Batavia electric customers ask judge to reinstate suit over prices
A group of Batavia utility customers is trying to get a federal judge to reinstate their class-action lawsuit over the city's involvement in the Prairie State Energy Campus by saying consultants' advice to city officials prevented residents from also advising the council.
The suit now contends the consultants were "fully aware" that Batavia's ability to commit to the project depended on having ratepayers bearing the cost of investment.
The amended complaint, filed Oct. 23, again alleges that consultants "negligently misrepresented" aspects of the plan to build and operate Prairie State, including how much it would cost to build and how much the electricity generated would cost. Prairie State is a mine-fed coal-fired generation plant in southwestern Illinois. It began operating in 2012.
According to the amended lawsuit, had the Batavia City Council "been accurately informed about the project," ratepayers could have petitioned the council to conduct an advisory referendum on the proposal in elections in November 2006 and April 2007.
The April 2007 election took place one day before the council approved a final commitment to have the Northern Illinois Municipal Power Agency, to which Batavia belongs, invest in Prairie State. Batavia committed to purchasing a minimum amount of electricity, whether it needed it all, assuming that electrical consumption would increase as the town grew. It was also trying to hedge its bets for steady costs for power for the long term in a newly deregulated electrical market. But construction cost more than expected; the per-megawatt-hour cost of the electricity is higher than anticipated; Batavia's consumption did not grow as anticipated; and market costs for electricity decreased, leading the city to sell excess electricity at a loss.
The original lawsuit was filed in August 2014 in Kane County Circuit Court by nine Batavia residents and businesspeople, including the late Joe Marconi and his wife. The outspoken Marconi decided to take legal action after receiving a bill for $1,000 for one of his downtown properties, the Gammon Corners, which contained a shop and his personal residence.
Marconi died in December. And the defendants asked the case to be heard in federal court, since some of the defendants were based in Indiana and because Prairie State has investors from throughout the Midwest.
In August, federal judge Rebecca Pallmeyer ruled that if negligent misrepresentations had been made, they were made to city and Northern Illinois Municipal Power Agency officials. And since Illinois law requires a finding that plaintiffs in a lawsuit relied on such representations when making decisions, the people suing weren't eligible, because they weren't the ones making the decision to contract with Prairie State. Those decisions were made by the city council and the power cooperative. Pallmeyer dismissed the case.
The lawsuit never got to the point where Pallmeyer ruled on the claims made.
Batavia must buy at least 50 megawatt hours from Prairie State, via NIMPA, for 27 more years. When it signed the deal, the council expected the cost to be $46 per megawatt hour. As of June 2014, the cost has been as high as $179 an hour, according to the original lawsuit. As a result, Batavia customers may end up paying $19 million more than they otherwise would have for electricity during the life of the contract, according to the original lawsuit.
The defendants have until Dec. 4 to respond to the amended lawsuit. The defendants are the Indiana Municipal Power Agency; the agency's Services Corp.; Rajeshwar G. Rao, president and chief executive officer of IMPA; engineering consultant Sargent and Lundy LLC; and engineering consultant Skelly and Loy Inc.