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Aldermen bristle at Emanuel’s electricity shopping plan

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Updated: December 19, 2012 11:55AM

Mayor Rahm Emanuel’s fast-track plan to shop for electricity in bulk got a jolt of opposition Wednesday from aldermen concerned about choosing a single supplier and about an open-ended “surcharge” with the potential to wallop consumers.

Guidelines proposed by two powerful aldermen — Edward M. Burke (14th) and Pat O’Connor (40th) — had sought to limit any one supplier to 20 percent of the city, guaranteeing Chicago at least five electricity providers.

The model was patterned after the geographic areas established during the early 1980s, when Chicago was wired for cable television.

But, a substitute ordinance drafted by the mayor’s office and outlined at Wednesday’s Finance Committee meeting eliminates the 20 percent ceiling.

That paves the way for Emanuel to replace one monopoly — Commonwealth Edison — with another.

Equally troubling to aldermen is the fact that they would have no role in selecting that single supplier. Their only vote would be to approve an ordinance establishing the ground rules that are silent on minority participation and simply mirror state mandates on renewable energy instead of raising the bar.

“If we adopt this, we’re out of the picture,” said a visibly angry Burke, chairman of the Finance Committee.

Ald. John Arena (45th) was equally miffed.

“Forevermore, the City Council has no oversight. … It is the fifth floor [mayor’s office], whoever that may be, forevermore. That’s a big concern of mine. The City Council is here for a reason. That’s a non-starter for me,” Arena said.

Ald. Ameya Pawar (47th) added, “We’re abdicating our authority and giving that to the mayor’s office.”

Senior Counsel Ron Jolly countered, “I would say ‘delegating.’ ”

Downtown Ald. Brendan Reilly (42nd) raised another concern with the potential to minimize any consumer savings that might be achieved by shopping for electricity.

Buried in the ordinance is what Reilly described as the “unlimited” potential to slap a consumer surcharge onto the fixed price of electricity. Proceeds would be used to reimburse the city for administrative costs and to “support energy-related [programs] such as renewable energy and energy efficiency initiatives.”

The city has already spent $500,000 on consultants and mailers.

“There may be an institutional inclination to take advantage of this surcharge opportunity to expand a number of energy efficiency programs, which is a good thing, but potentially at substantial costs to the end-line consumer,” Reilly said.

“Each of us represents 55,000 consumers. ... This leaves open the possibility for substantial surcharges — and that’s something we’d all like to avoid. That’s why we’re looking at this as an alternative to traditional retail electricity supply, is it not?”

Jolly replied, “Internal discussions have been that there would be a limit [to the surcharge]. It depends on what the price is that we were able to achieve.”

As for the mayor’s decision to remove the 20 percent ceiling, Jolly said it’s about maximizing savings for all Chicago consumers.

“The city wants to have one price for all consumers. … You risk not achieving the lowest price if you choose more than one bidder,” Jolly said.

“Say you get five suppliers that are the lowest five bids. And they’re 5cents, 6 cents, 7 cents, 8 cents and 9cents [per-kilowatt-hour]. You’d probably have to let all those companies charge the highest because I don’t think you could force the highest bid to charge the lowest amount.”

By a 57 percent vote, Chicago voters approved a Nov. 6 referendum authorizing Emanuel plan to shop for electricity in bulk in hopes of cutting utility bills. Chicago is now poised to become the nation’s largest city to jump to a new provider.

The Finance Committee is expected to hold two more hearings before taking a final vote on the mayor’s ordinance.

“We purposely introduced this ordinance earlier than necessary so that we could get full Council participation as we consider an initiative that could cut the electricity bills of Chicago ratepayers. By the time City Council votes, aldermen will have a final contract that has undergone the open and competitive RFP process,” said Kathleen Strand, Emanuel’s deputy communications director.

The mayor is moving quickly to jump through a fast-closing window to reduce utility bills.

The Citizens Utility Board has estimated that participating residents can save $9 to $14 a month until June 1, 2013. That’s when Commonwealth Edison’s higher-than-market-rate electricity contracts signed with Ameren in 2007 expire, and supply prices are expected to drop.

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