Batavia residents question decisions surrounding electric rate increase

Published: Monday, Feb. 24, 2014 10:25 p.m. CDT • Updated: Tuesday, Feb. 25, 2014 6:43 a.m. CDT

BATAVIA – Residents at Monday’s Joint Committee of the Whole meeting peppered city officials about the need for an electric rate increase, including wondering whether the decision to invest in the Prairie State Energy campus was a sound one.

Residents could see their electric rates increase by at least 10 percent starting in May. Batavia Public Works Director Gary Holm said that additional revenues would be needed to account for increased purchase power costs and the depletion of rate stabilization reserves.

In 2007, the Northern Illinois Municipal Power Agency, of which Batavia is a member, agreed to a long-term power contract to purchase electricity from Prairie State.

City officials said there were higher than anticipated costs related to the construction of the plant.

The project was estimated to cost $3.9 billion at the time of construction, but ended up costing $4.9 billion.

In addition, the city has looked at selling off some of its power because it doesn’t need as much as expected because of the economic slowdown.

Batavia’s contractual debt service obligation for the project is about $15 million annually through the year 2040.

At the same time, the city’s overall costs for power are up.

Holm said for the period from 2010 to 2013, purchase power costs have increased a total of $7 million, or about 30 percent.

Residents would see a 10 percent rate increase in their electric bills if aldermen approve an additional half-percent home rule sales tax that could be allocated each year toward rate relief.

The one-half penny of each $1 in sales could provide up to $1.5 million in additional funds, officials said. If aldermen decide against implementing the additional tax, then a 16 percent electric tax increase would be needed, city staff said.

In addition, staff has recommended an increase to the base rates for all customer classes.

The planned increase for residential customers is $4 a month.