Communications & Legislations Committee

COMMUNICATIONS & LEGISLATION COMMITTEE NORTHBROOK VILLAGE HALL, 1225 CEDAR LANE FEBRUARY 5, 2013, 7:00 P.M., TERRACE ROOM The Communications & Legislation Committee of the Village of Northbrook Board of Trustees will hold a meeting on Tuesday, February 5, 2013 at 7:00 p.m. in the Terrace Room of the Village Hall, 1225 Cedar Lane, Northbrook, Illinois. The following will be discussed. MEETING AGENDA 1. CALL TO ORDER 2. HEAR FROM THE AUDIENCE 3. DISCUSSION: North Shore Electricity Aggregation Consortium First Amendment to Intergovernmental Agreement & New Rate Period 4. ADJOURN Kathryn Ciesla, Chair Communications/Legislation Committee Members: Trustee Heller Trustee Israel Village of Northbrook Cook County, Illinois February 1, 2013 The Village of Northbrook is subject to the requirements of the Americans with Disabilities Act of 1990. Individuals with disabilities who plan to attend this meeting and who require certain accommodations in order to allow them to observe and/or participate in this meeting, or who have questions regarding the accessibility of this meeting or the facilities, are requested to contact Greg Van Dahm or Debbie Ford (847- 664-4014 and 847-664-4013, respectively) promptly to allow the Village of Northbrook to make reasonable accommodations for those persons. Hearing impaired individuals may call the TDD number, 564-8645, for more information.  MEMORANDUM VILLAGE OF NORTHBROOK GENERAL GOVERNMENT DEPARTMENT TO: RICHARD A. NAHRSTADT, VILLAGE MANAGER FROM: PHILIP A. KIRALY, ASSISTANT VILLAGE MANAGER DATE: February 1, 2013 SUBJECT: DISCUSSION OF ELECTRICAL AGGREGATION PROGRAM – COMMUNICATIONS AND LEGISLATION COMMITTEE MEETING At its meeting scheduled on February 5, 2013, the Communications and Legislation Committee is to receive an update on the current status of the Village’s Electrical Aggregation Program and to discuss options as we continue with our service provider, MC Squared Energy Services. BACKGROUND As you may recall, on March 20, 2012, Northbrook voters approved a Referendum to allow the Village to seek aggregated electricity commodities on the behalf of its residents and certain small businesses (those with annual usage of less than 15,000 kWh). Following the approval of the Referendum, the Village Board held a Special Meeting on April 3, 2012 to approve several documents necessary for the Village to administer an electricity aggregation program and authorize a contract with MC Squared Energy Services, granting the Village Manager the authority to execute a price lock with the other Consortium communities once the price was determined to be favorable. As you may also recall, in early 2012, the Village entered into an Intergovernmental Agreement with seven other communities (Deerfield, Highland Park, Lake Forest, Glencoe, Lake Bluff, Skokie and Park Ridge) to form the North Shore Electricity Aggregation Consortium (NSEAC). As a group, the Consortium communities submitted an RFP and worked with a consultant, Independent Power Partners (Mark Pruitt) and with Holland and Knight to vet respondents. MC Squared was the provider that was chosen for the Consortium, and once the contracts were approved by each member community, the price lock period began. Over a two week window, prices were monitored by the Consultant and when pricing seemed most favorable, a price lock was made. On April 20, 2012 the NSEAC held a joint press conference at the Village of Skokie to announce that MC Squared was our provider; that the agreement with MC Squared called for a three year term with 12 month price locks; and, that the bulk rate purchase price for the first 12 month price lock would be $.04836/kilowatt hour, representing an over 30% savings over ComEd’s rate at that time. At the time, it was expected that this rate would save the average homeowner in Northbrook approximately $140/year. Residents and small businesses that qualified for the rate also had the option to seek 100% green energy credits at the cost of $.05836/kilowatt hour. The process to transition all residents and qualifying small businesses to MC Squared from ComEd commenced immediately in an effort to have the new rate go into effect during the summer months to allow for residents to achieve as much savings as possible. The majority of Northbrook customers were switched to MC Squared by late June, commencing their savings in July. Page 1 CURRENT STATUS Since transitioning to MC Squared, staff has received very few complaints and numerous positive comments about the program. Likewise, the customer service from MC Squared has been positive as well. There have been some minor issues that have arisen including:  Due to issues with location maps and data from ComEd not matching up, some residents were not transitioned to the program initially. As we have determined these individual cases, we have worked with MC Squared to expedite getting these residents into the program.  Likewise, residents who have moved into Northbrook since the initial changeover are not automatically registered for the aggregation program. Utilizing updated data from ComEd, MC Squared has done one large scale mailing to new residents in order to make them aware of the program and its associated cost savings. Another mailing will be done soon. We have also handled these on a case-by-case basis as they arise. The following charts highlight the savings that the community has realized since the transition to MC Squared took place this summer: Village of Northbrook Total Monthly Savings $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 Northbrook Residents Average Customer Monthly Savings $60 $50 $40 $30 $20 $10 $0 Page 2 As these charts highlight, the savings that residents and certain small businesses have realized are significant. MC Squared is estimating that through the contract period ending in May 2013, the average resident will save over $400 since June/July 2012 and in the aggregate the community will save $4.6 million during the same time period. NEXT STEPS Now that we are well into the first year of the three-year contract with MC Squared, the Consortium communities have begun to review what next steps need to be taken as we move forward. These include:  Renewal of the Consortium Intergovernmental Agreement (IGA) with its first Amendment.  Determine the best way to work through the next two cycles of electricity power supply agreements with MC Squared. First Amendment to the IGA The renewal of the IGA is scheduled to be considered by the full Board at their regular meeting on February 12. The draft is attached. At the meeting on February 5, staff will be explaining the IGA renewal and highlight several amendments that are proposed. Generally, changes to the IGA include the following:  Retaining the ability of each community to execute its own power supply agreement with MC2.  Sets forth terms intended to provide flexibility to the Consortium to pursue different methods of electricity aggregation. For example, this next round may allow for a two-year price lock instead of a one-year price lock, should the Consortium deem it in the best interest of the members.  Also, this year the Consortium communities expressed interest in possibly expanding the members’ cooperation to other issues of mutual concern. For example, if the State were to allow natural gas aggregation, this new IGA would allow the Consortium to mutually address those concerns, either as part of, or in addition to, the Consortium's electricity aggregation efforts.  Granting the Consortium the power to sign a new contract with the NSEAC’s consultant, Intelligent Power Partners (IPP). IPP has been the consultant to the Consortium since its foundation. Staff will be seeking input from the Committee on these items. Power Supply and Pricing In addition, a review of options for a one- or two-year price lock term will be discussed with the Committee. In order to highlight this, a discussion of what we may expect as we approach the next price lock period will be addressed at the Committee meeting. It is important to remember that electricity is a commodity that is impacted by supply and demand in addition to numerous other regulatory factors that can impact an increase or decrease electricity rates. Current long- and short- range forecasts indicate that the commodity costs are increasing; how much is yet to be determined. The IGA provides the Village Manager with the authority to execute the price lock for the community due to the very time-sensitive nature of the commodity pricing. At the Committee meeting, staff will provide some information to help inform the Committee of how the Consortium will move forward with the next price lock period, and explain the process that we will go through in order to ensure the best pricing structure for Northbrook residents and qualifying businesses. Page 3  DRAFT 1/17/13 FIRST AMENDMENT TO THE INTERGOVERNMENTAL AGREEMENT ESTABLISHING THE NORTH SHORE ELECTRICITY AGGREGATION CONSORTIUM BETWEEN AND AMONG THE CITIES OF HIGHLAND PARK, LAKE FOREST, AND PARK RIDGE, AND THE VILLAGES OF DEERFIELD, GLENCOE, LAKE BLUFF, NORTHBROOK, AND SKOKIE THIS IS A FIRST AMENDMENT (“First Amendment”) to a Intergovernmental Agreement ("Agreement"), dated January 1, 2013, by and between, and among VILLAGE OF DEERFIELD, an Illinois home rule municipal corporation (“Deerfield”), the VILLAGE OF GLENCOE, an Illinois municipal corporation (“Glencoe”), the CITY OF HIGHLAND PARK, an Illinois home rule municipal corporation ("Highland Park"), the VILLAGE OF LAKE BLUFF, an Illinois home rule municipal corporation ("Lake Bluff"), THE CITY OF LAKE FOREST, an Illinois home rule municipal corporation ("Lake Forest"), the VILLAGE OF NORTHBROOK, an Illinois home rule municipal corporation ("Northbrook") and the VILLAGE OF PARK RIDGE, an Illinois home rule municipal corporation (“Park Ridge”), and the VILLAGE OF SKOKIE, an Illinois home rule municipal corporation (“Skokie”) (collectively, the “Parties”). This First Amendment is made and entered into as of the 1st day of January, 2013 ("Effective Date"). WITNESSETH: WHEREAS, Section 1-92 of the Illinois Power Agency Act, 20 ILCS 3855/1-92 (“Act”), authorizes the corporate authorities of a municipality to establish a program to aggregate electrical loads of residential and small commercial retail customers and to solicit bids and enter into service agreements to facilitate the sale and purchase of electricity and related services and equipment for those electrical loads (“Electricity Aggregation Program”); and WHEREAS, pursuant to the Act, municipalities may, if authorized by referendum, operate an Electricity Aggregation Program as an “opt-out” program that applies to all residential and small commercial retail electrical customers who do not affirmatively choose not to participate; and WHEREAS, the Act authorizes municipalities to jointly operate an Electricity Aggregation Program and does not prohibit municipalities from entering into an intergovernmental agreement to aggregate electric loads for those programs; and WHEREAS, in December 2011, the Parties entered into that certain Intergovernmental Agreement Establishing the North Shore Electricity Aggregation Consortium Between and Among the Cities of Highland Park, Lake Forest, and Park Ridge, and the Villages of Deerfield, Glencoe, Lake Bluff, Northbrook, and Skokie ("Agreement"); and WHEREAS, the electors of each of the Parties approved referenda on March 20, 2012, permitting the Parties to establish an "opt-out" Electricity Aggregation Program; and WHEREAS, in accordance with the Agreement, the Parties established the North Shore Electricity Aggregation Consortium (“Consortium”) to provide for a comprehensive and unified effort to facilitate joint action and intergovernmental cooperation to combine the bidding and contracting process to obtain the supply of electric power for their Electricity Aggregation Programs (“Joint Power Supply Bid”); and  DRAFT 1/17/13 WHEREAS, as a result of the Joint Power Supply Bid process, each of the Parties entered into a power supply agreement with MC Squared Energy Services, LLC, for the provision of electricity as part of their respective Electricity Aggregation Programs; and WHEREAS, the Parties desire to continue to utilize the powers and authority granted to them, individually and collectively, pursuant to Article VII, Section 10 of the Illinois Constitution of 1970, the Intergovernmental Cooperation Action, 5 ILCS 220/1 et seq., and Section 1-92 of the Act, 20 ILCS 3855/1-92 to: (i) extend the term of the Agreement and the Consortium in perpetuity; (ii) allow the Consortium to continue to address and administer the Parties' Electricity Aggregation Programs; and (iii) allow the Consortium to address additional issues of mutual interest related to utility and energy efficiency and pricing that may be identified by the Parties from time to time (collectively, "Utility Issues"); and WHEREAS, after full consideration of all planning, fiscal, and other intergovernmental issues affecting this matter, each of the Parties has determined that it is in the best interests of its citizens and of the general public welfare that this First Amendment be executed and implemented by the Parties; and WHEREAS, the Parties have each approved this First Amendment by an ordinance or resolution duly adopted by the Party’s corporate authorities; and NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein made and other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, and pursuant to all applicable statutes and local ordinances, specifically including, but without limitation, Article VII, Section 10 of the Illinois Constitution of 1970, the Intergovernmental Cooperation Act, 5 ILCS 220/1 et seq., and Section 1-92 of the Act, 20 ILCS 3855/1-92, the Parties do hereby agree as follows: SECTION 1. RECITALS. The foregoing recitals are, by this reference, incorporated into and made a part of this First Amendment. SECTION 2. DEFINITIONS; RULES OF CONSTRUCTION. A. Definitions. All capitalized words and phrases used throughout this First Amendment shall have the meanings set forth in the various provisions of this First Amendment. If a word or phase is not specifically defined in this First Amendment, it shall have the same meaning as in the Agreement. B. Rules of Construction. Except as specifically provided in this First Amendment, all terms, provisions and requirements contained in the Agreement shall remain unchanged and in full force and effect. In the event of a conflict between the text of the Agreement and the text of this First Amendment, the text of this First Amendment shall control. SECTION 3. PURPOSE. This First Amendment is made for the purpose of extending the duration of the Consortium and endowing it with all of the authority, powers, and resources necessary and convenient to allow the Parties to jointly and efficiently: (i) continue to administer the Parties' Electricity Aggregation Programs; (ii) address common bidding and contracting for future Joint 2  DRAFT 1/17/13 Power Supply Bids; and (iii) address Utility Issues identified by the Parties. This First Amendment is further intended to allow the Parties to jointly seek available local, state, and federal funds and other resources, if available, to assist in addressing future Joint Power Supply Bids and Utility Issues for the Parties. SECTION 4. GENERAL COOPERATION. The Parties acknowledge and agree: A. To cooperate with each other in furtherance of the purposes, goals, and objectives of the Consortium, the Agreement, and this First Amendment. Cooperation required by this First Amendment specifically includes, but is not limited to, the sharing and joint utilization by and among the Parties of information and other materials possessed or developed by the Parties, either individually or collectively, and necessary to investigate, identify, and otherwise document future Joint Power Supply Bids and Utility Issues. B. The Consortium shall continue to research and investigate the electricity market and various options for the issuance of future Joint Supply Power Bids in accordance with the Agreement. C. The Consortium shall research and investigate Utility Issues and the relevant and appropriate utility markets and various options available to the Consortium to achieve energy and utility pricing and efficiency savings. E. The Consortium shall continue to have the authority to prepare Technical Requirements and bidding and contract documents incorporating the Technical Requirements for future Joint Supply Power Bids and to address Utility Issues. F. The Consortium shall continue to have the authority to mutually select, or change as may be necessary, one Party to serve as the official coordinator to bid future Joint Power Supply Bids or bids or proposals related to Utility Issues (“Official Coordinator”). G. The Consortium shall continue to have the authority to prepare Educational Materials concerning the Joint Supply Power Bid, future Joint Power Bids, and Utility Issues. SECTION 5. PAYMENTS AND EXPENSES. A. Official Payor. Highland Park shall continue to serve as the official payor of all Shared Expenses for and on behalf of the Consortium. In connection therewith, Highland Park shall have the authority to collect and accept revenues, payments, and fees from the Parties or any entity that contracts with the Parties, as may be agreed to by the Parties from time to time. B. Expenses. Pursuant to the Agreement and this First Amendment, each Party shall be responsible to pay its respective share, using its own local funds, of the costs and expenses of the Consortium, including, without limitation, the cost of the Joint Power Supply Bid, future Joint Power Supply Bids, and any bids related to Utility Issues that the Parties agree to issue. Each Party shall budget and appropriate sufficient funds to pay its respective share of the costs and expenses of the Consortium by an ordinance or resolution approved by the Party’s corporate authorities. 3  DRAFT 1/17/13 C. Approval by Corporate Authorities. The Parties acknowledge and agree that, although they intend to proceed under joint bids, the corporate authorities of any Party may fail to approve future Joint Power Supply Bids, related Power Supply Agreements, or bids, proposals, or agreements related to Utility Issues. In the event a Party fails to provide such approval, the remaining Party or Parties may either proceed with the Joint Power Supply Bids or bids related to Utility Issues, or proceed individually. SECTION 6. WITHDRAWAL. A. Right to Withdraw. Any Party may withdraw as a Party of the Consortium, prior to going out to bid on a Joint Power Supply Bid or a bid or proposal related to an Utility Issue, upon the provision of written notice to the other Parties of its withdrawal. B. Responsibility Upon Withdrawal. Any Party withdrawing from the Consortium pursuant to Section 6.A of this First Amendment shall pay its share of any and all costs and expenses incurred by or on behalf of the Consortium prior to the effective date of the Party's withdrawal and for which the Party is responsible. If the Withdrawal of one or more Parties results in the dissolution and termination of the Consortium pursuant to Section 6.C of this First Amendment, the withdrawing Party or Parties shall cooperate and participate in the dissolution and termination of the Consortium. C. Dissolution and Termination. The Consortium shall be dissolved and terminated upon the earlier to occur of: (i) the effective withdrawal pursuant to this Section 6 of one or more Parties so as to reduce the total number of Parties to fewer than two; or (ii) the written agreement of all of the Parties to this First Amendment. SECTION 7. GENERAL PROVISIONS. A. Notices. All notices required or permitted to be given under this First Amendment shall be given by the Parties as specified in the Agreement. B. Entire Agreement. There are no representations, covenants, promises, or obligations not contained in this First Amendment that form any part of this First Amendment or upon which any of the Parties is relying in entering into this First Amendment. This First Amendment, and all covenants and provisions herein contained, shall bind and inure to the benefit of each respective local governmental entity which is a party hereto and their respective successors and assigns. C. Effective Date. This First Amendment shall take effect upon the execution of this First Amendment by all of the Parties. D. Severability. If any provision of this First Amendment is construed or held to be void, invalid, or unenforceable in any respect, the remaining provisions of this First Amendment shall not be affected thereby but shall remain in full force and effect. E. Interpretation. It is the express intent of the Parties that the First Amendment shall be construed and interpreted so as to preserve its validity and enforceability of the Agreement and this First Amendment. The Parties hereto have been represented by counsel and have had full opportunity to discuss this First Amendment prior to execution. This First Amendment shall be construed without regard to the identity of the Party who drafted the various provisions of this First Amendment. Moreover, each and every provision of this First 4  DRAFT 1/17/13 Amendment shall be construed as though all Parties to this First Amendment participated equally in the drafting thereof. As a result of the foregoing, any rule or construction that a document is to be construed against the drafting party shall not be applicable to this First Amendment. F. Amendments and Modifications. This First Amendment shall not be modified, changed, altered, or amended without the duly authorized and written consent of each of the Parties by their respective corporate authorities and pursuant to ordinances or resolutions duly adopted and approved by the Party’s corporate authorities. No amendment or modification to this First Amendment shall be effective until it is reduced to writing and approved by the corporate authorities of each Party and properly executed in accordance with all applicable law. G. Authority to Execute. Each Party hereby warrants and represents to each other Party that the person executing this First Amendment on its behalf has been properly authorized to do so by the corporate authorities of the Party. H. No Third Party Beneficiaries. Nothing in this First Amendment shall create, or shall be construed or interpreted to create, any third party beneficiary rights. I. Indemnification. Each Party (the “Indemnifying Party”) hereby agrees to indemnify, hold harmless and defend the other Parties (each an “Indemnified Party”) from and against any and all losses, claims, expenses and damages (including reasonable attorneys’ fees) made against or incurred by the Indemnified Party for any actions taken or failures to act by the Indemnifying Party in connection with a bid related to Utility Issues that arise out of such bid, each agreement that a Party may enter into as a related to a bid issued by the Consortium related to Utility Issues, or this First Amendment, to the extent that such claims were not caused by actions, or failures to act, of the Indemnified Party. J. Execution. This First Amendment shall be executed by all of the Parties in identical original duplicates and each of the duplicates shall, individually and taken together, constitute one and the same First Amendment. [SIGNATURE PAGE FOLLOWS] 5  DRAFT 1/17/13 IN WITNESS WHEREOF, the Parties have by their duty authorized officers and representatives set their hands and affixed their seals to be effective as of the Effective Date of this First Amendment. ATTEST: VILLAGE OF DEERFIELD By: ___________________________ By:____________________ Village Clerk Village Manager ATTEST: VILLAGE OF GLENCOE By: ___________________________ By:____________________ Village Clerk Village Manager ATTEST: CITY OF HIGHLAND PARK By: ___________________________ By:____________________ City Clerk City Manager ATTEST: VILLAGE OF LAKE BLUFF By: ___________________________ By:____________________ Village Clerk Village Administrator ATTEST: THE CITY OF LAKE FOREST By: ___________________________ By:____________________ City Clerk City Manager ATTEST: VILLAGE OF NORTHBROOK By: ___________________________ By:____________________ Village Clerk Village Manager 6  DRAFT 1/17/13 ATTEST: CITY OF PARK RIDGE By: ___________________________ By:____________________ City Clerk City Manager ATTEST: VILLAGE OF SKOKIE By: ___________________________ By:____________________ Village Clerk Village Manager #11859990_v4 7