Batavia delays talk of raising electric rates
Editor's note: This story has been updated to correct that the city council is considering hiring the Childress Duffy law firm, but has not voted on the contract.
Talk about raising the price Batavia charges for electricity was postponed Tuesday night at the request of Mayor Jeff Schielke. He said the city's attorney, Kevin Drendel, advised him to pull the item off the council's committee-of-the-whole agenda, because the city is exploring what legal actions it could take to get out from under an onerous power-supply purchase contract.
"We don't want to send any mixed messages here," Schielke said. "We should just bag this (the rate increase discussion) for awhile."
Alderman Alan Wolff strenuously objected.
"We have a budget (preparation) we have to get through. We have an obligation to pay for electricity. I think we are just pushing this down the road," Wolff said.
The city staff is preparing the proposed 2016 budget to present to the council in November, and Wolff said they need to know the electric rates to calculate that part of the budget. The fiscal year starts Jan. 1.
A consultant's report that was to be presented Tuesday said that the city should raise both the customer and energy charges for all classes of customers. Residential customers would pay 5.88 percent more if the energy rate was raised from 9.79 to 10.65 cents per kilowatt hour, and the customer charge would go from $14 a month to $15.25, if the recommendation was approved.
Wolff said he doesn't want to "surprise" residents with a rate increase in March or April, with just one month's notice. Typically, rates change on May 1. And, he said, what if it takes a year for the city to figure out what it wants to do as far as legal action. In the meantime, a rate increase is needed to purchase the electricity, he said. If the city can get a better price for electricity, the council could always reduce what it charges utility customers, he said.
"If the (Prairie State) contract changes and we can get it (electricity) for less, that is the best thing that can happen," Wolff said.
Alderman Dave Brown suggested that the mayor try to bring the matter back within a week or two.
The city has hired the law firm Childress Duffy to review documents relating to the council's decision in the early to mid-2000s to form the Northern Illinois Municipal Power Agency, to have the agency borrow money to buy in to Prairie State, and for the city to get its power from Prairie State. It is contracted for the next 27 years to take a minimum amount of power, whether or not the city needs it. It currently does not need all the electricity, and when it tries to sell it, is doing so at a loss.
Childress Duffy is the firm that brought a class-action lawsuit in 2014, on behalf of Batavia utility customers, against consultants who advised the Batavia council to buy in (via the agency) to Prairie State, which consists of a coal mine and two generation plants. They alleged the consultants were negligent in their representations to city officials about several things, including the price of producing the electricity. The electricity costs more than the city expected.
A federal judge dismissed the lawsuit in August, saying the utility customers didn't have the ability to sue for misrepresentation because they weren't the ones who made the decisions.