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posted: 2/20/2014 5:30 AM

Learn why Batavia electricity bills are going up

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Batavians who come to Monday night's special meeting to learn why their electric rates might increase as much as 16 percent May 1 aren't likely to come away happy, city officials acknowledged Tuesday.

The presentation will show them what the city has tried to do to keep rates down, and what little more officials think they can do.

"I know it is not pleasant to implement a rate increase, but we (the city) are obligated to pay the bills that we get, and a rate increase is the way to do it," finance director Peggy Colby said at a city council committee meeting Tuesday.

According to Colby, the city will be charged at least $5.2 million more annually starting this year for the power it buys plus capacity charges.

And the city has lost one of its largest customers, Portola Packaging, which paid about $1 million a year for electricity, Colby said.

The city is required to buy a certain amount of electricity from the Northern Illinois Municipal Power Agency, to which the city, Geneva and Rochelle belong.

But Batavia's demand for electricity has declined, and the city has had been selling its excess at a loss.

Industrial and commercial users are the top nine of its 10,800 customers, accounting for about 40 percent of revenue.

For 2014, it estimated revenue at $48.15 million.

Administrators have proposed increasing the city's sales tax rate on general merchandise and nonessential groceries, to raise $1.7 million to be devoted to paying for electricity.

The city could then opt to raise the kilowatt-hour rates by as little as 8 percent.

With or without a boost from sales tax, and even with a 16 percent electrical rate increase, the utility is likely going to run at a deficit, according to Colby's report.

The city is also proposing to raise the monthly base charge by $4.

Officials stressed Tuesday that when it comes to the public presentation next week, they don't want to spend time talking about decisions by past city councils, including the decision by NIMPA's members to invest in the Prairie State Energy Campus, a coal plant in southwestern Illinois.

NIMPA is obligated to buy power from the plant.

"You need to frame the talk in what we are doing to solve the root problem," Alderman Drew McFadden said.

Colby agreed, but warned: "It may not result in the answer that you want."

Alderman Martin Callahan noted the city has raised electricity rates six times in the last 25 years, but four of those raises have come since 2006.

"This goes to why we need a solution. This can't continue," Callahan said.

Alderman Lisa Clark, chairman of the public utilities committee, said she hopes costs associated with the startup of the Prairie State plant will decrease as it "has a couple years under its belt."

Alderman Susan Stark suggested raising the sales tax one penny instead of a half-cent, if doing so would let the city raise electricity rates only 8 percent.

"If it works out to be $1 per $100, it's not that much," she said. Even though at 8 percent it would be higher than neighboring communities, she said she doubted somebody would drive to Target stores in North Aurora or St. Charles, rather than shop at the one in Batavia.

The home-rule sales tax increase would not apply to the sale of autos, boats, snowmobiles and the like; drugs and medical devices; or food to be consumed off premises (i.e., most groceries).

Alderman Alan Wolff, however, said he doesn't like the idea of the electric utility relying on sales tax, or the city's general fund.

The utility is an enterprise fund, he said, and needs to be self-supporting.

Monday's meeting starts at 7:30 p.m. at the Batavia Government Center, 100 N. Island Ave.

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