Proposed Fee We are aware of some inexperienced consultants providing below market fixed rates and/or usage-based rates to other communities. Independent Energy Consultants would like you to know that we more than offset our fees and consistently broker the lowest prices in the market. We accomplish that by: –Having an excellent reputation with suppliers. They know we will relieve them of a great deal of work – please talk to some. –Writing a properly written RFP that eliminates ambiguity and results in less risk premium being built into supplier offers. –Creating a great deal of supplier liquidity for our bids. When suppliers know they are in competition with many suppliers their pencils get sharper. –The proper sequencing of bids can lead do better pricing. –Having an excellent grasp on when to go to market. –Being in the market on a daily basis gives us tremendous price discovery, so we wont be fooled by artificially high prices. We understand how far supplier margins can be compressed. –Reducing our fee in all likelihood will not reduce the cost to your residents, it will simply increase the supplier margin. Our fee is very reasonable to suppliers. 3
Proposed Fee (cont.) IECs standard rate for Governmental Aggregation has been $0.0005/kWh That fee was modest in the year 2000 –We have not sought a rate increase in 11 years IEC has already agreed to reduce our standard fee by 20% for Will County We will reduce it by another 10% for any subsequent work 30 other communities now understand our rate structure and level of service and have agreed to the same fee we are proposing to Will County. –$0.0004/kWh for initial term, $0.00036/kWh for subsequent terms. IEC is at risk of spending over $100,000 and never earning a penny for our efforts. IEC has already spent over $10,000 preparing for and developing materials to support you program. 4
Proposed Fee (cont.) An Example of a how a Good Consultant pays for itself. We have seen Illinois communities lock into electric prices in the range of 5.7 – 6.0 cents/kWh. IEC recently brokered an equivalent 2-year fixed-rate electric offer for an Illinois industrial customer that was 3.91 cents/kWh! –Note: We understand this industrial customer receives lower rates than a residential customer but we can use it as a starting point to say with our skills and process, we could conservatively broker a residential rate of 5.2 cents/kWh. If we are able to obtain a better rate for a program of just 1/2 of a mil ($0.0005/kWh) heres what it would mean to your residents in total program cost. Less experienced/skilled broker: 1,300,000,000 kWh X $0.0525/kWh = $68,250,000 IEC brokered illustrative offer: 1,300,000,000 kWh X $0.0520/kWh = $67,600,000 Difference in brokered offers is $650,000! –That would be an estimated $26/year/account savings over our nearest competitor Why trust your program to a low-ball offer with no experience or proven track record. The net cost to your residents is what matters. 5
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