Lawsuit


I started this discussion here.

To review, here’s the May 25 memo from Sup. Roger Thornton to the District 211 school board advocating the choice of the Illinois Energy Consortium as D211’s energy provider, for both electricity and natural gas.

The document relies on historical prices as the basis for choosing the IEC over ConstellationNewEnergy or ComEd as the district’s natural gas provider. (Note: An energy insider tells me that historical prices are not the best way to evaluate a natural gas contract.)

However, careful scrutiny of documents filed with the court in the lawsuit against District 211 suggest that the prices reported in that May 25 memo do not reflect the prices provided to the District by ConstellationNewEnergy.

In one court filing, D211 energy manager Reece Thome explains that he questioned the historical prices supplied to him by ConstellationNewEnergy.

Here is a copy, filed with the court, of the historical prices supplied to District 211 by ConstellationNewEnergy.

Mr. Thome’s affidavit to the court explains that the figures he gave to Sup. Thornton to reflect ConstellationNewEnergy’s historical price data were different from those that were actually provided to him by ConstellationNewEnergy.  I’m not in a position to evaluate the reasons he gives for changing the figures.  His affidavit also says in paragraph 25 that he discussed this difference with Sup. Thornton.

The historical prices actually supplied to District 211 by ConstellationNewEnergy were $377,516.00 lower than the historical prices supplied by the IEC.

The ConstellationNewEnergy historical prices that Sup. Roger Thornton provides in his May 25 memo to the 211 school board are $1,180.00 higher than those of the IEC.

This approximately $1,000 price difference is what led Sup. Thornton to propose to the school board that they adopt the IEC as their natural gas supplier.

The words that trouble me the most in Sup. Thornton’s May 25 memo are these:

The same three vendors supplied a historical analysis of their pricing structure…

He then goes on, in a chart, to provide the figures that ConstellationNewEnergy is said to have supplied to the District.

But, if I am reading these documents correctly, the prices from ConstellationNewEnergy that Thorton alludes to in his May 25 memo in saying that the IEC would cost the District approximately $1,000 less, are not the figures Constellation NewEnergy actually gave the District.
And, there is no indication of this in the May 25 memo.

So how could the school board have known about the change, since the May 25 memo doesn’t say a change was made? It simply reports the changed figures.

I’m very curious to hear from any District 211 school board members about this.

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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.

Thank you so much to a reader for providing me with an inside report on a key meeting held in District 211 union HQ last Thursday, April 5 to discuss what the lawsuit against District 211 for entering into a no-bid contract for electricity means to the union.

Hosted by union leader John Braglia, the meeting was attended by about 25 union reps, four members of the Illinois House, two members of the Illinois Senate and three candidates for the District 211 school board. None of the school board incumbents who are running for re-election attended.

There as invited guests were Todd Rowden and Timothy Binetti. They are the attorneys in charge of the lawsuit brought by Bill Tarsitano against D211 for its no-bid energy contract.

State Rep. Suzanne Bassi was there and, we hear, was given an earful for her advocacy of an insane piece of proposed state legislation that would exempt school districts from having to look at competitive price bids for electricity and natural gas.

State Rep. Paul D. Froehlich, a Republican from Schaumburg, was also there. Rep. Froehlich has a website here.

According to the report we’ve been given, Rep. Froehlich crisply and authoritatively interjected “this doesn’t pass the smell test” as he listened to a description of the process by which District 211 entered into the now-infamous no-bid energy contract.

Suzanne Bassi must not see it the same way, since she has refrained from publicly disassociating herself from the absurd HB 261.

We hear that a young firebrand at the meeting denounced Bassi as a “mouthpiece for the superintendents”.

We also hear that Bassi is closely associated with District 211 school board president Debra Strauss, who is fighting to retain her position of influence on the school board. Besides being the chair of the D211 school board, Strauss also chairs lobbying firm Ed-Red, which is known to be lobbying in favor of HB 261 with your tax dollars.

As noted here, on March 22, District 211 administrators posted this document on the District 211 website.

The document was (and still is) posted in a prominent place on the front page of District 211’s website.

The document was clearly posted there in an attempt to lay to rest the questions and concerns that have been raised here and elsewhere about the contract between District 211 and the Illinois Energy Consortium for electricity.

I think it’s time to remove the document. I call on District 211 school board members to do the right thing and make sure that this document is either removed or revised.

As readers know, District 211 is being sued by Bill Tarsitano, who claims that District 211 illegally entered into a no-bid contract for electricity and natural gas with the Illinois Energy Consortium.

There are two important and separate questions:

(1) Did District 211, as alleged, break Illinois state law by failing to consider competitive bids?

(2) Under the terms of its contract with the IEC, has District 211 been losing or saving money on electricity?

It is the second question that this document is supposed to answer.

The document shows that District 15 is paying less for electricity (District 15 used a competitive process to select its electricity vendor) than District 211–specifically, over a 17-month period, District 15 would pay about $74,000 less than District 211 for the same amount of electricity.

The authors of the document, however, than say that District 211 saved $133,188 in the four-month period from 8/2006 through 12/2006 versus what it would have paid to ComEd, if it had been buying electricity from ComEd in that four-month period.

As I pointed out here, that is irrelevant since the important question is what District 211 would have paid during that four-month period for electricity if it had purchased electricity through a competitive process.

Meanwhile, I’ve obtained copies of District 211’s electricity bills for December 2006 and January 2007. This tells me where D211 administrators got the figure of $133,188.

According to the electricity invoices in front of me, the Illinois Energy Consortium claims on its February 26, 2007 invoice to District 211 that electricity used by District 211 through January 23, 2007 saved the District $133,188 over what it would have paid to ComEd in a comparable period.

So not only is the figure of $133,188 irrelevant, because it has nothing to do with what the district would have paid if it had gone through a competitive bidding process such as that used by District 15, but the figure isn’t even correct on District 211’s own terms. They represent the “savings” of $133,188 as occurring through the end of 2006, and that’s not correct.

Even though the figure is fundamentally irrelevant, it matters in assessing the District’s comparison to District 15, since that comparison starts on January 1, 2007.

It’s a further reason why District 211 administrators should remove this document until and unless it is revised to reflect reality.

As I said the other day, based on documents I’ve been sent and have also sought out, I’m working on a post about an aspect of the contract between the Illinois Energy Consortium and District 211. This has to do with what the District 211 school board was told by the administration, when they agreed to get into a contract with the Illinois Energy Consortium, about what prices might be charged by another company. It’s complicated but moreso it is disturbing. I don’t really have the heart to write about it on Good Friday.

I wish all my readers a very Happy Easter.

See you on Monday.

I’ve been sent some revealing information in this case which I haven’t really had time to review.  I should be able to review and post by late Thursday/early Friday.

A reader was the source for this blog’s revelation last week that paid administrators working for District 211 and District 15 spent two days in Springfield lobbying for the atrocious HB 261, a bill that would exempt school districts from having to get bids for utility contracts.

As my readers know, District 211 is currently defending itself against a lawsuit because it entered into a no-bid contract for electricity with the Illinois Energy Consortium. The concern that we as parents and taxpayers have about that no-bid contract is that it seems very likely that District 211 is paying more for electricity than it needs to pay, in spite of District 211’s increasingly lame attempts to claim otherwise.

Not only are we paying more for electricity, we’re also paying for attorneys to defend against the lawsuit, and now it turns out we’re paying for our administrators to spend days in Springfield lobbying for a bill that means that in the future the District 211 school board could with impunity enter into no-bid contracts for electricity and natural gas.

UNBELIEVABLE.

Would you like some answers from the District 211 school board members? I know I would, so I wrote each of them last week.

I also wrote to all the board members and candidates for District 15, since a District 15 employee also spent two days in Springfield lobbying on behalf of the atrocious HB 261. One District 211 school board member responded. He said he’d answer my questions if I gave him my telephone number. So much for “improving communications”.

Meanwhile, two District 15 school board members and/or candidates responded to the question I asked them about what they think about we, the parents and taxpayers, footing the bill for an administrative employee to lobby for a bill in Springfield that is so bad that Suzanne Bassi has withdrawn herself as chief co-sponsor–even though, as we know from District 211 school board member Bill Lloyd, she came under heavy pressure from District 211 honchos to support this absurd legislation.

Here are excerpts from the two answers I got. I post these because I think it’s important for concerned citizens to know what our school board members and candidates think. If you like the answers, or if you dislike the answers, take this as a signal to get involved.

I think that lobbying by District employees is allowable where the lobbying agenda has been fully disclosed, deliberated upon, and approved by a vote of the Board of Education. I think it is important that District administrators not set their own agendas, and it is up to the board to make sure that the administrators and their lobbying efforts serve the best interests of the community.

and

I am most certainly AGAINST our employees lobbying for this at 211 or 15. Our employees and superintendent all work for the tax payers/community under the direction of the board. I don’t think that there is one community member that would support the district in its effort to loosen the constraints of the laws that bind them. (ie raise 10k to 25k) Our children and their education should be our focus.

Blog readers: Please ask District 211 and District 15 board members and candidates where they stand on this! And let me know what you hear

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