Elgin to save hundreds of thousands with bond refinancing, new electricity contract
Elgin will save hundreds of thousands of dollars thanks to a new electricity supplier and refinancing bonds, city officials said.
The city council unanimously approved those moves with no discussion Wednesday night.
• MC Squared Energy Supply, LLC, will supply electricity to 66 municipal facilities at an estimated savings of $317,000 annually. That includes city hall, the Highlands of Elgin golf course, the Hemmens Cultural Center, Hawthorne Hill Nature Center, the Edward Schock Centre of Elgin and both water treatment plants.
The city's contract with Direct Energy expires next month. The new contract with MC Squared will provide lower rates and allow the city to use 100% renewable "green" energy," City Manager Rick Kozal said. That means MC Squared will purchase renewable energy credits equivalent to the quantity of energy consumed by the city; the credits will purchased from a wind farm in the Midwest, typically Illinois or Iowa.
That's consistent with the city's sustainability goals, and those of the "Greenest Region Compact 2" initiative by the Metropolitan Mayors Caucus that includes Elgin and more than 125 other communities, Kozal said.
• The city will save an estimated $600,000 or so in interest payments by refinancing $4.9 million in bonds issued in 2011 and $4.8 million in bonds issued in 2013, city officials said. The money funded water and sewer improvements and the public safety radio communication system.
The move came at the recommendation of the city's financial adviser, Speer Financial Inc., and the city's chief financial officer Deb Nawrocki. The plan is to close on the sale of the refinanced bonds in January. The city has AAA bond rating by Fitch Ratings and AA+ by S & P Global Ratings.
Another bond refinancing opportunity is expected in fall 2020, Nawrocki told the council. On Thursday, she said that would apply to nearly $5.8 million for sewer improvements in 2010, water and street improvements in 2012, and previously refinanced bonds. Refinancing could yield an estimated savings of $237,200, she said.
"These are all estimates based on current market conditions. Whether or not we do this will depend on interest rates next fall," she said.
Nawrocki also told the city council the plan is for the city to take on more debt for the utility fund. When asked about that Thursday, she declined to give details. "This recommendation will be incorporated as part of the 2020 budget and submitted to council for approval," she said.