Why electricity rates would go up in Batavia

Updated 2/25/2014 2:47 PM
Editor's note: A previous version of this article incorrectly stated who voted to borrow money to invest in an electricity plant.

As Batavia officials consider raising electricity rates by as much as 16 percent, people attending an information session Monday night asked how in the heck the town got in this situation.

The special joint committees-of-the-whole meeting was designed to answer such questions, particularly how its investment in the new Prairie State Energy Campus is the driver behind the cost increase.


The city expects the electric fund to run at a deficit if rates are not increased by 16 percent.

Essentially, after electricity sales were deregulated in the late 1990s, Batavia leaders looked for options besides ComEd. The city joined the Northern Illinois Municipal Power Agency, and agreed to buy a 50 percent stake in NIMPA's investment in Prairie State. Batavia borrowed money for that investment. Electrical customers are paying that debt.

People asked why Batavia agreed to buy even more power in 2007, raising the stake to 55 percent; what would happen if Batavia simply stopped making payments and buying the electricity; what exactly a $5,000-a-month lobbying firm has accomplished for the city in the last year, as far as changing electricity-sales laws; and whether the construction debt could be refinanced.

Public Works Superintendent Gary Holm said studies projected that Batavia's electrical load was going to continue to increase, as more businesses and residents moved to the city. He said studies also showed the Prairie State-generated electricity would cost less than that available from other entities, meaning Batavia could sell any unneeded electricity at a profit.

And then the recession hit. Businesses and residents cut back their energy use.

Furthermore, the price of natural gas dropped to historic lows, due at least in part to an increase in supply as the government allowed hydraulic fracturing of rock to release the gas. That meant gas-powered electrical generation plants could produce at a lower cost, driving prices for electricity below that of Prairie State. Batavia has been selling its excess at a loss.

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And the cost of building the plant went from an original estimate of $2.9 billion for one kind of plant. to about $5 billion.

Estimates of when the price of other electricity starts rising above that of Prairie State electricity range from 2016 to 2024, Holm said, which elicited groans from the audience.

Betsy Thelin Zinsser, a resident who has been studying the matter for several years, urged the council to make more information public about Prairie State and the city's electricity purchases and sales. All the aldermen have signed confidentiality agreements about some details of negotiations and strategies. "We really need to move toward full disclosure about what is happening at Prairie State. This secrecy harms us. The secrecy helps Peabody and Prairie State and allows Peabody to tell a false success story that gives them strength in our state legislature," Zinsser said.

Resident Steve Lemke bluntly opposed one proposed solution: charging more sales tax and using that money to help pay for electricity, so rates don't have to be increased so much.

The utility users should bear the burden, he said.

"Hey guys, you gotta raise rates." And enough, all at once, to take care of the issue, "so don't come back and nick us every stinking year," he said.

The council will discuss electricity rate increases at joint committees-of-the-whole meetings March 4 and 11, and plans to decide the matter March 17. Rate changes would take effect May 1.

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