Illinois School Districts on Energy: To Group Buy or Not to Group Buy

School board meeting room. Decision time: to group buy for electricity or natural gas or not?

By Becky Thompson

January 15, 2018 – As an Illinois public school administrator, you hold an enormous amount of responsibility for your district. You have a finite budget, and what you spend is public knowledge. With that kind of transparency comes the expectation to spend it responsibly. No pressure, right?

Considering that schools in the US spend $8 billion annually on energy (more than textbooks and computers combined), proper management of your energy is essential.

But with so many options available, how do you know what’s best for your district?

We could spend hours explaining different products and buying strategies. But let’s focus for now on one of the biggest questions facing most public schools and how they purchase energy.

Should I use a buying group or an energy advisor?

When natural gas (and later electricity) became deregulated in Illinois, the market flooded with options – some good, some not. As with most new things, this opportunity brought uncertainty.

Enter buying groups (aka consortiums).

Making decisions with energy buying groups.

Buying groups offered a host of benefits, including:

  • “Bulk buying” meant leveraging buying power, presumably achieving lower rates.
  • Feeling of less risk through group-made decisions. (i.e. the “group mentality”)
  • Less individual responsibility to watch the market and identify actionable opportunities.
  • Easy transaction. The group coordinators pick a supplier, present options, and school administrators sign and return the paperwork.

Buying group drawbacks.

As the market matured, districts began to shift towards brokers and independent energy advisors.
Former consortium members found that:

  • More buying power did not necessarily mean lower rates, but it did mean socialized costs. Not all accounts in the group received an A+ for their energy use. (Translated: higher costs to all in the group.)
  • They were sometimes put in a position of more risk by not having control over when the group went to market.
  • Advisors still watched the market and kept the responsibility off the district’s plate. But opportunities were individualized and more meaningful to the district.
  • The buying groups focused solely on supply, leaving the district administrators to figure out efficiency measures and revenue-generating demand-side programs.

Do your homework on what energy strategy works best for your school district.

As for whether or not to use a buying group to purchase your district’s energy, that is a decision only you can make for your district. You know your schools better than anyone and have to make choices in your best interest.

Just remember to take into account all factors and do your homework first. If nothing else, speak to an energy advisor to check out all of your options before jumping into any long-term commitments. You might just walk away with a cost-saving strategy that gives your budget some breathing room.


About The Author

Becky is a Strategic Energy Advisor specializing in the public sector, including schools and municipalities. She has been in the energy industry for over five years, working from the ground up as an account manager and then as an electric pricing team lead. Her background knowledge of the inner workings of an energy company helps identify actionable strategies for making her clients’ energy strategies both easy and cost effective. In her free time, Becky enjoys any activity that requires being outside and making her son belly laugh.

Becky can be reached via email at bthompson@naniaenergy.com or phone at 630-225-4561.

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