By Ketul Patel The Daily Northwestern

Northwestern won’t be left out in the cold by the deregulation of electricity prices, administration officials said Tuesday.

The state of Illinois will end a 10-year freeze in electricity prices in January.

Commonwealth Edison announced last month that residential electricity costs will increase by about 22 percent beginning in 2007 following a wholesale electricity supply auction.

Eugene Sunshine, senior vice president for business and finance, said NU will be insulated from unregulated fluctuations in electricity prices because it negotiated a rate cost increase with Exelon.

Sunshine said there are some risks involved in negotiating a price with a gas company because the actual price increase might be lower than the price agreed upon.

“When we have a big institution, we have the opportunity to do deals with natural gas and electricity providers,” he said. “Northwestern had to make a decision about how much risk it wanted to take. If you don’t lock in a rate, you’re subject to what the market forces are.”

Sunshine said the ComEd increase would be problematic for NU’s large electricity budget.

A 22 percent increase in the $22 million NU budgeted for electricity on both campuses this year would have amounted to almost $5 million in extra costs.

Sunshine declined to tell the specific percent increase of prices because electricity costs cannot be revealed under the contractual agreement with Exelon, ComEd’s parent company and energy provider.

But he said the increase is “reasonable.”

“We’re not happy about it, but we’ve locked in a rate increase,” Sunshine said. “We’ve protected ourselves – we’re not worried about it.”

Ronald Nayler, associate vice president for facilities management, worked with his office and consultants to determine the optimal point to lock in a rate of increase.

“We compared the costs with a number of energy providers,” Nayler said. “We locked it in at the trough.”

Sunshine said the price Nayler and his office agreed on is close to the electricity costs for both campuses projected in the school year’s budget, which was set in April.

“The price Nayler locked in is basically very close to, if not equal to, the budget we predicted last year,” Sunshine said.

“We won’t get hurt by excessively large prices in electricity costs because we’ve locked in. We’ve protected ourselves. It isn’t magic.”

This predictability in costs is especially crucial for a large institution, he said.

“Most institutions opt for some degree of certainty,” Sunshine said.

“They don’t like wide fluctuations because they could do horrific things to the budget.”

Reach Ketul Patel at [email protected].