Naperville to tax out-of-state natural gas buyers

Naperville councilmen Tuesday closed a $1.1 million loophole and gave hope to some businesses for some breathing room when paying their 2009 natural gas bills.

With the exception of Councilman Robert Fieseler, who excused himself for professional reasons, the city council unanimously approved a 4-cent-per-therm tax for businesses and residents who purchase natural gas from out-of-state suppliers.

They also called for the city's staff members to work with the Naperville Area Chamber of Commerce to draft a rebate proposal for affected businesses and industries who stand to pay a total increase of about $910,000 annually.

In 1993, the gas industry was deregulated, resulting in some out-of-state companies selling gas to local customers.

Since then, those customers have paid only a portion of the full 5 percent tax already placed on natural gas.

With the local tax in place as early as Sept. 1, the city has budgeted to collect about $1.1 million more per year.

Richard Greene, president and CEO of the chamber, again came before the council to lobby for a rebate of up to 50 percent of the tax payment for entities who have bought gas out of state since June 2008 and either employ more than 150 employees in Naperville, utilize at least 250,000 therms of natural gas annually and have the capacity to provide cogeneration of electricity to supplement the city's electric utility or be in the manufacturing business and utilize at least 250,000 terms of natural gas annually.

The chamber's proposal also calls for an exemption of not-for-profit establishments to the tax.

City financial analysts identified five local entities they believe could meet the criteria for such a rebate as Nalco, BP, Kraft, Tellabs and DuKane Precast.

If not-for-profits were to also be exempt, North Central College and Edward Hospital are estimated to be the major beneficiaries.

Those seven entities are estimated to pay approximately $760,000 or 70 percent of the total projected revenues of the tax.

Nalco officials estimate the cogeneration power plant facility would be forced to pay an additional $400 per day or $150,000 annually to operate if the tax were enforced.

Councilman Richard Furstenau said he would like the staff and the chamber to create a rebate program in time for the city to implement as early as December.

Councilman Kenn Miller also favors the rebate but said too many questions still need to be answered, including whether those purchasing gas in-state and paying the 5 percent tax would be eligible for any rebate program.