The same company that heats homes in Chicago has been picked to provide the electricity that powers them.
Integrys Energy Services, a sister company to Peoples Gas, on Friday was named the city's choice to supply electricity to about 1 million Chicagoans. It's the largest such deal negotiated by a city on behalf of its residents.
The City Council is to vote on the contract Wednesday after a Monday public hearing.
Chicagoans should see discounts of 20 to 25 percent from March through June. Afterward, savings are expected to drop. Overall, the average household is expected to save $130 to $150 through May 2015, when the contract ends, according to the mayor's office.
Mayor Rahm Emanuel said Friday the deal "will put money back into the pockets of Chicago families and small businesses."
The contract calls for the elimination of power produced from coal, the largest source of greenhouse gases. About 40 percent of Chicago's electricity is from coal.
"That's a giant step toward healthier air and clean, renewable energy that supports good paying jobs in the technologies of tomorrow," said Jack Darin, executive director of the Sierra Club's Illinois chapter and a member of the advisory committee that worked on the deal.
However, the no-coal provision is largely symbolic since there is no way to know the precise origin of electricity flowing into Chicago homes.
Integrys Energy Services, a subsidiary of Chicago-based Integrys Energy Group, was chosen from eight bidders and was the only company other than Exelon-owned Constellation NewEnergy that made it to the final round.
Integrys Energy Group's board includes William Brodsky, head of the Chicago Board Options Exchange and a member of World Business Chicago, which Emanuel chairs.
The Integrys unit won the electrical aggregation contract despite Emanuel's connection to Constellation through its parent company, Exelon, which also owns Commonwealth Edison. While working at investment banking firm Wasserstein Perella & Co. after leaving the Clinton White House in 1998, Emanuel helped set up the merger that created Exelon.
Price was the determining factor, the mayor's office said.
Bidding documents, including pricing and how the contract would be structured, were not made public Friday.
In picking a price, Integrys must account for a large number of customers that will come and go. If electricity prices rise, Integrys risks losing money. Still, Integrys stands to become a dominant player in the retail electricity business and gain about $300 million in yearly revenue.
"Scale is important in this business," said Travis Miller, a utilities analyst with Chicago-based Morningstar. "The winner is immediately going to gain a huge scale advantage within the retail market."
ComEd still will be responsible for delivering electricity and fixing outages. ComEd makes its money delivering electricity, not supplying it. Customers' new bills will look like the old bills, except that the portion titled "electricity supply services" will have a new rate and include the new supplier's name.
Chicagoans can opt out and stick with ComEd or choose their own supplier like thousands of people already have.
Tribune reporter John Byrne contributed.
jwernau@tribune.com
Twitter @littlewern
Integrys Energy Services tapped to supply Chicago's electricity
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Integrys Energy Services tapped to supply Chicago's electricity
