City of Chicago Contracts Constellation NewEnergy as Electricity Supplier

Lee Edwards | As of Wednesday, November 20, 2013

Constellation NewEnergy, an Exelon company, has been hired by Chicago’s s Department of Fleet and Facility Management (2FM) to manage the city’s facility and street lighting accounts under a 25 month contract.

This newly signed contract is aligned with the zero coal municipal electricity aggregation agreement approved by the City Council in December 2012. By eliminating coal from the electricity sourced for the supply of City facilities, an equivalent of 221,000 cars will be removed from local roads.

Under the agreement, the City has secured a two percent discount from their previous electricity contract despite skyrocketing regional transmission and other tariff costs, amounting to a reduction in City electricity costs of $1.2 million over two years.

“Through the success of the municipal aggregation program, the City of Chicago has decreased its carbon footprint while delivering savings to residents and small businesses,” said Mayor Emanuel. “Our agreement with Constellation will build on this success while creating a cleaner, healthier environment for our children.”

Constellation was selected from a pool of Qualified Bidders that represent some of the most sophisticated and financially stable suppliers in the region. Constellation was selected after three planned pricing events yielded successive reductions in bidder pricing. Constellation was the low-price bidder in all categories, and has agreed to meet all City contract terms and conditions. The actual rate and price weighted average price for the fixed facility portion is $42.67MWh (annualized).

The new savings will apply to the 2FM portfolio which includes all City owned facilities that 2FM manages, including all City libraries, police and fire stations as well as buildings like the Cultural Center, City Hall, Harold Washington Library, O’Hare and Midway airports. 2FM manages 450 facilities and all of the City’s street and traffic lights.

“We’re pleased to partner with the City of Chicago on an agreement that will lower costs, enhance sustainability and advance Chicago’s clean energy leadership,” said Louis J. Hutchinson III, vice president, public sector, Constellation.

In addition to capturing historically low market prices, the contract also requires Constellation to source the electricity from non-coal fueled assets. By eliminating coal and transitioning to cleaner energy produced by nuclear and natural gas generation facilities based in Illinois, the City will reduce its carbon emissions by 99.5 percent and remove the equivalent of 221,000 cars from the road. The City’s agreement with Constellation also complies with Illinois Renewable Portfolio standards. Meeting this no-coal supply requirement does not add any cost to the City, and will contribute to meeting the City’s Climate Action Plan goals.

Mayor Emanuel announced this new agreement while accepting the “Carbon Crusher” award at a national municipal electricity aggregation conference hosted by LEAN Energy US. LEAN Energy, a non-profit, membership organization dedicated to the accelerated expansion and competitive success of clean energy municipal aggregations nationwide, provided this award to the City for setting new standards for clean energy with its municipal aggregation agreement with Integrys Energy Services.

The City’s aggregation program, approved by the City Council in December 2012, provides approximately 750,000 customers with electricity while saving Chicago residents and small businesses $26 million since February 2013 on their electricity bills. This agreement, the largest of its kind in the country, has earned national recognition for eliminating coal from the City’s portfolio and containing 5 percent wind energy sourced from Illinois wind farms, doubling what customers received via ComEd.

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