For weeks, I’ve been focusing on the electricity part of the District’s no-bid contract with the Illinois Energy Consortium.

The IEC sells both electricity and natural gas. Some school districts buy just one of those commodities from the IEC.

District 211 buys both.

The agreement that District 211 entered into with the IEC was recommended by Superintendent Roger Thornton and approved by the school board in May 2006.

Startling documents I’ve seen raise a bevy of questions about what the District 211 school board was told about natural gas prices at that meeting in May 2006.

At the meeting in question, Superintendent Thornton distributed a memo entitled Analysis of Energy Cost Proposals. The memo is dated May 25, 2006.

A paragraph on the third page under the heading “Natural Gas” reads:

The same three vendors supplied a historical analysis of their pricing structure for a twelve month period beginning on April 1, 2005 and ending March 31, 2006.

When Sup. Thornton writes “the same three vendors” he is referring to the Illinois Energy Consortium (the IEC), Constellation NewEnergy (CNE) and ComEd/Exelon. ComEd was the District’s existing energy supplier in May 2006.

Most people–including I presume the school board members–might have taken the quoted sentence, along with other features of the memo, to mean that District 211 had received bids of some type from each of the three energy vendors.

The question to ask, here, is:

What is the difference between obtaining “historical price data” and obtaining a bid?

Had I been on the school board, I know that since Sup. Thornton was putting information before me about historical price data as the primary component of why he was recommending a contract with the IEC, I would have assumed that historical price data is the best way to make decisions about energy vendors.

Had I thought that, from what I’ve subsequently learned, this would have been a naive assumption. Since starting this blog, I’ve had comments and emails from people who know a lot more about energy prices than I ever will. I asked one of them to give me a perspective on whether historical price data is the best way to assess which vendor to choose.

This is what he responded:

Anyone in the energy industry knows VERY well that past pricing has absolutely nothing to do with future costs. Nothing. It’s a pointless exercise to even LOOK at any past pricing when considering a future Supplier. You have to evaluate the contract under which the gas will be sold to you. Period. What does the contract call for as the price basis for you going forward? Period. Then with a thorough understanding of the contract, and a thorough working knowledge of how gas prices change and why, one can make an intelligent, educated decision. Period.

I welcome additional comments or email from people conversant with this area.

Apart from this, though, the next big question to ask about Sup. Roger Thornton’s May 26 memo is how he arrived at the historical price data he says was obtained from

the three vendors [who] supplied a historical analysis of their pricing structure.

This post is getting long, though, so I’ll devote a separate post to that.