Title
Electricity Aggregation Regulated Fee Increase - Approval
History
The Village has managed a Municipal Aggregation (MA) program for residents’ home and some business electric billing since 2012. MA programs allow for municipalities to negotiate residential rates below ComEd’s. Residents who have participated in the program since inception have realized a $427 reduction in the home electric charges.
At the February 19th Board meeting, renewal bids were presented. The board accepted the lowest price, which was provided by Nordic Energy at a bid rate of 7.38¢ for the May 2018 to September 2019 period. Since then, one of the regulated charges embedded in the 7.38¢ has risen. One of the largest regulated costs, Capacity, ensures that there is ample power available to users during peak periods. The federal governing body (FERC) overseeing the country’s regional grids conducts annual auctions with power suppliers for this Capacity and published that pricing up to 3 years in advance. FERC then adjusts those prices 3 additional times per year; the historic adjustments have been minor. Suppliers incorporate these Capacity prices into their bid prices.
The latest re-set occurred just 2 weeks after NIMEC held the Village’s renewal bid. Nordic incorporated the Capacity charge, and factored in a modest increase, in keeping with the historical increases for the reset. Unfortunately, FERC’s adjustment in pricing was 8-10 times higher than the historical adjustments. As such, Nordic has sought to recoup that atypical increase, per the terms of the contract. See the attached letters from Nordic dated March 19th and April 11th identifing the rate increase.
All suppliers, including ComEd, will pay this higher Capacity charge. This surprise jump caused the analysts to increase their projections of the ComEd annual rate from the 7.5¢-7.8¢ range up to 7.8¢-8.0¢ range.
The Village’s options:
1. Agree to the increase;
2. Suspend the aggregation program, returning all res...
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