Village Manager s Office

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Leona Jennings
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1 Village Manager s Office SUBJECT: Provide an update and seek direction on municipal electric aggregation program AGENDA ITEM: 5.a. MEETING DATE: January 5, 2016 VILLAGE BOARD REPORT TO: Village President and Board of Trustees FROM: Don Owen, Deputy Village Manager ( ) Sarah Kuechler, Assistant to the Village Manager ( ) THROUGH: Todd Hileman, Village Manager PURPOSE AND ACTION REQUESTED: To provide an update and seek Village Board direction on the municipal electric aggregation program as the extension agreement with the selected supplier, MC Squared (mc 2 ), is set to expire with the May 2016 billing cycle. BACKGROUND: On November 13, 2012, the Village of Glenview adopted a municipal electric aggregation program. The Village joined with the Lakeshore Power Alliance (LPA), consisting of the Villages of Wilmette, Kenilworth and Northfield, and contracted with the Alliance s selected supplier mc 2 for a three-year agreement through May 2015 and approved a one-year extension through May The summary of the LPA rate history compared to the ComEd rate is shown below: Program Term ComEd Base Rate* ComEd Effective Rate mc2 Rate % savings to ComEd Effective Rate Year 1 (Jan May 2013) % Year 2 (June May 2014) % Year 3 (June May 2015) % Year 4 (June May 2016) % *The ComEd base rate can fluctuate +/- 0.5 c/kwh on a monthly basis. The 2nd column shows the actual effective ComEd rate with that fluctuation. Year 4 calculation of the ComEd rate is based upon June December 2015 rates. More detail on the rate comparisons can be found in Attachment 1. The ComEd effective rate with a credit of 0.5 cents has fallen slightly below the mc 2 rate in some months this year. To date, the average participating customer in the program has saved approximately $326. 1

2 DISCUSSION: As evident in the rate history, the percent savings for members in the program has decreased significantly. This reduction in savings is largely due to the Illinois Power Agency restructuring how ComEd rates are set along with regulatory changes to other charges impacting the rate. Members of the LPA have met several times over the last year to analyze options for the program after May The options are summarized below: Extend mc 2 agreement by one year and seek new pricing Issue a Request for Proposals to find a new vendor Discontinue the program and return customers to ComEd In reviewing Option 1, the LPA sought from mc 2 a price estimate for a one year renewal. mc 2 projects that a new rate would be approximately 6.45 c/kwh. The LPA s consultant projects the ComEd rate will be approximately 6.65 c/kwh, providing savings of only 3%; however, as a result of the base ComEd rate fluctuating +/- 0.5 c/kwh on a monthly basis, the ComEd rate could fall below the mc 2 rate as has been experienced this year. As a result, staff is not recommending this option. Concurrently, Option 2 is not recommended as consortiums that have recently re-bid their electrical loads have found results to be unfavorable with vendor margin costs increasing. The LPA has one of the lowest vendor margins in the ComEd territory. Also, for comparison, other communities that went out for an RFP in September or October 2015 saw a range of pricing from c/kwh with a majority being 24 or 36 month terms. With savings no longer guaranteed, staff recommends Option 3 to discontinue the program and return customers to ComEd. There will also be more regulatory changes to come with the supply rate in the future. In 2017/2018, ComEd plans to unbundle the supply rate and make the capacity component of the supply rate individualized to a customer s usage, with those who consume more electricity having a higher capacity rate. It is not clear how an aggregation pool program would account for differences in individual capacity rates. If the program is discontinued, residents with accounts enrolled in the program would receive two notice letters from the Village and ComEd in late March or early April notifying them that the agreement with mc 2 will be expiring on the May 2016 meter read date. Residents could: Do nothing and have their accounts returned to the ComEd default rate starting after the May 2016 meter read date; Establish their own supply contract with mc 2 or any other certified retail electricity supplier prior to the May 2016 meter read date (subject to ComEd enrollment timelines and filing requirements); or Return to ComEd default service at any time by calling ComEd or mc 2 at (855) There is no penalty for leaving the Village s aggregation program early. Monthly rate comparisons are updated on the Village s website under the Residents tab. 2

3 Once returned to ComEd default service, residents can still choose to enter into their own supply contract with a supplier at any time with the exception of mc 2. After returning to ComEd default service, by state regulations, residents must wait for six (6) months before they may enter into an electricity supply contract with their immediate previous supplier, mc 2. RECOMMENDATION: Staff recommends discontinuing the municipal electric aggregation program and returning participating customers to ComEd for their electric supply at expiration of the mc 2 agreement at the end of the May 2016 billing cycle. Staff is seeking Board direction. ATTACHMENT: 1. Rate Comparison through December

4 Attachment 1: Rate Comparison through December

5 Attachment 1 Rate Comparison Through December 2015 Rate and Savings History by Program Year Year 1 Year 2 Monthly PEA Charge or (Credit)* ComEd Rate (Rate (c/kwh) BES) Effective Monthly Billing Period Effective ComEd Rate mc2 Price Difference % Savings Program Year mc2 Rate (c/kwh) Savings Difference in Cents Janurary 2013 (0.094) (4.17) 50.84% Year 1 (Jan May 2013) % $ Febuary (4.77) 54.16% Year 2 (June May 2014) % $ March 2013 (0.500) (3.77) 48.28% Year 3 (June May 2015) % $ April 2013 (0.500) (3.77) 48.28% Year 4 to Date (June Dec 2015) % (0.100) 6183 $ (6.19) May 2013 (0.500) (3.77) 48.28% $ June 2013 (0.500) (0.03) 0.68% July (0.86) 14.66% August (1.03) 17.20% Rate and Savings History by Calendar Year September (1.07) 17.65% October (1.03) 17.12% Average Estimated November (1.03) 17.12% Effective MC Squared Difference in Customer Savings per December (1.03) 17.12% Calendar Year ComEd Rate Rate Savings Cents Usage (kwh) Customer Janurary (1.05) 17.37% % $ February (1.05) 17.37% % $ March (1.05) 17.37% % $ April (0.99) 16.56% $ May (1.05) 17.37% June 2014 (0.500) (0.38) 5.31% July 2014 (0.500) (0.38) 5.31% Aug 2014 (0.500) (0.38) 5.31% Sept 2014 (0.361) (0.59) 8.01% Oct 2014 (0.500) (0.27) 3.84% Nov 2014 (0.500) (0.21) 3.04% Dec 2014 (0.500) (0.21) 3.04% Jan 2015 (0.500) (0.35) 4.99% Feb 2015 (0.500) (0.35) 4.99% March 2015 (0.500) (0.35) 4.99% April (1.35) 16.76% May (1.35) 16.76% June 2015 (0.058) (0.10) 1.36% July 2015 (0.386) % Aug (0.30) 4.18% Sept 2015 (0.395) % Oct 2015 (0.285) % Nov 2015 (0.214) % Dec 2015 (0.500) % *The ComEd base rate can fluctate +/- 0.5 c/kwh on a monthly basis -- shown as Purchase Electricity Adjustment (PEA) charge. Year 3 Year 4 Effective ComEd Rate (c/kwh) Average Customer Usage (kwh) Estimated Savings per Customer

VILLAGE OF GLENVIEW BOARD OF TRUSTEES MEETING October 2, 2012 M I N U T E S

The Village Board of Trustees regular meeting October 2 - Page 1 of 5 VILLAGE OF GLENVIEW BOARD OF TRUSTEES MEETING October 2, 2012 M I N U T E S Village President Kerry Cummings called the meeting of