As Naperville weighs its long-term energy options, the city could join or create a new joint action agency, a group of member municipalities that pool their resources to secure electricity.
Electric Utility Director Brian Groth laid out the process for both at the Naperville City Council’s Tuesday night meeting.
Naperville is already part of the Illinois Municipal Electric Agency, a 32-member joint action agency. While the city’s contract with IMEA does not expire until 2035, the council has been resistant to the agency’s request for a contract extension through 2055, in part because some council members want to obtain electricity from sources cleaner than the coal-generated power IMEA provides.
In general, joint action agencies offer small- and mid-sized municipal utilities access to larger energy-generating projects, shared staffing and economies of scale that would be difficult to achieve alone.
“Through joint action agency membership, smaller utilities are able to take advantage of larger utilities’ load to participate in generation projects or energy purchases not always available to a smaller load,” Groth said.
If Naperville were to pursue a new joint action agency, the city would need to either identify a group or begin building one from scratch no later than June 2027, he said.
For the city to create its own joint action agency, it would need to first identify other municipalities willing and able to participate in the new organization. From there, the member municipalities would need to establish rules and agreements and hire staff members to help run the agency.
Members of the joint action agency would also need to establish the kinds of services the organization would provide. Beyond power supply, they can provide member municipalities with “legal, regulatory and energy efficiency programs,” Groth said.
Should Naperville want to proceed with a new agency, it would need to be established with a board of directors by no later than June 2028.
Similar to starting a new business, creation of a such an agency comes with significant financial risk, Groth said.
“Creation of a new joint action agency will require financial support and will come with a loss of complete autonomy and power supply decision making,” he said. “A newly created joint action agency with no proven track record will likely require direct financial investment from the city to support asset ownership, as well as collateral for (city electricity grid operator) PJM (Interconnection) market participation.”
There are ways to lessen the risk, but they depend on the number of members in an agency as well as the overall load of the organization, he said.
Joining an existing joint action agency, by comparison, would come with less risk since the organization would already have an established track record, Groth said. Other factors, such as the city’s level of autonomy in decision making, would vary depending on the agency’s rules.
“Should we desire to enter an existing joint action agency, we must first identify an agency and begin negotiating the terms under which we will enter,” Groth said. “This process likely begins with agency staff and ultimately ends with the board of directors reviewing our requirements and approving our entrance.”
After a joint action agency is identified, contract negotiations would need to start no later than September 2028. Premium payments to existing members of the joint action agency may also be required.
Any agency Naperville joins would ideally already be part of PJM Interconnection.
About 80% of public power utilities in PJM territory are already part of a joint action agency, Groth said. There are several joint action agencies Naperville has identified as potential partners but none has reached out to discuss partnerships, he said.
“Given that we haven’t gone out and specifically asked if other joint action agencies are interested in having us join, do you have a sense for the available opportunities that are out there?” Mayor Scott Wehrli asked at the meeting.
Groth said there are “probably two or three that would match, are like-minded. … When you start with two or three, I think you probably quickly dwindle down to one or two.”
The council in June will be presented with an overview of another energy option, market participation with asset ownership.
cstein@chicagotribune.com
