Contract negotiations with the city’s longtime energy provider Illinois Municipal Electric Agency were put on hold Tuesday by the Naperville City Council, giving the city an opportunity to explore other electricity sources.
The city is locked into a contract until 2035 with IMEA, a nonprofit joint action agency that sells electric power to municipally-owned utilities. The council’s action comes in response to IMEA’s request that the city extend its contract to 2055, something to which 29 of its 32 member municipalities have already agreed.
Contract renewal discussions have been ongoing for nearly two years, and in August the council voted to negotiate independently with IMEA on a number of provisions that could be included in a future contract with the agency.
On Tuesday night, the council heard from Naperville residents in favor of and opposed to extending the IMEA deal, with more than 20 people speaking on the topic.
“Tonight, here we are again without a firm counter offer and without a firm plan to move on — just more vagaries,” Naperville resident Marilyn Schweitzer said. “Enough waffling. It is time to move on. … Vote yes to explore seriously options other than IMEA with firm commitments and a clear plan, something that many in the community have been advocating for many years.”
But resident Michael Lapinski urged the council to use common sense in how it proceeds for the sake of future stability.
“We expect your sensibility over a short-term, feel-good vote that has a long-term cost burden to ratepayers and each of you,” Lapinski said. “The way forward with stable prices, stable supply, reduced infrastructure complexity and renewable supply capability is with IMEA. … This is your time to step up and cast your vote for the citizens you represent and approve the new IMEA contract.”
There were eight contract points on which city staff were authorized to negotiate, including the ability for Naperville to leave the IMEA contract in 2045, increasing Naperville’s voting rights within the IMEA and provisions that would allow Naperville to lower its carbon footprint.
The city’s current contract with IMEA does not allow the city to procure energy from other sources, but IMEA members who sign the new 20-year agreement can utilize a Member-Directed Resource allocation to obtain a percentage of their electricity from a renewable or cleaner energy source.
Among the provisions sought in the contract negotiations, Naperville proposed increasing the city’s Member-Directed Resource allocation if IMEA, which relies heavily on coal as an electricity source, fails to meet its carbon milestones by a percentage equal to the shortfall.
Another would have increased Naperville’s “by-right” allowance of Member-Directed Resources to 20% of capacity or 50% of energy consumption, with the option to sign a power purchase agreement for a variety of carbon-free resources, including nuclear energy.
In September, city staff issued a Request for Proposals to assess what clean energy vendors would be available for the Member Directed Resource allocation. Of the 552 requests sent to potential suppliers, only four complete responses were received alongside one no bid and one incomplete response.
Since then, IMEA has provided responses to Naperville’s proposal. Notably, it rejected the city being allowed to leave the contract early and to increasing its voting rights. The agency also rejected much of what the city proposed as carbon-free milestones and an increase in its by-right allowance in the power sales contract.
Council members voted 6-3 to pause negotiations, with Mayor Scott Wehrli and Councilmen Josh McBroom and Nate Wilson voting against the action.
Council members who voted to put a hold on future talks cited a lack of clarity on IMEA’s future power sources and costs as a major factor as well as a desire to consider alternative options before making a final decision on the future of Naperville’s power supply.
“(The proposed) contract has no cost guarantees, no early termination clauses, no flexibility in return (in) terms of full requirements clause,” Councilwoman Mary Gibson said. “We are in a rapidly changing market and if Naperville’s needs don’t dictate that we make this long-term decision now, we should wait until those needs dictate that we start looking at our future options.”
Councilman Benny White said he would like to see the city follow its standard procurement practices to “identify the most responsible and cost effective providers capable of supplying power” to Naperville.
He also would like to see the city create a strategy and define what its priorities are for energy sources, noting that it may be a while before the city starts looking into other energy providers.
“I do think we’re probably a few years early … probably about 2029 or so is when those discussions need to take place,” White said. “If we do it too soon, the technology, it’s a good chance that will change. We see how things are changing so quickly in this market.”
Wehrli cautioned against pausing negotiations, saying that as experts warn of future chronic power shortages and higher monthly bills in Illinois, it could be difficult to find bidders wanting to provide electricity to the city.
“I don’t see what we gain by walking away now,” the mayor said. “If we stop negotiations or discussions … we effectively lock ourselves and future councils into our current generation mix and cost structure for nearly the next decade with no possibility of a change. That limits Naperville’s ability to reduce costs, adopt cleaner or newer technology and respond to a rapidly changing energy landscape.”
As for exploring and selecting alternative energy providers, the timeline would be dictated by the strategy the council chooses for how it wants to proceed, said Brian Groth, the city’s electric utility director.
If it’s decided the city will build its own energy resources, the lead time would be about eight to 10 years, Groth said. If it chooses to contract with a power marketer, the lead time would likely be one to two years, he said.
cstein@chicagotribune.com
