Naperville electric rates to rise 8.3%, in part due to water costs
First it was garbage collection, then sales taxes, and now electricity will join the list of things that will cost more next year in Naperville.
Electric rates will increase 8.3 percent in 2016 for the city's 57,000 residential and commercial customers.
For the average resident who has a $103.75 monthly bill, the increase will be about $8.30 a month for a total of $99 additional next year.
"We're just shoving more expense onto the residents and onto the users," said council member Patty Gustin, who along with council members Becky Anderson and Kevin Gallaher opposed the rate increase given preliminary approval Tuesday.
The increase is higher than proposed by all seven options a consultant designed after completing an electric rate study for the utility this fall. It comes because council members said they have to address financial needs in another department, the water utility, which loaned the electric utility $13.2 million last year.
"Certainly we all want to get water paid off as soon as possible," Mayor Steve Chirico said. "This (rate increase) provides an adequate amount of money back into water to keep maintaining the system properly, while at the same time allows us to solve this problem without taking on more debt, which I think is more important."
The city's water department plans to spend about $8.8 million next year on maintenance and improvements to rehabilitate aging sewer infrastructure. But some projects would have to be delayed without at least $3 million back from the loan to the electric utility. The 8.3 percent rate increase will provide that $3 million in 2016.
First on the chopping block were $1.1 million of work to replace a faulty water main along Ogden Avenue between Columbia and Wisconsin streets and $800,000 toward a $3.2 million project to line a sewer interceptor pipe along Raymond Road that often fills beyond capacity and contributes to sewer backups.
Council members didn't want to see those projects delayed.
"Water needs to be paid back fairly quickly so it can continue this work or increase its pace of this work," council member John Krummen said about efforts to rehabilitate the sewer system.
Plus, the council heard from Jim Holzapfel, water utility director, that more costs are around the corner. Holzapfel said the city needs a new five-year operating permit for its Springbrook Water Reclamation Center, which treats drinking water for Naperville and Warrenville. The permit is expected to come with a tighter limit on how much of the mineral phosphorus can be found in treated water.
Upgrades to meet regulations and decrease phosphorus could cost between $40 million and $80 million, Holzapfel said, depending on how strict the phosphorus limit is. The permit from the state Environmental Protection Agency will determine how long Naperville has to complete the work - likely between five and 10 years.
The 8.3 percent electric rate increase for 2016 will be followed by increases between 0.4 percent and 4.4 percent in 2017 and 2018. The amount of the increase will vary for residential, small commercial and large commercial customers. Combined, those increases could allow the electric utility to pay back the water loan in 2018.
The rate study, completed for $68,000 by Utility Financial Solutions, found residential and small commercial customers don't pay their fair share for electric service and are being subsidized by large commercial establishments.
"Our residents didn't know they weren't paying the actuals, but they weren't," council member Rebecca Boyd-Obarski said.
Council members decided to fix the imbalance starting in 2017 and continuing for five to seven years. In that time, residents and small businesses can expect larger rate increases than big businesses.
The increase for 2016 will be official when the budget is approved next month.
It follows increases of 6 percent in 2014 and 7 percent this year as the utility adjusted to higher prices for power, lower-than-expected electric use and cost overruns at one of the power plants that supplies the city.
Rising cost of living in Naperville
Recent increases to garbage collection fees and electric rates, as well as creation of a home-rule sales tax in Naperville, stand to increase costs for the average resident by $297.76. Here's how the increases break down.
• $124.20: garbage fee increase from $2 to $10.35 a month
• $99: electric rate increase of 8.3 percent, bringing average bill total from $103.75 to $112.05 a month
• $74.56: expected household total increase from 0.5 percent home-rule sales tax effective Jan. 1
One factor is expected to decrease the cost of living in Naperville:
• $42.37: Property tax rebate for the owner of a $385,000 house, the average in Naperville, from a $2 million total rebate planned in January