Title
A Resolution Authorizing the Village Manager to Enter into a Contract for Purchase of Electricity from the Lowest Cost Electricity Provider for the Purpose of Commercial Accounts Through the Northern Illinois Municipal Electric Collaborative Bid Process
History
In 2007, the State of Illinois implemented a plan to deregulate Commonwealth Edison. Under deregulation, ComEd no longer generates electricity for its customers but continues to provide power through its distribution system. As a result of the deregulation, electricity is purchased based on market price and is no longer dominated by one electrical supplier.
In 2007, the Village joined the Northern Illinois Municipal Electric Collaborative (NIMEC), which is a municipal collaborative that pools the energy needs of members in order to secure more competitive pricing than can be provided individually to a single municipally, based on higher volumes. The Collaborative is made up of 180 members, most of which are municipalities. The amount of aggregated energy purchases of the Collaborative is $25 million.
Since 2007, the Village has utilized NIMEC to receive electrical supply pricing for Village facilities and has experienced energy cost savings. The Village’s current contract with Dynegy expires in May 2026. Following the expiration of this contract, the Village could revert to ComEd’s supplier for electrical supply. However, ComEd’s supplier only offers a floating market rate, which changes every hour. Therefore, the rate of this hourly market rate is impossible to estimate, as it is dependent upon future market conditions, as well as the specific times the accounts consume the power. The only source of fixed electrical rates in Illinois is from third party, non-ComEd, suppliers.
In order to take advantage of deregulation, it is recommended that the Village receive bids from several electrical suppliers for its non-franchise Village-owned facilities, including recreational facilities and water treatment plants. The Village recommends that the Village continue its relationship with NIMEC to conduct the bidding process and recommend to the Village the most advantageous pricing for Village facilities. This program is specifically for Village-owned facilities, as opposed to the previous program, which has since been discontinued, of electrical aggregation for residential customers.
NIMEC Bidding Process
NIMEC bids out the collective loads of its members to three of the larger power suppliers in northern Illinois. The collective usage of the NIMEC group ($25 million annually) allows NIMEC to negotiate rates lower than what individual municipalities could negotiate on their own. This makes utilizing NIMEC bid pricing a very attractive option.
On March 11th of this year, depending on the state of the energy market pricing, NIMEC will conduct bidding for electrical supply for its members’ non-franchise government owned facilities. Following receipt of the bids, NIMEC will recommend whether the Village should accept these prices or revert to the ComEd supplier’s floating rate.
Because commodity pricing is volatile (much like the stock market), pricing can only be held for one day. As such, it is necessary to delegate signing authority to the Village Manager to accept the NIMEC bid on the day of the bid with the lowest cost electricity provider within hours of the bids being received by NIMEC. The resolution attached for Village Board consideration directs the Village Manager to engage the services of NIMEC and provides Village Board authorization to allow the Village Manager to execute a contract with the successful energy supplier upon receipt of the bids by NIMEC.
Also, after the bids are opened, an analysis will be conducted of the submitted bids to determine the optimal length of the electrical supply contract for the Village. The Village will sign either a one, two, or three contract for fixed electrical supply pricing based on NIMEC’s recommendation.
Financial Impact
Electricity costs are budgeted.
Recommended Action/Motion
I move to approve authorizing participation in the Northern Illinois Municipal Electric Collaborative (NIMEC) and authorizing the Village Manager to execute a one, two, or three-year contract with the lowest responsive and responsible electricity provider;
AND
I move to pass a Resolution entitled: A RESOLUTION AUTHORIZING THE VILLAGE MANAGER TO ENTER INTO A CONTRACT FOR PURCHASE OF ELECTRICITY FROM THE LOWEST COST ELECTRICITY PROVIDER FOR THE PURPOSE OF COMMERCIAL ACCOUNTS THROUGH THE NORTHERN ILLINOIS MUNICIPAL ELECTRIC COLLABORATIVE BID PROCESS.