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Chicagoans will vote on whether to have city buy electricity

Updated: July 29, 2012 5:02PM

Chicago voters will decide Nov. 6 whether to sign off on Mayor Rahm Emanuel’s plan to shop for electricity in bulk in hopes of cutting utility bills.

The City Council unanimously agreed Wednesday to put the referendum on the ballot, the first step toward making Chicago the nation’s largest city to jump to a new provider. If voters don’t approve the referendum, it can’t happen.

The resolution was co-sponsored by the City Council’s two most powerful aldermen: Finance Committee Chairman Edward M. Burke (14th) and Ald. Pat O’Connor (40th), the mayor’s City Council floor leader.

Among the political power players lining up to get a piece of the action are former Cook County Commissioner Joseph Mario Moreno and former Chicago Bears great and Super Bowl XX MVP Richard Dent.

Moreno serves as general counsel for Illinois Energy Aggregation LLC, a company whose top officials pitched the referendum idea to Burke, Moreno’s political ally.

Dent’s company, RLD Resources, is working in partnership with Integrys Energy Services, one of Edison’s chief competitors.

Prior to the final vote, Burke noted once again that Chicago is coming late to the game of shopping for power. An estimated 118 municipalities around Illinois have already fully implemented what’s known as “municipal aggregation and saved consumers “anywhere from 23 to 28 percent,” the alderman said.

The Citizens Utility Board has estimated that participating residents can save $9 to $14 a month until June 1, 2013, when ComEd rates will change.

“It was estimated at the Finance Committee hearings on this matter that Chicago residents could save over $200 million. Let me repeat that: $200 million in total savings over the first 17 months of an aggregation program,” Burke said Wednesday.

“If, indeed, these kinds of savings can be achieved for Chicago electricity customers, I believe we should move ahead, if for nothing other than to submit the question to voters while we fully examine the potential for these kinds of savings.”

If Chicago approves the referendum and the city negotiates a better deal than ComEd’s existing rates with a rival power supplier, Chicago would become the nation’s largest city to jump to a new electricity provider, experts say. The next-largest city to abandon its incumbent supplier is Cincinnati.

Individual residents would be able to “opt out” of the bulk purchase without penalty.

The ballot question will read, “Shall the City of Chicago have the authority to arrange for the supply of electricity for its residential and small commercial retail customers who have not opted out of such program?”

Shopping for electricity was put on the fast-track in Chicago thanks to Emanuel’s surprise endorsement last week.

On Wednesday the mayor shed no new light on how he planned to structure the city’s request for proposals, nor would he say whether he intends to build in energy efficiency or reserve some of the millions of dollars saved to help balance the city budget.

“Other communities in and around the state of Illinois have used aggregate purchasing to save people money on their utility bills. That’s why I’m for getting this tool. I want to save homeowners money on their utility bills,” Emanuel said.

“If it passes, we have to then make sure that can be achieved,” he said. “Unlike other municipalities, we’re bigger. That is an asset to us. It also ... makes it difficult. There are some complications to it. So, we have to do it in a smart way…. My standard will be one standard. Will this save homeowners money? If it does, then I can see it through.”

Nearly 200 municipalities around the state are already shopping for energy on the open market.

The timing has everything to do with the long-term power contracts that ComEd signed with Ameren in 2007. Since then, supplies have increased dramatically, while demand has dropped, a result of the prolonged recession. That has created head room for competitors to undercut ComEd’s energy price.

But there’s a catch: The savings are only guaranteed through next June, when ComEd’s long-term agreements with Ameren are due to expire. That makes it imperative for Chicago to move quickly, said David Kolata, executive director of the Citizens Utility Board.

“You’re gonna want to get to market as quickly as you can and lock things in. We know what the price is through June and there’s a good opportunity to save. If it drags out beyond June, the opportunity for sure savings becomes less and less,” he said.

“I would be hesitant to sign anything for longer than two years because of all the uncertainty. We don’t know what ComEd’s prices will look like after that, but we expect it to be significantly lower.”

Kolata has cautioned Chicago to carefully structure its request for proposals to get consumers the best value and to take a “more creative approach” than some suburbs have taken.

“You could write an RFP that bundles in energy efficiency — anything from home retrofits to street light improvements — and use the bulk buying power of the city to leverage additional value. The best way to save money in the medium and long-term is to improve the energy profile of city,” he said.

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