City of Lincoln prepares to vote on insurance, electricity supplier and Nicholson Rd. railroad crossing improvements

[April 02, 2009] 

City prepares for employee insurance renewals

The city of Lincoln insurance committee met last week with Nancy Schaub, director of agency services for R.W. Garrett Agency.

Alderwoman Kathy Horn reminded the committee that these benefits are union-negotiated, and therefore there is nothing for the committee to act on.

The life and dental policies are offered by the Principal Group. Schaub said that for the next year there would be no change in the premiums for the life insurance.

On the dental coverage, the company had indicated an increase of 14.9 percent for the new policy year. Schaub said that the agency sent that quote back and asked the company to reconsider, and they came back with an increase of 7.5 percent, which Schaub said was very reasonable.

Over the past policy year dental claims have been at 110 percent of the premium, which indicates that for every dollar the city paid to the policy, the policy was paying out $1.10. She said typically an insurance company hopes that no more 73 percent of the premium goes back out in claims.

The medical insurance for the city is through Blue Cross and Blue Shield and offers two plans, an HMO and a PPO.

Blue Cross originally requested a 10.2 percent increase. They were asked to reconsider and came back with 6.99 percent. Schaub said that the agency made a second request, asking them to lower the increase even more, and the company came back with 3.78. She said that current trend increases are running between 8 percent and 12 percent, so the 3.78 was very reasonable.

City looks at electricity suppliers for 2010 changeover

Mike Ellis of Mid-American Energy spoke to the council regarding entering into a contract for the city's electricity.

Ellis said that he and waste treatment manager David Kitzmiller have been discussing the electricity for the waste treatment plant for quite some time.

In May of 2010, the treatment plant will be switched to an hourly rate by Ameren. This means that as the market fluctuates up and down on an hourly basis, so will the fees charged to the plant account.

Electricity, a commodity just like corn or soybeans, is available to any buyer on the open market. Mid-American uses that open market coupled with long-term contracts to save the consumer money.

If the city chooses to switch to Mid-American, delivery of service will still go through Ameren, but the city will pay Mid-American for the electricity consumed.

At the current market value, Mid-American can reduce the cost of electricity to the city 21.9 percent on a 13-month contract, 17.5 percent on a 25-month contract, or a 44-month contract would show a cost reduction of 10.5 percent.

Ellis said that on today's markets there are 25 other city accounts that would show a cost reduction between 33 percent on 13 months and 23 percent on 44 months.

For the city to make the best of this type of contract, Ellis said that the council should appoint one person to make a purchase commitment. That person would be responsible for checking the market price with Ellis and making a decision on when to buy.

Ellis said that once the commitment was made by the person in authority, he would fax documents to the city, and those would have to be signed by the mayor or mayor pro tem no later than 5 p.m. the same day.

There was a great deal of discussion on this matter. Questions arose as to what happens if the city doesn't use all the power they commit to. The answer: Ellis will sell it to another consumer, but if he does so at a loss, the city would pay the difference.

Ellis was asked how fluctuations in market price will affect the contract after it is signed. He said that regardless of the price after they commit, the city will pay what they agree to on the commitment day for the full term of the contract.

Alderwoman Melody Anderson asked if they could add to the contract midterm and was told yes. The city can buy power now at one rate and then later add a second contract at a different rate.

Anderson said that, personally, she would prefer the city go with at least the 25-month contract and that she is most inclined to go with the 44 months.

Mayor Pro Tem Marty Neitzel said that they could also consider 44 months for the sewer and shorter contracts for the other city accounts.

The vote on this will be a blind commitment, as the purchase will be based on the market value the day the city notifies Ellis they plan to buy.

Bates said that the best the city can do is vote to agree to a contract with Mid-American at a price not to exceed, for example, 3 percent of the current quote on the date of the vote.

Crossing improvements at Nicholson Road

City engineer Mark Mathon read a letter from the Illinois Commerce Commission saying that they will be doing improvements to the railroad crossing on Nicholson Road. The city is responsible for 10 percent of the cost. With the letter was a motor fuel tax resolution for the council to vote on, which will appropriate money from that state tax fund for the city's share.

These matters would be brought to a vote on Monday at the city's next business meeting.

[By NILA SMITH]