesses in Paxton would save a combined $153,000 to $180,000 a year on average, based on the current market and the current rates for Ameren residential customers, said Nicol.

The process for implementing electric aggregation in Paxton would be similar to the one completed in Champaign earlier this year, Nicol said. Integrys began supplying Champaign with electricity, effective this month, after the city passed a referendum in March.

First, the council would need to pass an ordinance prior to the Aug. 20 deadline to certify a request for a referendum on the Nov. 6 general election ballot.  After certifying a ballot question with the local election board, the city would decide whether to hire an outside consultant or use Integrys to guide the city through the process of negotiating a rate at which to be supplied electricity. Meetings would also be held to educate the public about the proposal.

The rate that would be charged, as well as the duration of the program, would be set upon passage of the referendum. If the market rates are too high at the time, the city would have the authority to postpone implementation if it so desires or instead decide not to move forward with implementation at all, Nicol said.

If the city does move forward, electric customers would be automatically enrolled in the program and would need to do nothing to experience the savings.
Residents would receive a notice of their right not to participate, Nicol said. Once they receive notice, residents would be able to “opt out” of the program during a designated 14-day “opt-out” period by either returning a postcard they receive in the mail, visiting a site on the Internet or calling a toll-free number, Nicol said.

In Illinois, more than 90 percent of residents in communities with municipal electric aggregation programs decide to stay with the program, Nicol said. The average has been about 85 percent in Ohio, where Integrys has been an alternative aggregation supplier for 10 years, Nicol said.

As Nicol noted, market rates are currently lower than the utilities’ rates.

In Paxton, Ameren Illinois would still do the billing for the city’s residents. The lower rate would be reflected only on the “energy charges” component of the bill — which makes up about 65 to 75 percent of the total bill on average, Nicol noted. The distribution and transmission charges Ameren lists on each bill would not go down as a result of aggregation, he added.

Based on the current market and current prices charged by Ameren Illinois, Paxton residents could expect to save about $200 or more per year on average, Nicol said.

“Overall, the effect is to save about 25 percent of a resident’s total bill,” Nicol said.

The number of alternative retail electric suppliers in Illinois has grown substantially in recent years. In 2010, there were about 15 nonresidential suppliers; that number grew in 2011 to nearly 45 nonresidential and about 25 residential and in 2012 to more than 45 nonresidential and nearly 30 residential.

In March 2012, 225 communities in the state passed referenda for “opt-out aggregation, and thus far 32 of those have selected Integrys.

The towns Integrys serves as an electric aggregation supplier in both Illinois and Ohio have had 100 percent success passing referenda, Nicol said.

Paxton Mayor Bill Ingold said he wants the city to explore the possibility of electric aggregation to save residents and small businesses money.

Ingold noted that the city has been using Integrys as its supplier for city-operated electricity accounts for the past year, resulting in a “substantial savings.”

According to figures provided by Treasurer Julie Burgess, the city saved $29,918 in electricity costs for city-owned buildings from Aug. 1, 2011, through July 31, 2012, when compared with the costs from the year prior, after the switch to Integrys. The city spent $123,441 on electricity from Aug. 1, 2010, through July 31, 2011, and $93,522 from Aug. 1, 2011, through July 31, 2012.

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