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Village Board Approves Electricity Rate Referndum

Trustees agree to put electrical aggregation referendum on Nov. 6 ballot that could save residents between $200 to $400 annually on electricity bills but hiring a broker to negotiate a lower rate with electrical suppliers is still up for debate.

Oak Lawn trustees but crossed swords over hiring a broker to negotiate a lower rate with an electrical supplier recommended by the public works committee.

Trustee Alex Olejniczak (Dist. 2) questioned if a consultant—Progressive Energy Group of Evergreen Park—was actually needed to negotiate a lower rate on behalf of the village.  

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“I’ve been buying energy on the open market in my business for 15 years,” Olejniczak said. “It’s complicated but when you really break down and look at what needs to be done, it’s clearly not that complicated.”

Before municipalities can enter into electrical aggregation agreements, the issue must be approved by a referendum. Voters will be asked whether to authorize the village to negotiate a lower power rate with an electrical supplier for residential and small business customers.

If the referendum is approved, Oak Lawn’s 19,000 households and businesses that choose to participate in the aggregation program will see an average savings of $200 to $400 per year on their electricity bills.

Electrical aggregation programs are becoming increasingly popular because of ComEd rates, which will increase from 7.9 cents to 8.3 cents per kilowatt-hour in October. Aggregation programs typically lock in rates of 4.5 cents to 4.9 cents per unit of electricity.

Electrical aggregators work with municipalities in developing a plan of operation, which is submitted to the Illinois Power Agency for review, and drafts a request for proposals based on a community's electrical usage.

The aggregator also conducts two public hearings required under state statutes prior to the referendum.

Olejniczak said that Progressive Energy’s proposal was too open ended. The village does not directly compensate the electrical aggregator. Instead, the broker’s fee is figured into the negotiated rate with the electrical supplier, which is passed on to the consumer.

Progressive Energy provided a boilerplate municipal aggregation consulting agreement with Big Rock, IL, in its proposal to the village board. According to Big Rock consulting agreement, Progressive Energy’s broker fee is not to exceed .00025 per kilowatt.

The cost of the broker’s fee to residents and businesses that choose to participate in the aggregation program is approximately $2.08 per bill. Olejniczak said the consultant’s fee would cost Oak Lawn’s 19,000 households and businesses over $400,000 for one year, and almost $1 million for two years.

According to the terms of Progressive Energy’s power supply agreement, the broker’s fee figured into customers’ electricity bills remains in effect for the term of the power supply agreement.

“I’m not used to seeing compensation to consultants for performing the service,” Olejniczak said. “It’s just way too open-ended. I think we owe it to residents to keep it in house and help them save that much money per household.”

Trustee Tom Phelan (Dist. 6) said there was enough expertise in house to consider eliminating the consultant.

“We have Trustee Olejniczak who’s done this in private business for more than ten years, and Trustee [Bob] Streit who’s in the business,” Phelan said,

Streit (Dist. 3) blasted Oleniczak for putting out “misinformation.” He said the cost of the broker’s fee would come out to $3 to $5 per household, or $100,000 annually. Streit later revised the annual broker’s cost to households at $65,000 per year.

“Trustee Oleniczak points out that we can do this in house,” Streit said. “Once the referendum passes in November we’re going to want move quickly. With all due respect to [village] staff, I think the aggregator will be more prepared to move quickly than our staff could.”

Streit said the aggregator’s fee was a small amount compared to the $6 million residents and businesses would save annually on their electricity bills.

Olejniczak said he could not vote in favor of a consultant where the fee was not spelled out in the proposal.

“We haven’t done our homework,” Oleniczak said. “[Streit] has come up with smaller fee thn mine. I don’t think it’s reasonable for a broker to be paid $120,000 to do something that staff can do. I think we should put the money back toward the residents and save them more money.”

The village board voted 4-3 to authorize Village Manager Larry Deetjen to negotiate a rate with Progressive Energy, to go before the board for approval at the next meeting on Sept. 11.

Should Oak Lawn hire a broker to negotiate a lower electricity rate with an electrical supplier? Tell us in the comments.

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dave bird August 20, 2012 at 12:43 PM
this is a corp.con game just like american water out in homer glen,beware a few years from now this paper will be filled with everyone complaining,MARK MY WORDS
Phinnigin August 20, 2012 at 01:13 PM
Save $200 / $400 p/year? Great! How about Comed providing a reliable supply of electricity to the 9900 blocks of Major and Massasoit? I moved into this house new in 1978. Since then I have had at least 100 power outages, 2 within the last 4 days. Comed refuses to fix the problem. Apparently it's cheaper to work on restoring power then to fix the problem. I guess it's just "the hell with the customer," Thanks for nothing Comed. Oh, I mean thanks power some of the time. Phinnigin
scouter August 20, 2012 at 04:05 PM
I think the VILLAGE aught to be the negotiator - after all - the Village SHOULD have the Village's best interest at heart!
Pat F August 20, 2012 at 04:25 PM
Would have to agree with Dave Bird.. Gas company played the same con game years ago and thousands of people who used a new supplier ended up paying way more than the original charges. Who knows what kind of new charges they will come up with to change from one supplier to another! For my vote, I want to see a 5yr Guarantee that the rate(with all the taxes, delivery charges.etc.) will be No Higher ever than Com Ed rates at that time.. Considering what they say we're going to get in savings with these new Low rates, I don't think this is unreasonable?? Let's get All the details and read All the Fine Print....
scouter August 20, 2012 at 04:36 PM
I agree with Pat F. Get the details, read the fine print and, additionally, SHARE IT with those who will ultimately pay for it - the Village consumers... Help us make an INFORMED choice. And, here's another idea - tell Com Ed that you are looking elsewhere and see what they will do to COUNTER OFFER. Hey, we might then get the upgrades, etc. Another thing - equipment... WHOSE equipment will we still be using? IF we are going to be still using their equipment, we will still have to work with them - especially for downed lines, transformers that don't work right (per Phinnigin) and what will we have to pay for that? We want to be informed - not just left flying in the wind..
O.L. Taxpayer August 20, 2012 at 05:08 PM
Doesn't anyone else find it rather suspicious that "our" trustee from dist.3 who has not denied the fact that he is involved in a business venture that offers other villages and towns advice and assistance on this very subject comes to our meetings like a total buffoon and does not know what costs would be but knows they aren't as high as Alex stated and doubts our staff can act on proposals even though We appearantly have 2 more than qualified trustees. ( one does it for a living and the other pretends he can as long as his friends and partners can stay out of jail long enough) Why Bob would you cost us more money when you should be looking out for us.
Sara August 20, 2012 at 05:59 PM
..apparently we are seeing what the taxes in this town go towards -> a fabulous education from a public school.
OakLawnGuy August 20, 2012 at 06:11 PM
That's the first thing that hit me while reading the article. This is one motion that I hope won't pass too quickly, but suspect it will. To Scouter's point, yes the power supplier will use existing equipment, so the dependability (or lack thereof) of said wires/transfomers will remain as is.
Mel August 20, 2012 at 09:08 PM
When you use a consultant and aggregate then you will have more competitive bidding in the open market. Naturally all consultants will get paid and hopefully by the supplier which is usually figured into the rate passed on to the consumer. There should not be an extra/separate charge passed on to the consumer. We still pay ComEd for transmission/distribution but achieve lower prices per kwh for consumption. Aggregation and open market competitive bidding is a good thing for all. Rates can be locked for a certain term and increases can be negotiated or reviewed as part of the bidding process. ComEd's parent company Exelon can bid on the supply side however they are not always the most competitive price. Alex quit over-estimating your knowledge of how the process comes together and being able to find the most suitable, lowest price supplier for the residents in the village.
Mel August 20, 2012 at 09:13 PM
Also, my vote is for combined billing so we (the residents who chose to participate) do not have to pay 2 separate bills.
Dave W. August 21, 2012 at 12:46 AM
Seems like a simple rider stating that the aggregator's bills will never exceed what a Comed bill for the same amount would be should suffice, right? As others stated, lock in for five years (or agreed amount) with all the fine print in big type, make it public well beforehand, and then let the residents vote. No gun to anybody's head about what they 'have to do'...if any company is unwilling to give some basic assurances, they can tell their story walking...we are a big town, they need us as much if not more than we need them.
Mel August 21, 2012 at 01:43 PM
The Village should pre-qualify and bid out the consultants as well to verify their capabilities as well as their success with rate structures and contract negotiations. There are plenty of them out there who have been negotiating and bidding contracts for municipalities as well as commercial real estate owners for many years (with and without aggregation)...Independent Energy Consultants, Satori Energy, etc....some are commissioned by the suppliers with no charge to the consumer.
Sitting in Row Six August 21, 2012 at 03:05 PM
It never ceases to amaze me that you can put any article on the Patch and the ignorant few flock to the typewriter to pass aloing idiotic ideas without any basis in reality or fact. NO town in Illinois has entered into a five year contract with an alternative supplier because the savings would not be as good. If you don't want to individually be in the free market, you can stay with Com Ed and pay its rate. That isn't guaranteed for five years either and seems to go up on a yearly basis. As for a consultant, didn't the village interview two consultants? There are only about five in the whole state, including Streit's company. Since he can't do it, I would say interviewing two out of four is pretty good. Let's put the pedal to the medal and start saving. After reading the story, it makes it clear that Alex doesn't know didley. Buying electricity for his employer's warehouse doesn't qualify him to talk about aggregation. Look at our neighbors in other towns who are already saving money and didn't pay $400,000 a year in fees. Alex simply made the numbers up because he wants to stop a good idea that wasn't his idea. Streit is actually in the business, I think I'm going with the numbers he is talking about
Diana Kutnar August 21, 2012 at 08:22 PM
You have got to be kidding----politicans (trustees) involved in this electrical process. So who is going to make a few bucks off of this ??? I'll stick with COM ED---Please Oak Lawn look at you empty stores---get some businesses coing in here"""""""""""
Alexdontknow August 22, 2012 at 12:27 PM
Ok Diana stay with Com Ed but let the rest of us save 30 percent. Every village is doing this and some have already gotten their prices. Com Ed hasn't been the low bidder in any village. Would you rather pay .787 to com ed or .474 like Palos Park is paying?

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