Village Board Places Referendum on Electrical Aggregation on March Primary Ballot

 

As you may know, recent changes in electrical regulation by the State of Illinois have given residents the ability to purchase their electricity from another supplier besides Commonwealth Edison (ComEd).  As part of those regulation changes, municipalities may also bid the cost of electricity on behalf of residents in order to achieve even greater savings.  However, in order to do so, the Village must first gain public support through an advisory referendum.  The Village Board recently approved placing a question on the Tuesday, March 20th primary election ballot.  The Village wishes to get as much information out before the referendum to give residents a fully informed review of their options prior to voting.
 

What does the Referendum Ask?

The referendum question will be on the ballot as follows:

Shall the Village of Gurnee 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?
        Yes_____                                No _____

What is Electrical Aggregation?

Electrical aggregation is simply the ability of the Village to negotiate directly with a supplier for the cost of electricity (purchased by kilowatt hour) that can be consumed by the Village’s residents.  The Village has the ability to leverage the size of the population in negotiations, and this generally results in greater discounts.  Think of it in terms of buying in bulk - you receive greater discounts because you can buy more.  In this case, the buying power for an entire community can result in significant discounts beyond what an individual can get alone.  In communities that have already completed the aggregation process, discounts have been roughly 22 - 30% off the ComEd rate per kilowatt hour.  In November 2011, individuals could receive around a 10-17% discount if they purchased electricity from a third party supplier on their own (this website allows you to compare current rates available to individuals). 

How does Electrical Aggregation Impact Me?
Aggregation will have no impact upon you as an individual beyond the savings you will receive by participating.  To understand what this fully means, you have to have a general understanding of how electricity is purchased and distributed.  Below is a quick overview of why aggregation works by looking at the companies involved in electrical power:

  • Generation Companies: These companies generate electric power.  Aggregation has no impact on them.

  • Supplier Companies: These companies purchase power from the generators for resale.  Aggregation solely impacts your relationship with the supplier by letting the Village act as a buyer for all residents in the Village.

  • Transmitter Companies: A transmitter company is responsible for operating the grid that brings power to you home.  ComEd is the transmitter for most of the northern Illinois.  Aggregation has no impact on the transmitter companies.

  • Consumers: You, your neighbors and local businesses are all consumers.  By voting for this referendum, you’re giving the Village the ability to act as a buyer on your behalf and bid electric prices from the suppliers.

As you can see, the only relationship that changes is the supplier.  Therefore, you will not see a change in service - just a change in the cost of purchasing power.

Can Savings Be Guaranteed through Aggregation?

The Village can structure its bid to have suppliers meet a certain percentage under the ComEd rate, but there is no guarantee of savings. If bids do not come under the ComEd rate, then aggregation would not occur.

 Since 2006, the Village has been able to participate in a similar type of aggregation program to the ones residents would have if the referendum passed. This program allows the Village to bid the costs of electricity for streetlights and water pumping stations with other municipalities. The group went to bid on February 14th and received very favorable rates leading to a savings of $29,000 annually in electrical costs. Based on this experience in aggregation, the Village expects that residents would likewise benefit from the economy of scale in aggregation and therefore see savings.

Why is there a Referendum?

According to State law, the Village cannot pursue aggregation without voter approval.  The Village desires to provide the best quality of life possible for each resident and business and believes that aggregation will contribute to a better quality of life by reducing the cost of living for residents.  No financial benefit will come to the Village from aggregation.

What Happens if Voters Approve the Referendum?

If voters pass the referendum, the Village will begin the process of bidding electricity with authorized electricity suppliers in Illinois.  If the Village finds a company that can provide electricity at a lower rate than ComEd currently does, the Village can contract with that supplier.  If no such company is found, the Village is not obligated to contract with anyone.  Prior to any final award, residents will have the opportunity to comment at either a regular Village Board meeting or through the online commenting system.  Residents will still have the option to "opt out" of the system and choose their own supplier even if the Village does contract with a specific supplier.

What If Voters Do Not Approve the Referendum?

If the referendum does not pass, residents will be free to continue choosing their own supplier or stay with ComEd as their supplier but may not receive the same discounts they could under aggregation.

Do I have to participate in Aggregation?

No.  If this referendum passes, that only means that the Village may bid on behalf of you and your fellow residents but does not obligate either the Village or you to actually complete the process.  If the Village does find a supplier with a favorable rate and decides to proceed, you still have the option of opting out of the program when the Village notifies residents of its choice.  Instructions for doing so will be provided at that time. 

I have already signed a contract with another supplier.  What are my options?

Please be aware that if you signed a contract with another supplier before aggregation and would like to switch, you can only do so when your contract ends with your current supplier.  If you choose to break the contract in order to take advantage of the rates available under aggregation, please be aware that there may be penalties. 

Will this Impact My Service from ComEd?

No.  ComEd will still be the transmitter company for northern Illinois and will therefore still bill you and conduct any repairs that need to be made.  Aggregation will simply change the supplier and result in lower electrical costs.

Will I Receive Two Bills After Aggregation: One from the Supplier and One from ComEd?

No.  ComEd would remain responsible for billing customers for all electricity, regardless of the electric supplier. The only change would be in the name of the electricity provider on the bill's electricity supply portion.

Where can I get more information?

If you have any questions, please contact Village Hall at (847) 599-7500.