With Naperville residents facing electric rate increases of 6 and 7 percent in the next two years, city officials held an open house Thursday to give the public more information on the hikes.
“I don’t think that 5 or 10 percent bothers me,” Naperville resident Jim Camasto said after perusing the charts prepared by city staff to explain the reason behind the proposed increases.
He noted that he was in favor of going as high as a 10 percent increase if it would solidify the electric utility’s cash reserves.
Camasto was one of about 50 residents who showed up to question available city staff and ask questions of several City Council members on hand.
Since 2007, Naperville has been a member of the Illinois Municipal Electric Agency, a consortium of municipalities that purchases electric service from a variety of different sources.
One of those sources, the Prairie State Energy Campus, is a coal-based energy supplier that has recently undergone rising costs due to mechanical problems and construction cost overruns at its facility downstate.
But Prairie State is only one source of energy for the agency. Other factors leading to the rate hikes include inconsistent weather and the unexpected availability of cheaper natural gas.
The low price of natural gas in 2012 contributed to less demand for energy from IMEA’s own energy providers.
“They get a little less for what they sell into the market,” Mark Curran, City Public Works-Electric manager, said.
Naperville conducted its last rate study in 2011, but actual electric costs since then have exceeded estimates by 9 to 16 percent.
The result is that Naperville’s electric utility finds itself with a $14 million deficit that has to be made up either by borrowing or raising rates, or some combination of both.
The increases, which are the official recommendation of city staff, still have to be approved by City Council and would go into effect on May 1 of 2014 and 2015.
The yearly increase for the average customer is estimated to be $98 for the first year and $104 for the second year.
A previous council workshop on the subject produced the recommendation and what looks to be a consensus among City Council members that the increases are the prudent choice.
“City Council made an unfortunate decision in 2007,” Councilman Joe McElroy said, noting the 28-year contract Naperville was locked into with IMEA and the likely direction of energy production in the United States. “Coal is not exactly the energy source of the future.”
But McElroy indicated that he supported the proposed increases as a “middle position” acceptable to all and pointed out that maintaining Naperville’s record on providing service was an important factor in the equation.
Indeed, the city provided figures showing that Naperville’s average down time for electric service stood at 15.38 minutes per year, as opposed to ComEd’s record of 227.36 for the entire area it covers.
“In my mind, efficiency trumps price,” McElroy said.
City Manager Doug Krieger agreed, stressing that dependable service was especially important to business owners who suffered not only inconvenience but lost revenue during power outages.
McElroy’s colleague on the City Council, Bob Fieseler, isn’t convinced of the wisdom of the proposal and said he plans on voting against it, vowing not to go any higher than a 5 percent increase in rates.
He agreed with McElroy about the 2007 decision, saying that the City was essentially locked into the deal with IMEA and forced to “moderate the (cost) swings” that resulted in IMEA’s business decisions.
But Fieseler said that the city could take other steps to counter the situation, suggesting that if a situation arose similar to Prairie State’s cost overruns, Naperville could make an offer to IMEA that either the consortium or, in this case, Prairie State, could pick up some of the extra costs.
Fieseler pointed out that out IMEA’s most recent figures showed it providing about 4.1 billion kilowatt hours to its customer municipalities.
Naperville purchased 35 percent of the total, making it easily IMEA’s biggest customer.
One resident seemed to agree with Fieseler.
“I’m not happy that there’s a rate increase coming,” said Lupe Priebe.
But she was also realistic about the need to put the electric utility’s finances in order.
“I can accept that,” she said.