With Naperville’s electric rates almost certain to increase in the near future, City Manager Doug Krieger Monday briefed the Naperville Area Chamber of Commerce.
“The news, frankly, is not good,” he told the Chamber Legislative Committee Lunch at the Hotel Arista.
Krieger’s address was part of an ongoing effort by the City to explain to residents the unexpected increases City Council will vote on early next month that will hike the rates 6 percent on May 1, 2014 and another 7 percent May 1, 2015.
For the average residential energy user, the increases will translate into an additional $98 the first year and $102 the second.
The 2011 rate study done by the City had estimated that increases would be zero for the first two years and 2 percent for three years after, but subsequent developments made that plan unworkable as it related to maintaining a mandatory fund balance.
Krieger listed several reasons why the original projections fell short, including problems stemming from the City’s 28-year contract with the Illinois Municipal Electric Agency, a consortium that serves various municipalities with electric power and obtains that power from a variety of sources.
Among those sources is the Prairie State Energy Campus and coal mine, which has experienced rising costs due to delay of service and rising construction costs.
But also culpable are the fluctuations in weather, unusually low costs of natural gas in recent years, increasing government regulations and ensuring the ability of the City-owned utility to meet peak use demands.
Krieger said that natural gas was an “extremely volatile commodity” while stressing that the future of federal regulation — and its effect on energy costs — were unknown.
But he did say that the two coal plants IMEA purchased its energy from were likely to not suffer the effects of added regulation since they both used relatively new technology.
Krieger acknowledged that some commercial users in Naperville would pay more, calling the new rates a “mixed bag” but also pointed out that after one year of ComEd’s residential rates being uncharacteristically lower than Naperville’s, Naperville’s rates would in the future again be below what the average ComEd customer paid.
“We are cheaper than what’s out there,” he said.
One audience member asked about Naperville’s electric rates compared to the other municipalities served by IMEA.
He said that Naperville was more expensive than some of the other cities, but explained it by noting that Naperville was a relatively new member of the consortium.
“We pay a higher rate because we came in late,” he said.
Another question related to paying closer attention to the governance of IMEA, a reference to the feeling among some that Naperville wasn’t well-represented on IMEA’s Board of Directors.
Krieger would only say that IMEA was receiving a “higher level of scrutiny.”
One audience member mentioned the Illinois state tax on electricity and asked what could be done about it, but Chamber Legislative Committee Chairman Kevin Gensler would only say that the Chamber would study the problem further before making any policy recommendations.
“We’re looking at all of that,” he said.
City Councilman Steve Chirico noted that increasing rates on any City service was not easy, but he stood behind City staff’s recommendation.
“I think we made the right decision,” he said.