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Sterling goes with 3-year electricity deal

Bid awarded for sewer project

Published: Tuesday, June 3, 2014 1:15 a.m. CDT • Updated: Tuesday, June 3, 2014 9:09 p.m. CDT

STERLING – The city received a second round of bids at Monday's council meeting and opted for a 3-year electricity aggregation deal with MidAmerican Energy.

ComEd came in with the lowest rate for the first year, but because ComEd's rates change each May, and its second and third years are unknown, the council voted 5-1 to go with the lowest rate over the 3-year period.

Based on average monthly use of 670 kilowatt hours, Sterling's current program with FirstEnergy costs $31.28 per month. The cost per kilowatt hour is 4.67 cents.

The new deal with MidAmerican, based on the same average monthly use, would be $53.39 in the first year, $52.72 in the second year, and $50.92 in year three.

ComEd's first year rate, based on the same monthly use, would be $50.88 in the first year. ComEd also adds a price energy adjustment of up to 0.5 cents per kilowatt hour.

The city also received bids from four other suppliers, including FirstEnergy, but the rates were all higher. MidAmerican's bid was 18 cents lower than its first-round offer.

Mike Mudge, owner of Rock River Energy Services, said the first year with MidAmerican might be a wash with ComEd, but benefits are likely to be realized in years 2 and 3.

"I think capacity rates will continue to go up, so I believe it's prudent to lock in a 3-year rate with a supplier," Mudge said. "Everyone can opt out if ComEd is cheaper later, but this gives us another option to lock into."

Alderman Barry Cox saw things differently.

"I make a motion we go with ComEd and sit on the sideline for a year," Cox said.

Cox's motion was not seconded, and Alderman John Stauter then asked Mudge what the projections looked like for rate increases.

"We do expect them to go up more in 2016, ’17 and ’18," Mudge said. "A lot of it depends on how many coal plants are shut down. MidAmerican is about the same as ComEd this year, and it's important to have a measuring stick for the other 2 years."

Alderman Lou Sotello made a motion to go with the 3-year deal with MidAmerican, and it was seconded by Chris Schuchard.

Mayor Skip Lee said he didn't think the city would see a lower rate if they sat out a year.

"I don't see the cost of energy going down," Lee said. "At a minimum, it holds us stable at today's rate, and we should be better positioned for the second and third years."

In other action, the city accepted the low bid on a sanitary sewer project to alleviate flooding and overflow problems in the area around 19th Street and Freeport Road. The low bid of $275,195.56 came from Fischer Excavation of Freeport.

City Manager Scott Shumard said the project involved putting in a new force main, or pressurized pipe, from the Hey’s Lift Station, along Freeport Road and then west down Lynn Boulevard alongside the existing force main. It will connect to an existing sanitary sewer pipe at that point.

"The new force main will take all the flow from the Windsor Lift Station and bypass the Hey’s Lift Station," Shumard said. "This should reduce the flow through the Hey’s Lift Station by more than half, and help prevent backups upstream."

Also, in executive session, the council approved a 5.9 percent raise for Shumard. His salary was bumped from $98,850 to $104,700.

Lee said Shumard had not had a raise since 2008, and the city wants his pay to be competitive with other cities of similar size.

Next meeting

The Sterling City Council next meets at 6:30 p.m. June 17, 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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