City of Lincoln:
Aldermen begin discussions about electric aggregation

[October 13, 2017] 

LINCOLN

At the Tuesday evening Committee of the Whole of the Lincoln City Council, a lengthy discussion kicked off the process of looking once again at electric aggregation to save money on utility costs for Lincoln residents.

City Administrator Bob Mahrt opened the talks giving a brief overview of the aggregation history and process. The city of Lincoln last participated in an aggregation plan in 2012. Since then there has been a considerable rollover of aldermen, with Jeff Hoinacki and Kathy Horn being the only two aldermen who went through that process in 2012.

This city of Lincoln initiated an aggregation plan in 2012. They hired Mark Pruitt of Illinois Community Choice Aggregation Network (ICCAN) as the city’s consultant after hearing from two consulting firms – ICCAN and Good Energy.

The city also chose to join the Logan County Electric Consortium, made up of mayors and other city leaders for all the communities in Logan County that were participating in the aggregation program. The consortium also included the Logan County Board, representing the unincorporated communities within the county.

In June of that same year, the first aggregation contract was activated, and the city chose Integrys Energy to be the supplier for all Lincoln residents. The contract was written with an “opt out” opportunity, meaning that any resident who did not want to be in the aggregation plan could say no by notifying the city that he or she wished to “Opt out.”

The contract was written to last two years, and expired in 2014. At that time, Pruitt told the city that research he had done indicated that the default provider for the city, Ameren Illinois, was going to offer the best price in the immediate future. He recommended that the city postpone entering into aggregation with any other suppliers at that time.

Since 2014 the city has not heard a great deal from Pruitt, and there has been very little discussion about aggregation and little heard from the consortium.

Marht said pricing trends have changed again, and it might be in the best interest of city constituents if the aldermen once again looked at aggregation.

Mahrt explained that the consortium did look at aggregation in February of this year. The city issued Request for Proposal letters for a consultant and heard from ICCAN, Good Energy, and Stone River Group. Responses indicated that once again ICCAN would provide the best value when hiring a consultant.

NOTE: The job of the consultant would be to watch the electric markets, and choose not only the best provider but also the best time based on market analysis to enter into a purchasing agreement.

ICANN quoted an annual rate of $1,466; Stone River quoted $21,995; and Good Energy $43,989.

Marht said that the consortium had chosen ICCAN, and in March of this year made that recommendation to the city of Lincoln. After that, he said there has been little discussion, and no action taken.

Welch offers additional timeline information

When the floor was opened for discussion, Tracy Welch was the first to speak. He said that after the March recommendation, other activities had taken place. He offered an overview.

He read a timeline list starting back in October of 2016. The timeline indicated that Stone River Group had presented a price from Mid-American Energy to the consortium that appeared to be the best offer and benefit to the citizens. However, the consortium did not act on it.

Pruitt in that same month sent letters to the consulting firms who responded to the RFP saying the consortium had decided not to proceed with any of the bids at that time.

In August of this year, the Logan County Economic Development Partnership sent letters to these consultants asking them for a quote on consultant fees as well as an estimate of the current electric rates.

Welch said the responses came back showing that Stone River was going to be offering the lowest rate. However, he said that what he had before him in the form of an email was a statement from Pruitt that he would undercut any competitor rate by 10 percent.

Welch said he found that email in particular very disturbing. He said making such an offer was undermining the RFP process, and was unfair to the other bidders. He said it was just the same as when the trash hauler bids were received, and the city considered asking for additional quotes from the two companies who did not offer an optional “Plan 4.” In that instance, it was stated that it would be unfair to Area Disposal who initiated Plan 4, because the other bidders would already know the cost, and could easily undercut Area. Thus the city had not taken that action.

In addition, Welch went on to say that the fee structure was set up with ICCAN showing they did charge a fee, while Stone River had a fee, but it was included in the electric rate so in essence there was no fee to the city. He said he felt that Stone River had consistently offered the best electric rate opportunities for the city, but had been ignored. He ended saying, “for some reason, it is an uphill battle to select a local consultant to work with us.”

Welch presents three recommendations to the council

Welch said he would make three recommendations. He wanted to first, recommend the city enter into a consulting contract with Stone River. He also wanted to see the city withdraw from the consortium, and finally, he wanted the city to repeal a resolution passed in 2016 that added an administrative fee for the city to the electric rate charged to constituents.

Mahrt said that the RFP’s done in February were “legitimate” and he would like for the full council to review those RFP before accepting a recommendation.

Michelle Bauer asked if the city was bound to membership in the consortium. Mahrt said the city was under no obligation, and could withdraw if it chose.

Bauer said she felt that she needed more information about the entire process. Having not been involved in the 2012 process, she felt she needed more time to digest the information and understand the process.

Rick Hoefle noted that based on the information Welch had presented, the city could do something that would save the average household about $240 per year in electric costs. He said that had to be a good thing for the constituents. He also agreed that the council needed a little more time to be educated on the aggregation process, but also stated that he didn’t want to delay too long. He said, “I’m all for if we need to take a little time let’s do it, but let’s get it done. This is an opportunity and I’d hate to have citizens call me saying, why are you stone walling on the opportunity to save money on my energy bill.”

Bauer agreed saying she didn’t want to miss the opportunity either, but she needed to see the information and study it rather than just listening to what had been presented. She asked if Mahrt could provide comprehensive information to all the aldermen. Mahrt in turn requested that Welch provide him with all the information he had presented. Welch agreed, and Mahrt said he would put together everything available and send it out to all eight aldermen.

Aggregation administrative fee to be repealed

The aldermen did agree that they would vote this coming week on eliminating the aggregation administration fee. Welch asked for that motion to be placed on the agenda, and Jeff Hoinacki pointed out that the fee was passed after the last contract had ended, and the city has not had an aggregation plan since then. Because of this, if the city chooses to repeal the fee, wouldn’t truly be losing anything, because it was revenue never actually earned.

City may opt out of the Logan County Aggregation Consortium

In regard to the consortium. It was explained that the group is made up of city mayors or other elected or appointed officials who represent the incorporated areas in the county. A member of the Logan County Board was appointed to represent the unincorporated areas.

Mayor Seth Goodman said he had attended the meetings of the consortium since being elected into office, and really had not seen that the group is doing all that much at the present. He said he was of the opinion that the city should withdraw from the consortium and go out on its own. There was also a comment from one of the aldermen that the county had withdrawn from the consortium as well.

[Nila Smith]

Past related

01/23/2012 - Understanding electric aggregation and what it means for local residents

02/18/2016 - City approves aggregation administrative fee by narrow margin