Naperville electric rate hike could be even more than expected

A Naperville advisory board is recommending the city raise electric rates by nearly 8 percent this spring, instead of the 6 percent Naperville City Council backed last month.

The Public Utilities Advisory Board said it would like to see the electric utility's budget out of the red in two years, which would require a 7.86 percent increase beginning this May and a 7 percent hike next spring, according to Mark Curran, director of public utilities-electric.

John Krummen, chairman of the Public Utilities Advisory Board, said he would prefer to see the utility's budget stabilized sooner rather than later and compared the situation to a child asking a parent for $20 and then returning the next day for $10 more instead of asking for the whole sum at once.

"Don't nickel and dime me," he said. "Lay it out."

The city, which runs its own electric utility, is facing a $14 million deficit in the utility's budget and is also short the $11.2 million its own policy calls for it to have in reserve.

Last month, Naperville councilmen gave preliminary approval to a 6 percent rate hike beginning May 1 and another 7 percent increase next spring. They also expressed support for getting rid of the infrastructure availability charge for new service connections. But that still leaves a $5.2 million hole in the budget and no reserve.

Advisory board members on Tuesday said they didn't feel the difference between the City Council's proposed rate hikes and the rate hikes needed to eliminate the deficit would be significant to the average taxpayer, but would make a big difference for the city.

"For us it would be important to be as whole as possible," board member Nancy Marinello said.

Under the rate hikes the City Council was leaning toward, the average resident who is now paying $92.79 per month would see a monthly bill rise to $97.69 this year and $103.75 next year.

Under the Public Utilities Advisory Board proposal, the average resident's monthly bill would be $99.21 this year and $105.37 next year, according to Curran.

Before budget trouble struck, the city had planned to increase rates 2 percent this year. Naperville purchases power from the Illinois Municipal Electric Agency, of which it is a member along with 31 other municipalities and a co-op. There was a significant cost overrun in the construction of one of the IMEA's investments, the Prairie State Energy Campus in southern Illinois, which city officials cite as part of the reason rates are now going up even higher.

City Manager Doug Krieger has also blamed market volatility, unexpected trends in the residents' electrical usage and government regulation.

Public Utilities Advisory Board members on Tuesday called on Curran to provide more information about the Prairie State cost overruns and what is being done to avoid unexpected rate hikes in the future. Residents, they said, are demanding answers.

"It wasn't a horrible investment," Marinello said. "… But until you have answers that are sustainable, answers that make sense in black and white it's not going to do you any good."

Krummen agreed.

"I don't think somebody was asleep at the wheel," he said. "I don't think the fox was guarding the hen house. I don't think that at all. I just want to see it."

Curran said increases in labor and materials costs were partially to blame and agreed to gather more details for the group. He also responded to criticism the city should have acted sooner, saying there was a budget surplus last year. The department started discussing budget troubles with councilmen in October.

"The thought process was as long as our cash flow close was still pretty close to zero … to not go through and say hey we've got to do something on the rates now, kind of cry wolf so to speak, before we absolutely knew we needed to do that," he said.

The City Council will discuss the recommendation when it meets March 18.

mjenco@tribune.com

Twitter@melissajenco