October 12, 2006

SIU joins consortium to lower electrical costs

by Sue Davis

CARBONDALE, Ill. -- Southern Illinois University's Board of Trustees today (Oct. 12) approved an agreement aimed at saving the University more than $9 million in electricity costs during the next two fiscal years.

SIU will begin purchasing its electricity in bulk at a fixed rate Jan. 1 through a university consortium. In anticipation of rising electrical costs, SIU Carbondale, SIU Edwardsville, Western Illinois University and Eastern Illinois University joined together to see what kinds of rate they could obtain on the open market.

The consortium received four formal proposals with the top proposal coming from MidAmerican Energy Company. MidAmerican is the largest utility in Iowa and is strategically located in the middle of markets stretching across South Dakota, Iowa and part of Illinois

Board approval paves the way for $6.74 million in projected savings for SIUC over the next two years, and $3 million for SIUE over the same time period. The two-year contract includes the option to renew yearly for up to eight years after that.

The negotiated rate for the initial two-year contract with the consortium will be 6.62 cents per kilowatt hour during peak periods and 4.13 cents per kilowatt hour at off-peak times.

MidAmerican provides service to more than 706,000 electric customers and more than 687,000 natural gas customers, most of whom are located in a 10,600-square-mile area from Sioux Falls, S.D. to the Quad Cities area of Iowa and Illinois.

Effective Jan. 1, non-residential electricity consumers become eligible to "shop" for electrical energy suppliers, while maintaining the local electric utility's regulated control over the delivery of electricity.

Even with the new fixed rate, SIU administrators expect to spend $120 million for electricity at SIUC ($90 million) and SIUE ($30 million.)