More electric rate increases coming for Naperville?
When the calendar flipped to 2018, Naperville residents and businesses began paying their third electric rate increase in as many years - and more could be coming.
The city council on Tuesday approved a $52,000 contract with a consultant to conduct an electric rate study, which in the past has been a precursor to changes in rates.
This study will be conducted by Utility Financial Solutions, the same firm that completed an evaluation of electric utility expenses and revenue in 2015, before the city imposed higher rates in 2016, 2017 and 2018.
Three years ago, the need to boost electric finances was strong, fueled by inaccurate expense projections, cost overruns at one of the power plants that supplies the city, and the need to begin repaying an internal loan taken from the water utility in 2014.
But this time, the projections included in the 2015 study are relatively on target, Finance Director Rachel Mayer said.
The electric utility was projected to finish this year with $22.5 million in reserves, for example, and now appears on track to top that with $25.2 million, according to a memo from Mark Curran, electric utility director
So any rate increases that might be necessary in the next few years are expected to be "moderate, not significant," Mayer said.
The new study will help set those rates.
It will cover 2019 to 2021 and will determine what customers must pay to ensure there is enough money for maintenance and pay back the $13.2 million loan from the water utility by the end of 2020, Curran said.
Residential customers in Naperville have been paying 3.6 percent more this year after also taking on increases of 3.6 percent in 2017 and 8.3 percent in 2016. Commercial customers saw an 8.3 percent increase in 2016 and increases from 0.4 to 4.4 percent in 2017 and 2018, depending on the scale of their power needs.
All customers have been paying a monthly fee of $1.50, $3 or $25, depending on their needs, and the rates also have included an automatic adjustment, which sets the price every month based on a six-month rolling average of whether the city's cost of providing electricity was above or below a designated base.
Curran's memo said these changes have worked to stabilize utility finances. He described Utility Financial Solutions as an "excellent partner," which is why he sought council approval to hire the firm again.
The $52,000 fee comes in nearly 50 percent below a $100,000 budget for the study.