R2023-93 Resolution Authorizing the Execution of a Service Agreement for the Electricity Supply for Residential and Small Commercial Retail Customers Under the Municipal Aggregation Program

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MEMORANDUM 2023-09 DATE: May 15, 2023 TO: Honorable Mayor Julie Moore Wolfe and City Council FROM: Scot Wrighton, City Manager Jon Kindseth,Deputy City Manager SUBJECT: Resolution Authorizing the Execution of a Service Agreement for the Electricity Supply for Residential and Small Commercial Retail Customers Under the Municipal Aggregation Program. SUMMARY RECOMMENDATION: Staff recommends the City Council authorize the City Manager to execute a supply agreement for electricity for the Municipal Aggregation program when optimal pricing is received. BACKGROUND: The City of Decatur has run successful municipal aggregation programs for over a decade leading to millions of dollars saved by our residents and small businesses. Every few years new pricing had been secured by the City for our residential and small commercial electrical customers, who had not opted out of this program. Historically the City has been able to secure 10-20% savings in electrical supply costs. There have typically been approximately 35,000 accounts included in the aggregated electrical supply purchase made by the City. The City's last electrical aggregation pricing expired in December of 2021. The City was not able to secure favorable pricing at that time and residents were sent back to the utility(Ameren). Our residents have been with Ameren pricing since January 2022. The City did enter into an agreement with Arcadia Solar which provided a community solar option with a 10%savings over Ameren. Due to the conflict in Ukraine, rising inflation last year, and global energy challenges pricing has been unfavorable from Ameren and alternative suppliers since 2022. This is starting to change. Ameren's rates are starting to fall from over 12 cents/kwh and suppliers have started to provide more favorable rates as the future seems less unpredictable. The current price, to compare that most of our residents are paying for electrical supply, is 11.83 cents/kwh. We have recently received pricing below 10 cents/kwh and believe we can save our residents about 15% off of Ameren's supply price through an alternative supplier. Due to the violability of energy costs, pricing received for electricity is typically only good for 24 hours. There can be significant pricing swings on a daily and certainly a weekly basis. The City will receive final and best pricing again on Monday, May 15`h. Staff may recommend that this pricing be accepted, or we may opt to reject that pricing and secure pricing again in a week or two. This resolution will authorize the City Manager to continue secure pricing until such a time when we believe that it is the lowest it will be before final execution.