HomeMy WebLinkAboutOrdinances - ORD-06-1349 - 11/13/2006 - AUTHORIZE INTERGOVERNMENTAL AGREEMENT PURCHASE ELEORDINANCE NO. ORD-06-1349
An Ordinance Authorizing Execution of an Intergovernmental Agreement
for the Purpose of Purchasing Electric Power for the Municipalities' Needs;
Waiving the Bidding Requirements for the Purchase of Electric Power
and Authorizing Purchase Agreements for the Purchase of Electricity
WHEREAS, several municipalities, the Villages ofLake in the Hills, Huntley and Lakewood
and the Cities of Genoa, McHenry and Woodstock, all Illinois municipal corporations, (collectively,
"Municipalities") have made or are reasonably expected to make the following findings:
A. On January 2, 2007, the State of Illinois is implementing a plan ("Plan") to deregulate
Commonwealth Edison; and
B. Under the Plan, Commonwealth Edison will no longer generate electricity for its
customers, but will continue to provide electric power through its distribution system; and
C. As a result of this deregulation, the purchase of electricity will be based on market
and auction prices and Exelon, the parent company of Commonwealth Edison, will no longer be the
sole supplier of electricity in northern Illinois, resulting in new electricity suppliers being able to
compete against Exelon and competitive market forces dictating the price of electricity; and
D. During fiscal year 2005-06, the City of McHenry spent $565,200 on electricity for
such services including, but not 'Limited to, street lighting, potable water production and distribution
and wastewater treatment; and
E. Since Commonwealth Edison has had prices fixed for the last nine years by the
Illinois Commerce Commission, which will end with deregulation through the Plan, the cost of
electricity is expected to rise 20 to 60 percent, according to information received from
Commonwealth Edison; and
F. Units of government throughout the Commonwealth Edison service area are now
looking at ways to enter the market to purchase electric power in order to mitigate some of the
economic impact of these rising electricity rates; and
G. The Municipalities have concluded that working through a cooperative group and by
negotiating directly with electric generation suppliers, the Municipalities will be able to secure
competitively priced power at a rate dramatically lower than the rate that will be provided by
Commonwealth Edison; and
H. Transaction costs of negotiating a power purchase arrangement with third party
suppliers may be reduced considerably by acting cooperatively with other units of local government;
and
Electricity, Page 1
I. Because of the way the bidding process works, the Municipalities'
Manager/Administrator/Mayor/President will need authority to approve and sign a contract with an
electricity provider which is deemed most favorable for the Municipalities within hours of the bids
being received and there will not be adequate time to return to the corporate authorities for formal
approval; and
WHEREAS, the specified Municipalities have negotiated an intergovernmental agreement
establishing the Northern Illinois Governmental Energy Cooperative ("Cooperative") for the purpose
of purchasing electric power for the Municipalities' needs at a lower cost than that available through
the Municipalities' current provider, a copy of which is attached hereto as Exhibit A (the
"Agreement"), and it is expected that additional local government bodies may also join this
Agreement; and
WHEREAS, municipalities may contract and associate among themselves pursuant to Article
VII, Section 10 of the Illinois Constitution of 1970 and the Illinois Intergovernmental Cooperation
Act, 5 ILCS 220/1 et seq.; and
WHEREAS, the Municipalities agree that there may be economies of scale, both in
administrative costs and in commodity prices by purchasing electricity together as a group, and that
in order to obtain these economies of scale, they must operate together, which is one of the purposes
of the Intergovernmental Cooperation Act; and
WHEREAS, Division 9, Purchasing and Public Contracts in Municipalities of Less than
500,000, of the Illinois Municipal Code, at 65 ILCS 5/8-9-1, requires that contracts forpublic works
or improvements be let to the lowest responsible bidder after advertising for bids, in the manner
prescribed by ordinance, except that any such contract may be entered into by the proper officers
without advertising for bids if authorized by a vote of two-thirds of all the aldermen or trustees then
holding office.
NOW, THEREFORE, BE IT ORDAINED by the CITY COUNCIL of the CITY OF
McHENRY, McHenry County, Illinois, as follows:
SECTION 1: That the Mayor be, and is hereby authorized and directed to execute, and the
Clerk is authorized and directed to attest, duplicate original copies of the Intergovernmental
Agreement between the Municipalities, a copy of which is attached hereto and made a part hereof as
Exhibit A. This approval includes explicit waiver of any conflict of interest for the law firm of
ZTEo—w7ski, Rogers, Flood and McArdle to represent the Municipalities and the Cooperative in this
matter.
SECTION 2: The Administrator is directed to take all actions necessary, including executing
a purchase contract on behalf of the City, to secure a supply of electricity for the City's municipal
needs from either Commonwealth Edison or, if a meaningful lower priced option can be had through
the Cooperative, then with the supplier identified by the Cooperative.
Electricity, Page 2
SECTION 3: The requirements of 65 ILCS 5/8-9-1, to the extent they apply, are hereby
waived regarding the purchase of electricity.
SECTION 4: At the first available meeting of the corporate authorities after the execution of
the Contract, the Administrator shall report to the corporate authorities the details of any purchase
contract.
SECTION 5: If any section, paragraph, subdivision, clause, sentence or provision of this
Ordinance shall be adjudged by any Court of competent jurisdiction to be invalid, such judgment
shall not affect, impair, invalidate or nullify the remainder thereof, which remainder shall remain and
continue in full force and effect.
SECTION 6: All ordinances or parts of ordinances in conflict herewith are hereby repealed
to the extent of such conflict.
SECTION 7: This Ordinance shall be in full force and effect upon its passage, approval and
publication in pamphlet form (which publication is hereby authorized) as provided by law.
Voting Aye: SANTI, GLAB, SCHAEFER, MURGATROYD, WIMMER, PETERSON, CONDON
I'7. TT ,.. NONE
�.ting J.aj.
Absent: NONE
Abstain: NONE
(SEAL)
ATTEST: t Cr,— C
/City erk Janice nes
Passed: NO"BER� 3, 2006
Approved: NOVEMBER 13, 2006
pjh. McHenry. Ord (Electricity. ord
Mayor Susan E. Low
Electricity, Page 3
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INTERGOVERNMENTAL AGREEMENT
FOR THE PURCHASE OF ELECTRICITY
This Intergovernmental Agreement ("Agreement') is entered into between signatory parties
below, including the Villages of Lake in the Hills, Huntley and Lakewood and the Cities of
Genoa, McHenry and the Woodstock, all Illinois municipal corporations, (collectively,
"Municipalities"). It is explicitly contemplated that additional local governmental entities may
join this Agreement at a later date with the permission of the Administrator, as defined below,
and without additional approval from the original contracting parties, and that this Agreement
shall be binding on any signatories provided that at least three of the municipalities listed above
approve this Agreement.
WHEREAS, the Municipalities agree that there may be economies of scale, both in
administrative costs and in commodity prices, by purchasing electricity together as a group; and
WHEREAS, the Municipalities agree that in order to obtain these economies of scale,
they must operate together which is one of the purposes of the Intergovernmental Cooperation
Agreement Act ("Act") (5 ILCS 220/1 et seq.); and
WHEREAS, this Agreement satisfies the requirements of that Act and the Illinois State
Constitution (Article 7, Section 10)
Now, therefore, the Municipalities agree as follows:
1. To form together as the Northern Illinois Governmental Energy Cooperative
("Cooperative") in order to negotiate an economical power purchase agreement ("Power
Agreement') and agree to be bound by such agreement under the following circumstances:
(a) This Agreement is for the purpose of purchasing power generation
supplies for delivery to the Municipalities starting as soon as economically
and practically possible in January 2007, but dependent upon the
administrative requirements imposed on Commonwealth Edison and other
power retailers operating in the State of Illinois.
(b) Each member of this Agreement shall be given one vote for purposes of
determining whether to enter into a specific Power Agreement;
(c) The Cooperative membership shall be governed by one representative of
each member (the "Governing Board"). This Governing Board shall be
responsible for researching and identifying market power purchase
opportunities, issuing RFPs for potential suppliers and considering the
purchase options for the Cooperative all no later than December 31, 2006;
(d) The Governing Board shall vote to select the best Power Agreement. A
majority vote of the Governing Board shall be required to authorize entry
into a Power Agreement. This vote may be taken by telephone or e-mail.
(e) The members agree to be bound by this vote for purposes of entry into the
Power Agreement for a 17-month period or the balance of the first 17-
month Commonwealth Edison auction period if the 17-month period has
already begun. This period is expected to terminate on or about June 1,
2008. The Power Agreement recommended by the Governing Board may
be for a lesser period than 17 months if advantages are identified.
(f) The Cooperative membership agrees to provide the necessary information
required to develop bid specifications within one business week of the
request being made by the Administrator (as defined below). Failure to
provide this information may result in exclusion from the Cooperative at
the discretion of the Administrator.
(g) With an affirmative vote as described herein, the Administrator may
verbally commit the Cooperative membership to accept a Power
Agreement and each Cooperative member agrees to execute such Power
Agreement binding their respective unit of government within the first
business day after the affirmative vote is obtained.
(h) All original parties agree to have secured authority from their respective
corporate authorities to enter into this Agreement and to execute Power
Agreements under (g) above by November 15, 2006.
(i) The Cooperative membership agrees to share all costs associated with this
transaction, which costs shall be divided between them equally based upon
their expected percentage share of the total megawatt contract ultimately
agreed upon with the power vendor.
(j) The Cooperative membership agrees to obtain waivers of any conflict of
interests from their respective boards by November 15, 2006, permitting
the law firm of Zukowski, Rogers, Flood & McArdle ("ZRFM") to
represent them and this Cooperative.
(k) ZRFM will represent the Cooperative at the rate of $195.00 per attorney
hour, which is a discount of ZRFM's non -municipal rate, and a rate of
$100 per hour for legal assistant time. All parties acknowledge this rate
will include time and expenses already incurred for researching and
creating this Cooperative.
(1) The Cooperative membership agrees to place administrative responsibility
for this transaction including approval of any new members with the City
of Woodstock Finance Director (the "Administrator"), who will report to
the Governing Board on administrative matters. The Governing Board
may elect a new Administrator or Assistant Administrator at any time.
(m) The bidding shall exclude street lights and any franchise accounts.
(n) The Parties agree that no single member shall be bound by this Agreement
until at least three governmental members have approved its execution by
November 15, 2006.
(o) This Agreement shall apply only to the first seventeen (17) month bidding
cycle. A new Agreement must be approved on any power purchase
agreement to be made for the period commencing June 1, 2008.
VILLAGE OF LAKE IN THE HILLS: ATTEST:
President Edwin Plaza Village Clerk Denise L. Wasserman
Date:
VILLAGE OF LAKEWOOD:
President Julie C. Richardson
Date:
CITY OF GENOA:
Mayor Todd A. Walker
Date:
CITY OF MCHENRY:
4.
Mayor Susan E. Low
Date:�'r��r�h�
CITY OF WOODSTOCK:
Mayor Brian Sager, PhD
Date:
VILLAGE OF HUNTLEY:
Village President
Date:
U:UschlossbergElectric Utility BiddingUntergoven Agreement doc
ATTEST:
Village Clerk Janice S. Hansen
ATTEST:
City Clerk Wendy Shaneen
ATTEST:
City Clerk Janice C. Pones
ATTEST:
City Clerk Maureen Larson
ATTEST:
Village Clerk