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updated: 6/4/2012 11:25 AM

Why Antioch residents will pay more for electricity

Village didn't see competitive bids

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  • James Keim

      James Keim

  • Dennis Crosby

      Dennis Crosby

  • Video: CUB on electricity aggregation

 
 

While scores of suburbs have solicited competitive bids for electricity deals with rates cheaper than what ComEd is charging, Antioch took a different approach.

Instead of using a bidding process, the village approved an early contract with Integrys Energy Systems Inc. in an effort to assure quicker savings to residents and certain small businesses.

As a result, Antioch's kilowatt-hour price under a two-year contract is less than ComEd's but exceeds at least 11 other suburbs that selected companies with the lowest bids for multiyear terms.

The decision to not seek competitive bids from power providers has drawn questions from a statewide consumer watchdog group and an electricity consultant who's worked with other communities.

"We do have some concerns when we hear Antioch's story compared to prices other communities have secured under municipal aggregation," said Jim Chilsen, a spokesman for the Citizens Utility Board.

Chilsen said the consumer organization isn't familiar with any other towns choosing to skip a bidding process for electricity.

On March 20, Antioch voters -- similar to those in the other suburbs -- approved an advisory ballot question that allowed village government to aggregate residents' and small business's ComEd accounts and pursue a deal on their behalf with another, less-expensive power provider.

However, Antioch didn't seek competitive bids after the March vote. Meeting minutes show the village board instead approved a contract with Integrys in January locking in a 5.3-cent per kilowatt hour rate for two years starting June 1, below ComEd's current 7.03 cents for electricity supply and transmission.

In exchange, Integrys waived a $50,000 fee for services it provided to Antioch in the run-up to the March referendum. Integrys' contract with Antioch, in part, stated it would "promote referendum based on guidance provided by the village using mutually agreed-upon methods."

Antioch wouldn't have been billed the $50,000 for Integrys' consulting if voters had rejected electricity aggregation.

Village Administrator James Keim said Antioch sought the qualifications of several companies before the March vote and took into account more than the electricity price. He said Antioch wanted to know about a company's history with aggregation, professionalism, power capacity and services that could be provided before and after the vote.

Antioch village board members were asked to approve the Integrys contract in January so the savings to residents and small businesses could begin as soon as possible after the March vote, Keim said.

"We are on track to do that," he said in an email, "and begin the savings to those that qualify before the air conditioners begin to run in the hot summer months."

Arlington Heights, Buffalo Grove, Vernon Hills and four other towns started receiving cheaper electricity from Integrys on June 1 -- the same day as Antioch -- for 4.77 cents per kilowatt hour under a one-year deal. The seven towns combined to seek bids and selected Integrys.

Gurnee also solicited bids after the vote, but the village's one-year rate of 4.4 cents per kilowatt hour with FirstEnergy Solutions won't start until July.

Chilsen said Antioch's decision to not seek bids went against the concept behind aggregation.

Keim said he disagreed and added that it's too early to tell how well a community will be served.

Antioch Mayor Larry Hanson said the 5.3-cent rate from Integrys was considered a good deal in January and waiting longer would have been like rolling the dice because no one could predict if electricity prices would go up or down from there. Hanson said residents will still pay less than they would with ComEd.

Trustee Dennis Crosby, who was part of a 5-0 village board vote in favor of the Integrys deal, said it was based on information showing the company offered the best package of services. He said while he "wasn't overwhelmed" by Integrys' direct-mail pieces, its work likely tipped the scale in an 852-776 vote in favor of electricity aggregation.

Antioch's two-year rate guarantee of 5.3 cents per kilowatt hour is above the 4.68 average for multiyear deals negotiated for at least 11 suburbs by the Northern Illinois Municipal Electricity Collaborative. Based on the collaborative's estimate of 9,000 kilowatt hours per year for a typical home's use, those paying an average two-year rate of 4.68 cents would save an extra $55.

David Hoover, executive director of the Prospect Heights-based firm, said bids from several power companies have been sought on one day for 60 or so clients. The prices were presented to the towns, which made the final call on whether to accept the lowest bid and determined contract length.

"Our view is, if you have a number of suppliers bidding on a particular day on the same level, we believe it results in attractive pricing," Hoover said.

Hoover said price isn't the lone consideration when bids are solicited. About 20 pages of information is demanded from each company looking to provide electricity to a municipality, he said.

Integrys' Illinois direct market manager, Brian Bowe, said Antioch's 5.3-cent rate was the best available in January. He said the market fluctuates, which explains why many villages contracted with Integrys and other companies in the 4-cent range since March 20.

"They liked the price," Bowe said of Antioch. "They kind of had a price in mind."

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