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City Council-Approved Bid Could Cut Electric Bills by a Third

The council voted to select Direct Energy as its residential electricity supplier with a two-year contract that promises a rate of 4.54 cents per kilowatt-hour.

Darien residents who opt in to the city’s electrical aggregation program could find their electric bills slashed by roughly 35 percent once the new rates take effect.

voted Monday to accept a bid from Pittsburgh-based Direct Energy that charges residents and small business owners 4.54 cents per kilowatt-hour.

The average resident will see a $260 annual savings over the term of the contract, said Assistant City Administrator Scott Coren. According to the Department of Energy, the average U.S. home uses 958 kilowatt-hours of electricity each month.

ComEd—Darien’s current supplier—charges 7.73 cents per kilowatt-hour, though it will set a new 12-month rate in June. The new rate won’t likely fall below 7 cents, said Northern Illinois Municipal Electric Collaborative (NIMEC) Director David Hoover.

“The rates we got are the most favorable in the state of Illinois, as of right now,” Coren said during a work session prior to the meeting.

NIMEC negotiated the bulk discount on the city’s behalf. Direct Energy’s rate includes NIMEC’s payment for the work, Coren said.

The council voted to accept a two-year term that locks in Direct Energy’s rate. If during the first 12 months of the contract ComEd’s rate drops below Direct Energy’s, Direct Energy will either match the lower rate or roll customers back over to ComEd, Hoover said.

While it’s unlikely ComEd’s rate would drop below Direct Energy’s this coming year, he said he couldn’t predict what might happen in 2013. Residents can, however, opt out of—or back into—the program at any time without a penalty.

Direct Energy also offered a one-year term at a rate of 4.24 cents per kilowatt-hour or a three-year term at 4.93 cents per kilowatt-hour. Mayor Kathleen Weaver said she was most comfortable with the two-year contract.

“It puts us in the middle,” she said. “It gives us two years with a very good rate. Then we can watch the market and go out to bid again.”

NIMEC collected bids from a total of eight energy suppliers. Direct Energy offered the lowest rates for all term lengths.

As mandated by the state, renewable sources will generate 6 percent of the power Direct Energy provides. The breakdown of other power sources is: coal – 48 percent; nuclear – 35 percent; natural gas – 13 percent; and other – 4 percent.

The company supplies power to 570,000 customers nationwide, including 65,000 in Illinois. 

The program will take effect within 50-60 days, Hoover said. Residents who opt in will likely see savings on their July electric bill.

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