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City Council OKs ordinance that could cut electricity bills

Updated: January 14, 2013 7:21AM

Chicago’s residential and business customers are in line for a modest break in their utility bills — up to 25 percent from February through June and 10 percent after that — thanks to a groundbreaking ordinance approved by Wednesday.

Moving quickly to jump through a fast-closing window to reduce utility bills, the City Council approved Mayor Rahm Emanuel’s plan to make Chicago the nation’s largest city to purchase electricity in bulk.

The enabling ordinance paves the way for Integrys Energy Services to become the lone supplier of electricity to 2.7 million Chicago customers.

The company has projected that the average Chicago household would see its monthly bill drop from $95-to-$100 to $75-to-$85 from February through June followed by a savings of roughly $6-to-$10-a-month after that.

In June, Commonwealth Edison’s higher-than-market-rate electricity contracts signed with Ameren in 2007 expire and supply prices are expected to drop.

After that, the contract includes a requirement that Integrys “beat or match” the price charged by Commonwealth Edison — even if, as expected, ComEd rates go down.

Emanuel called the unanimous vote a “clear message to the country” by the nation’s largest city to go down this cost-saving path.

“We made sure for families that live paycheck-to-paycheck that our residents are gonna get what suburban residents have been getting for a while, which is saving on their utility bills,” the mayor said.

“And especially this holiday season as people try to make sure their kids get gifts and make sure they also have savings and have a little more money, it’s important. While it might not materialize this holiday, by next holiday it will.”

Emanuel argued that a city that spent a decade fighting over whether to close the city’s two coal-fired power plants is now blazing a cleaner trail.

“We not only have a piece of legislation here that’s gonna save our consumers money. We actually did it without any coal power be a source of energy…You put together a power base for a city the size of Chicago without any coal power. It stands out as a clear way that the second city is the first city.”

“This is a great day for consumers. They will experience some strong savings over next few months. It’s also a good day for the health of Chicago citizens. No longer will Chicago residents be relying on coal-fired plants for their power,” said Ald. Joe Moore (49th).

Ald. Edward M. Burke (14th), chairman of the City Council’s Finance Committee, noted that Chicago will become the “largest aggregator” of electricity in the nation and “first major city to adopt this king of program.

“I suspect Chicago will set a national standard by utilizing the cleanest power mix possible without increasing costs. ... This will be a major accomplishment of cleaning up the air in Chicago,” said Burke, who lead the charge to place a referendum on the ballot that set the move in motion.

Turning to Emanuel, Burke said, “You should be congratulated for the skill demonstrated in this team that put this aggregation together in a very, very small window of opportunity. ... The advice the City Council received by the group your office assembled was truly remarkable. As Chicago goes, so goes the nation.”

Ald. Richard Mell (33rd) pointed to the hours and hours of City Council hearings that preceded Wednesday’s vote.

“If we had spent one-tenth of that time on the parking meters, we wouldn’t have egg on our face today,” Mell said, referring to 75-year, $1.15 billion deal that privatized Chicago’s 36,000 parking meters.

Michael Negron, the mayor’s point man on the issue, has projected the total savings over the two-year life of the contract at $125 million and $130 to $150 for individual households.

“We moved as quickly as we could,” Negron said this week, acknowledging that the savings would have been greater if Chicago hadn’t been so late to get on board.

What happens when the contract expires in May 2015?

“We’ll have to see whether people are happy with it and what the rates are,” Negron said.

“We could try to either renew the deal with Integrys—and that would require going back to [City] Council. We could put it out for bid again. ... Or we could let it lapse if the ComEd rate looks better or it looks like it would make more sense for the city to get out of the business of doing this. ... It’s not locked yet. What we want to do is capture the savings opportunity ... and retain the flexibility to determine at a later time long with City Council what would make the most sense going forward.”

By a 57 percent vote, Chicago 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.

Chicago residents and small business customers will automatically transition to Integrys unless they choose to opt out, either by phone, mail or online. Every eligible customer will receive an opt-out letter from the city and get 14 days to drop out.

The Integrys contract also includes:

◆ A requirement that the supplier “beat or match” the price charged by Commonwealth Edison — even after ComEd rates go down after its supply contracts expire.

◆ “Complete elimination of coal,” which now comprises half of the city’s energy portfolio and a “full account” of all sources of fuel used to power the city.

◆ A 24/7 call center with multi-lingual call takers.

◆ A clause allowing customers to opt out at any time without penalty.

◆ A requirement that Chicagoans receive identical rates, regardless of their credit histories.

◆ A provision that “positions energy efficiency and renewable generation as an alternative resource in the supply portfolio to provide sustained local investments that will result in additional savings,” according to the city.

Although the change is on a fast-track, it’s expected to be a seamless transition. ComEd will still be responsible for delivering electricity, reading meters and responding to power outages. Edison will also continue to send monthly electric bills and receive payments.

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