Batavia has stopped its efforts to get permission to sell electricity to people and businesses in other areas, at the request of its other partners in the Northern Illinois Municipal Power Agency.
The other towns in the agency, Rochelle and Geneva, were concerned that lawmakers might then also authorize other providers to sell electricity in towns that have electrical utilities, Gary Holm, Batavia's public works director, told Batavia aldermen Tuesday night.
That leaves Batavia still looking for other ways to sell its excess electricity, preferably not at a loss.
NIMPA invested about $533 million in the Prairie State Energy Campus, a coal mine and coal-fired plant in southwestern Illinois that started operating last year, and is obligated to buy 7.5 percent of the power it produces. The cost of the power last year was about 50 percent higher than NIMPA expected when it decided to invest in the plant.
Batavia has a 45 percent stake in NIMPA's investment.
Officials saw it as a way to diversify Batavia's supply when deregulation occurred. Batavia used to contract with ComEd and Wisconsin Power, and also buys on the wholesale spot market.
But electricity consumption in Batavia declined, except last year. Nationwide last year, the cost of electricity declined as the cost of natural gas, one of the fuels used to make electricity, declined. And this year, ComEd decreased its rates.
Batavia tries to sell its excess on the wholesale market, but its power costs more than other providers. Holm estimates it may only sell 17 percent of its Prairie State entitlement this year, and it will be at a loss.
In April, the city council hired a lobbyist, with the goal of getting state law changed so that it or NIMPA could sell electricity in the retail market (such as to people or businesses), without other retail providers being able to sell in Geneva, Batavia or Rochelle.
But according to the minutes of a May 13 NIMPA board meeting, representatives from Rochelle and Geneva said they were worried about consequences of opening that topic up. And an attorney for NIMPA said it was possible that if the ability were granted, it would affect the tax-exempt status of the bonds NIMPA sold to finance its Prairie State investment.
As a result of all this, Batavia City Administrator Bill McGrath said the city would stop pursuing the option.
Batavia's contract with its lobbyist, Morrill and Associates, called for it to pay Morrill $5,555 a month, up to $50,000 total, through the end of 2013.
Alderman Mike O'Brien asked why the city paid Morrill for invoices from July and August, if the work had stopped. McGrath said the firm is continuing to do work for the city.
Besides the Prairie State issue, the council learned that the rate stabilization fund will likely be depleted by the end of the year. That fund helped keep customers' rates down when the cost of purchased power went up. The city purchases power on the spot wholesale market from time to time, for example, during times of peak demand such as hot summer days.
Holm also reported that he has met with representatives of the Batavia Chamber of Commerce and some industrial customers to discuss the customers' concerns about higher rates.