CGE Renewable Energy Community Choice Aggregation (CCA) for Electricity Frequently Asked Questions V.

1 January 2012

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Community Choice Aggregation (CCA) for Electricity

Frequently Asked Questions Overview Q: What is Community Choice Aggregation? A: Community Choice Aggregation (CCA) is a program that allows local governments to bundle or aggregate residential and small commercial retail electricity accounts and seek bids for a cheaper -- and even a renewable-- source of power. Currently, ComEd customers receive power at a price set each year by the Illinois Power Agency, a not-for-profit quasi-governmental body that buys electricity on the wholesale market on behalf of utility customers. By bundling residential and small commercial accounts, municipalities can go out into the open market to seek a lower price for electric power for small customers. Large industrial and commercial customers already use

this option to procure market based pricing for their electric energy. Only recently has the option for aggregation (Consumer Choice) become available to residential and small businesses.
Q: How does the program work? A: In accordance with state law, the City has placed a referendum on the March 20 ballot asking voters to give the municipal government the authority to aggregate electric accounts and seek bids for power generation. If Evanston voters approve the referendum on the March 20 ballot, the City will host two or more public hearings to discuss and create an Aggregation plan. Once the plan is in place, City staff would prepare and publicize a request for proposals. Only energy suppliers certified by the Illinois Commerce Commission could respond. The bid that comes closest to achieving the goals of the Aggregation plan would be accepted. However, if none of the bids meet the plans goals, there is no obligation to accept one, and the aggregated accounts will continue to receive power at the existing rates. A resident or small business owner has no obligation to participate and could choose to opt out of the program altogether. Q: What are the benefits of Aggregation? A: The most important benefit is the opportunity for Evanston residents and small business operators to save money on their electricity costs. Renewable energy resources will be considered in the process. How Does Aggregation Affect Me? Q: If the Community Choice Aggregation goes through, does that mean that I have to participate in this program? A: No, any account holder may opt out of the program after the bidder is chosen, and pay the rate ComEd charges to accounts not participating in the Aggregation program. All residential and small

business users will be included in the customer base unless they affirmatively choose not to participate. The opportunity to opt out will be available to customers after the bids are received and the electric price and identity of the electric supplier are made known to customers. Q: What is considered a small business eligible for the CCA? A: Small businesses are those which use up to 100 kilowatts (peak) of electric power comparable to a fast-food restaurant. One hundred kilowatts is equal to a thousand 100-watt incandescent light bulbs. The amount of electricity a property draws can be obtained on an electricity bill. Q: What if I have an existing power purchase agreement? A: If a homeowner or small business has an existing agreement for deregulated power at the time of initiation of this program, their existing power purchase agreements would prevent them from joining the CCA agreement. When a homeowners or small business existing deregulated power agreement ends, they would still have to wait until a new CCA agreement comes up to join in. Q: If I participate, will I get two bills one from ComEd (for delivering the power) and another from the company that supplies it? A: No. ComEd will continue billing customers for all power supply charges, regardless of the power supplier. The only change would be the name of the power provider on the bills power generation item line. Q: What if my power goes out or there are other service issues, will I need to call the company supplying the power? A: No. ComEd remains responsible for ensuring that electricity flows through its distribution network to all homes and businesses in Evanston. Aggregation would not change how ComEd responds to outages. Q: What is ComEds role in this program? A: ComEd delivers electricity, but does not generate it. As Evanston's local electricity distributor, ComEd is only responsible for infrastructure, like power lines, transformers and meters that bring electricity into homes and businesses, responding to outages and billing. ComEd will continue to bill customers for power distribution and individual electric supply, regardless of the supplier of that electricity. Q: What is the difference between ComEd and Exelon? A: ComEd is the electricity distribution company and Exelon is a power generation company. Exelon owns many of the various power plants and their power travels through ComEds power lines to your home and/or business. Q: I have received mailings from retail electric suppliers offering lower electric pricing now. What should I do? A: Residences and small businesses can participate individually in another electric suppliers program; however, you may forego your eligibility to participate in the CCA. If you remain on your current ComEd plan until the CCA bids are received, then you can compare all of your available options together. The earliest the community aggregation program is likely to begin is early summer 2012. Consumers who decide to switch to a retail electric supplier before the Community program is available should consider several aspects of the retail suppliers offer. Consider the following:

1. Length of contract. Many retail suppliers require a minimum 1-year contract, which would prevent a customer from getting the communitys aggregation price until the contract ends. 2. Termination fees. Look at the cost of early termination. Some companies charge fees and others do not. 3. Energy source, whether the offer includes conventional or renewable energy. Q: I am currently enrolled in ComEds budget program where you are able to spread out your ComEd electric costs evenly throughout the year. Would a potential new power supplier have this or a similar program? A: Evanstons plan of governance will outline any special payment plan options to be included in the Citys request for proposals. Q: What component of my electric bill will Aggregation affect? A: Aggregation will only affect the electric supply services portion of your bill. The delivery services portion will remain unchanged. Issues Related to Implementing Aggregation Q: If voters approve the referendum, how long will it be before the program is implemented? A: State law requires certain steps be followed to approve and implement the Community Choice Aggregation Program. If, in the March 2012 referendum, voters give the City the authority to pursue Aggregation, two public hearings must be held to gather citizen input for an Aggregation plan of operation and governance that outlines goals such as savings targets and the mix of energy generation sources. Once the plan is created and adopted, City staff would seek competitive bids from energy suppliers via a formal request for proposals (RFP) process. If a bid is received that meets the goals of the plan, a contract would be negotiated and presented to the City Council for approval. The earliest a program could be in place in Evanston would be early summer of 2012. Q: What is exact wording of the referendum on Community Choice Aggregation? A: Shall the City have the authority under Public Act 096-0176 to arrange for the supply of electricity for its residential and small commercial retail customers who have not opted out of such a program? Q: What is the time period of Evanstons CCA contract?

A: The term of the agreement will depend on the pricing offers available from the bidders. Other communities have agreements typically ranging from one to three years. Evanstons plan of governance will outline key considerations for the CCA.
Q: How transparent will this process be for residences and small businesses? A: Residents and small businesses will have access to information about the referendum and bid process through outlets such as local media coverage, informational meetings, social networking outlets and direct mail. If the referendum passes, the City will host two public hearings prior to the adoption of the plan. During the bidding and purchasing process, public announcements will be made to keep the community informed. Q. Which communities have enacted Community Choice Aggregation? A: As of the end of 2011, 20 Illinois communities have passed CCA referendums. This list includes

DeKalb, Grayslake, Lincolnwood, New Lenox, North Aurora, Oak Park, Oakbrook, and Sugar Grove. An additional 141 Illinois communities, including Evanston, are planning referendums for March 2012. Also as of the end of 2011, an additional 108 Illinois communities have informed the Illinois Commerce Commission that they interested in adding referendums to their March ballots. These communities include Bloomington, Champaign, Downers Grove, Highland Park, Park Ridge, and Waukegan. Q. Are any communities with CCA using renewable energy? A: Yes. Oak Parks CCA program includes 100% renewable energy and achieved an energy cost reduction of over 23%. All Illinois electric suppliers are subject to the states Renewable Portfolio Standard (RPS), which requires a minimum percentage of renewable energy6% in 2012 growing to 25% by 2025. Costs and Benefits Q: What are the costs to implement and manage the program? A: Few out of pocket costs are associated with CCA. City staff time and community outreach and education efforts will be required. The anticipated savings to individual residential customers and small businesses dwarfs any costs associated with CCA. Q: Can savings be guaranteed under an Aggregation program? A: The City can structure its request for proposals so that bidders set their rates at a specified percentage under ComEds current established supply rates. Market fluctuations make it impossible to guarantee that bids will come in under the current supply rate paid by ComEd customers. Right now, residents and small businesses pay a higher rate than most large commercial, industrial and institutional accounts that have sought open market bids. The savings can also depend on the term of the agreement. Q: Will CCA make my electric bill go up? A: No. The goal of this program is to reduce the cost of energy. Citizens Greener Evanston believes we can achieve this goal and use a significant amount of renewable energy. If the bids are higher than what is being currently paid, then the City does not have to accept the bids. Q: Will the City of Evanstons municipal utility tax be affected? A: No, Evanstons revenue from utility taxes will not be impacted by this program. Like most communities, Evanstons municipal utility tax is based on the energy consumed (kilowatt-hours). Q: If I heat my home with electricity can I save money by joining the CCA? A: Currently, a discounted rate structure applies to all-electric or electric space heating customers. It is possible that an alternate electric supplier may be unable to offer a lower price than the current utility price. When considering a switch of electric supply, it is important to evaluate your annual usage and the rate being offered to determine what electric supply option best suits your needs. For more information, go to the Illinois Commerce Commission website, Plug in Illinois, www.pluginillinois.org, and click on "Utility Space Heating Rate." Q: Are there any downsides? A: The City will not be obligated to accept unfavorable bids and any account holder (home owner or small business) can opt out of the program after bids are received. The open market can

pose risks, but if bids do not meet the Evanstons Aggregation plan goals, then they can choose not to accept the bid proposals. It should be noted that Aggregation participants will not be able to take advantage of ComEds real-time pricing program. Background Q: Will changing a power supplier through Aggregation further Evanstons sustainability goals? A: The City has the option to specify in its RFP that suppliers offer a blend of energy sources that can include renewable energy sources, with their corresponding reduced impact on the environment. Through the increase purchasing power of a CCA arrangement, it could be possible to use renewable energy at rates lower than we currently pay for coal and nuclear. Q: Would a 100% renewable blend meet the Evanston Climate Action Plans (ECAPs) CO2 reduction target? A: Yes! The Evanston Climate Action Plan, passed unanimously by the City Council in 2008, requires a 13% reduction in CO2 emissions by 2012. Under a CCA arrangement with 100% renewable energy we would be able to achieve a reduction of over 20%, even better than the ECAP target. An actual accomplishment that will save Evanston Electric consumers money. Q: But isnt renewable energy more expensive? A: Although the cost of generating electricity from renewable sources is higher than coal and nuclear, CCA may allow us to leverage our collective buying power to get a better price for renewable energy than were currently paying for traditional energy. Q: Renewable energy? What happens at night when the sun doesnt shine or when the wind doesnt blow? A: Using renewable energy will not affect the reliability of our energy supply. We would not be tied directly to a specific wind farm or a solar array, much like were not currently tied directly to a specific coal or nuclear plant. Renewable energy would be obtained indirectly, likely via Renewable Energy Credits (RECs), which are one way to claim power from renewable energy sources. Q: What are RECs? A: REC stands for Renewable Energy Certificate, which is a certificate proving that one megawatthour (MWh) of electricity was generated from a renewable energy resource. For every MWh of renewable energy that a supplier feeds to the grid, the supplier receives one REC which can then be sold on the open market as a commodity. RECs provide an additional income stream to the energy supplier, thus making it a bit more attractive to produce renewable energy. Q: What are the environmental benefits of a 100% renewable energy blend*? A: Displacing that portion of our electricity which is currently generated by coal plants will result in approximately 284,000 metric tonnes per year of C02 reduction from a 2008 baseline, which is equivalent to approximately 56,000 cars from the road, and provide meaningful reductions in the emissions of mercury, nitric oxide and sulfur oxide (which contributes to acid rain), and particulate emissions which are linked to asthma and other respiratory issues.
*Assumes a 15% opt out rate.

Q: Where does our electricity currently come from? A: Nuclear energy accounts for approximately 41% of the electricity generated in Illinois, with coal plants providing about 43%. Natural gas provides 12%, with the balance (3%) from other sources including renewables. (June, 2011 data, source: ComEd) Q: Where would aggregated electricity come from? A: The blend of power sources will be specified in Evanstons Plan of Governance. As in Oak Park, we hope to use 100% renewable energy while also reducing costs. Q: If Aggregation means lower energy costs for customers, wouldnt ComEd simply increase charges on the distribution to protect its profit margin? A: ComEd owns the distribution system only and does not realize profits or losses from the sale of energy. ComEd has worked for several years with large commercial and industrial customers who have switched to third-party energy suppliers, and remains supportive of other customers who switch to third-party suppliers. There would be no impact on distribution rates. ICC regulations dictate that ComEd cannot introduce any separate distribution fees on municipalities that aggregate. Q: Will the City of Evanstons franchise agreements with ComEd be affected? A: The Citys franchise agreement with ComEd is related to the reliability of delivery services. Because the delivery services and energy supply are independent of each other, there will be no change to Evanstons franchise agreement based on the CCA arrangements. Q: What is electric deregulation? A: In 1997, the State of Illinois implemented a plan to deregulate Illinois electric utilities, such as ComEd. As of the date of deregulation, ComEd no longer generates electricity for its customers, but continues to provide power generated by others through its distribution system. Deregulation means that power can be purchased through any Illinois Commerce Commission-approved power supplier. Contact Information Q: How can I learn more? A: For more information: www.1save2vote3gogreen.org Information regarding CCA can be found at the City of Evanstons site for CCA http://www.cityofevanston.org/sustainability/community-choice-aggregation/