Selling electric utility to ComEd one option for Naperville’s energy future, council told

Selling the city’s electric utility to ComEd is an option for Naperville, but it would leave the city with significantly less control over its electricity, City Manager Doug Krieger said.

Krieger explained what that process would entail at the Tuesday night Naperville City Council meeting. His presentation was the last to be made before the council’s Sept. 28 strategy workshop at which members are to hone in on their preferred direction for the city’s energy future.

Naperville’s contract with its current electricity provider, the Illinois Municipal Electric Agency, expires in 2035. In addition to selling its operation to ComEd, other options being considered include joining or forming another joint action agency, participating in the wholesale energy market while owning power generation and storage infrastructure, and participating in the market without owning any power generation or infrastructure.

Were the city to sell its operation to ComEd — the only viable private entity available to buy it — the city would lose significant control over its energy generation mix, customer rates and electric services, Krieger said.

“It’s one of the complaints with IMEA, that we don’t really have enough control. If the utility is handed over to ComEd, your input goes even further down,” he said. “Absent becoming a major shareholder, you’re really not going to be able to influence rates.”

Should the city pursue this option, the sale would be driven by market forces. Naperville’s electric grid operator PJM Interconnection operates a wholesale electricity market and given current trends in PJM’s market, Krieger said he would expect rates to increase and reliability and service levels to significantly decrease.

There would be no financial risk to the city since the electric utility would be privatized after the sale and no longer be under the city’s jurisdiction, he said. ComEd would be required to supply and bill all customers in Naperville, although customers would also have the option of opting out of ComEd and selecting an alternative supplier.

While city officials could not find any example of communities that sold their electric utility to ComEd, Bolingbrook’s water utility sale to Illinois American Water was a close comparison, Krieger said.

“At least in my discussions with Bolingbrook staff, they regret that decision,” he said.

If the council pursues this option, the city would begin legal negotiations with ComEd in 2030 to ensure that the organization could provide power after the IMEA contract ends. Krieger noted that while the city does not know how much money it would be offered, there would not be a lot of negotiating power since ComEd is the only company available to purchase it.

While the council will evaluate all their future electricity options in September, some council members acknowledged their initial opposition to the idea of selling.

“To me, this is probably the least attractive of everything we’ve heard so far,” Councilman Patrick Kelly said. He cited the negative results from Bolingbrook’s water utility sale and Chicago’s parking meters sale as examples of why the city should not pursue privatization.

“Generally, it just seems to me that true public utilities should remain public and not be privatized if you don’t have to,” Kelly said.

Councilman Josh McBroom agreed.

“It’s not an attractive option. The only thing, if we knew some kind of number that was associated with (the sale), probably a number we’d all pause at, but we’re not going to get that. … And it’d have to be a pretty high number because it’s not a very attractive (option if it’s not),” he said.

cstein@chicagotribune.com