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Sterling set to select electricity supplier

Council authorizes city manager to make decision

Published: Tuesday, May 20, 2014 1:15 a.m. CDT

STERLING – The City Council passed a resolution Monday authorizing the city manager to choose a new electricity supplier from a list of bidders.

The pricing bids are based on the whims of the open market, so they usually have a shelf life of just 24 hours. That reality is what spurred the decision to give one person the authority to act quickly, City Manager Scott Shumard said.

The city has sought bids for the second time since municipal electricity aggregation was allowed. Sterling’s first aggregation contract, with FirstEnergy Solutions, expires in August.

“We sought pricing on 2- and 3-year contracts last time and settled for the lowest 2-year contract,” Shumard said.

The city is again using Oregon-based Rock River Energy to solicit and recommend qualified bidders. Today, Shumard will meet with Mike Mudge, the energy services company’s owner. Mudge will present his bid recommendations, and Shumard says it’s likely a decision will be made.

Barry Cox was the only alderman to vote against the resolution.

“So you guys [Mudge and Shumard] are gonna pick the years and the rate?” Cox asked.

“You would actually be allowing me to choose with this resolution,” Shumard replied.

Alderman Lou Sotelo said he saw no reason why the entire council needed to make the decision.

“This isn’t the first contract; we’re familiar with the process now,” Sotelo said. “The city manager will be there, and I think he can find the best deal.”

Rock River Energy Services has played a key role in establishing aggregation programs throughout the area. Mudge is a retired ComEd employee who started the business in 2004, when deregulation created a unique need for his utility experience.

“We pretty much take them through every step of the process,” Mudge said. “Everything from help getting the referendums passed and gathering bid information, to helping with city ordinances and working with suppliers to get everything in order on their end.”

When the next supplier is selected, the new rates will not kick in until the first contract ends in August.

An Illinois bill allowing municipal electricity aggregation was passed in 2009, as the final phase of a statewide deregulation process that started 2 years earlier. Aggregation allowed municipalities to negotiate lower prices for residential electricity customers by pooling their usage. Residents must pass a local referendum to institute the process, from which individual users can opt out.

The savings for municipalities is not likely to be as pronounced as it was in the early days of aggregation. The spread between ComEd and other bidders was larger because ComEd had been locked into long-term contracts with power producers that had been signed when prices were much higher than current wholesale prices. Those contracts are now expiring.

“You won’t see the savings in the next round that you saw in the first round,” Mudge warned. “Although there isn’t as much savings now, this has served as a bridge to Phase 3, which will be the smart grid era,” Mudge said.

Aggregation has saved the city nearly $1.3 million during the course of this contract, Mudge told the council. There were 5,229 customers in the program, including a few very small businesses. About 1,700 Sterling residents still use ComEd as their supplier.

Shumard said he has not ruled out going back to ComEd.

“If that’s now the best deal for us, I have no problem using them again.”

Next meeting

The Sterling City Council next meets at 6:30 p.m. June 2, at City Hall, 212 Third Ave., on the first floor in the Council Chambers.

Go to www.sterling-il.gov/ or call City Hall at 815-632-6621 for an agenda or more information.

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