LITH Considers Referendum to Bundle Electricity, Lower Costs

Village officials are looking into joining a municipal electricity aggregation program that could save residents and small businesses money on their electricity bills.

At the village's committee of a the whole meeting Tuesday night, village Administrator Jerry Sagona told trustees that electrical aggregation programs are the “hot topic” right now among municipalities. Sagona said he attended a seminar last week to learn more about the issue.

“The savings (on electrical bills) can be anywhere from 15 to 30 percent,” Sagona said.

Municipal aggregation allows local governments to bundle — or aggregate —residential and small retail electric accounts and seek bids for power at a lower cost, according to information Sagona provided to the village board. It is similar to how municipalities negotiate contracts for waste disposal and cable television.

The McHenry County Council of Governments is working with McHenry County and several other communities within the county to coordinate a joint aggregate purchase of electricity for residential customers, Sagona said.

Sagona is seeking the village board’s approval to work with the MCCG on the aggregate program.

Illinois legislation now gives communities the authority to gather residents and small businesses together to buy electricity as a group and negotiate for a better price.

Opt-In, Opt-Out Aggregate Programs

According to Sagona, the board has two options: an opt-in program and an opt-out program.

An opt-in program can be established without a referendum and only includes customers who choose to participate in the program. Opt-in programs do not take advantage of bulk purchasing, according to the information Sagona gave to the board.

The opt-out program must be approved by a referendum and includes all eligible customers, unless they choose not to participate in the program. Residents could “opt out” after bids are received and the rates and supplier are identified, according to the informational documents.

“If we wanted to do the opt-out program, the board would have to pass an ordinance to put a referendum on the spring ballot,” Sagona told village trustees. “We would have to pass the ordinance by the end of the year.”

Referendum Question

The spring election date is March 20, 2012. Should the Village Board decide to seek the opt-out program, the following referendum question would have to be placed on the ballot:

 “Shall the village of Lake in the Hills 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?”

If residents vote “yes” bid rates would be compared to ComEd’s rates. The municipality would only move forward if the bid rate was better than ComEd’s.

Most municipal programs operate as opt-out programs because they have the largest number of customers, which allows the municipality or consortium greater ability to negotiate a better rate.

ComEd's Role

While ComEd distributes electricity, the company does not generate the power. It is responsible for the maintenance of power lines that distribute electricity to users’ homes and businesses and for responding to outages and billing.

According to the information presented Tuesday night, ComEd would continue to handle billing customers for usage and responding to power outages, regardless of which company is the supplier of the electricity. ComEd, according to the documents, is “indifferent to the aggregation program, as it does not impact them financially.”