In the March primary election Riverside voters will decide whether to give the village government the authority to negotiate an electric rate for residents and small commercial retail businesses. Monday night the Riverside Village Board unanimously voted to send the question to the voters in a referendum.
If the voters approve the referendum, the village would be authorized to sign a contract with an electric power supplier which would supply all residences and small commercial businesses in Riverside except those that chose to opt out of the program.
The price for electric power would be negotiated after the referendum and would likely be a fixed price for a one or two year period.
The ability for a municipality to contract with one of a variety of electric power suppliers and buy in bulk is one aspect of the newly deregulated electricity market in Illinois and is authorized by a new state law.
The advantage to residents of having the village buy in bulk and negotiate a price with one power supplier is that it is anticipated that the village could use its economy of scale and the promise of a large customer base to negotiate a lower price than individuals could get on their own.
“Nineteen communities have already done this,” said David Hoover, the executive director of the Northern Illinois Municipal Electric Collaborative, an electricity broker whom the village would likely use to seek out bids from electric power suppliers.
“You’re basically giving us the opportunity to shop on the behalf of residents,” said Hoover of what would happen if the referendum passes. Hoover’s company fee would be paid by the electric power generating company not by the village just as a real estate agent commission typically is paid by the seller of a home.
Hoover said the average Riverside customer could expect to save between $15 and $20 a month over current Com Ed rates based on an average usage of about 850 kilowatt hours per month.
Other communities that have aggregated their electric power purchases have seen savings of about 25 percent on the electric power generation portion of their electric bill, said Riverside Village Trustee Mark Shevitz.
“The savings may not be as dramatic this time around, but we still should see savings,” Shevitz said Monday night noting that Com Ed prices have been dropping.
Currently the Com Ed residential rate is about $0.0773 per kilowatt hour, Hoover said. Municipalities that have aggregated their purchase of electricity have received rates as low as $0.0589 per kilowatt hour.
The total savings to Riverside residents and businesses should be between $400,000 and $500,000 per year according to Hoover.
If the referendum passes, the village could still contract with Com Ed to provide electricity if it so chooses. Various electricity suppliers will submit bids and the village will choose the best deal. Municipalities typically sign one or two year contracts with electricity suppliers. Some suppliers offer “green” options so that some of the electricity generated and put on to the electrical grid will be produced by clean technologies such as wind power or solar. Generally the green options cost somewhat more than other options, but can still be lower than current Com Ed prices, Hoover said.
If the referendum is approved the village would probably look to sign a contract with a supplier by June 1. Residents and businesses would have no obligation to get power from the company that the village chooses but would have to affirmatively opt out to get their electricity from another company. If a resident opts out the residents could get electricity from any company the resident chose.
Whatever company supplies the electricity it will be transported through Com Ed wires and Com Ed would continue to handle billing and service. If a company other than Com Ed is the generator of the electricity Com Ed would charge that company a small fee to handle billing and it would continue to charge all customers transmission charges. If a power line goes down in a storm it would be Com Ed’s responsibility to fix it. Com Ed would be responsible for fixing all service interruptions.
Hoover said that Com Ed is indifferent as to whether municipalities go the aggregation route since it still makes a small amount of money from its billing fees to other electrical power suppliers even if it is no longer supplying the power.
Brookfield is also considering whether to put the same referendum on the ballot in the March primary. The Brookfield Village Board will vote whether to do at its Nov. 28 meeting.
Oak Park and Oak Brook are two of the 19 Illinois communities that have already voted to aggregate their electric power purchases.