PUBLIC UTILITIES ADVISORY BOARD AGENDA ITEM
ACTION REQUESTED:
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Receive the 2018 Electric Rate Study and approve the staff recommendation on rates, increased capital, early payoff of the Water Utility loan and realignment of the Purchased Power Adjustment base for City Council consideration.
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DEPARTMENT: Electric Utility
SUBMITTED BY: Mark Curran, Director and Lucy Podlesny, Deputy-Director
BOARD/COMMISSION REVIEW:
N/A
BACKGROUND:
Naperville's Electric Utility provides high-quality, reliable electric service to more than 57,000 customers. Over the last 50 years, the utility has purchased power through a variety of sources, including ComEd, J. Aron/Goldman Sachs and currently through an agreement with the Illinois Municipal Electric Agency (IMEA).
At the conclusion of the utility's last rate study in 2015, the City Council approved a rate increase to continue to align the cost of purchase power with revenues. This resulted in an 8.3% rate increase effective February 1, 2016, and average 2.4% increases across the various customer classes effective January 1 of 2017 and 2018.
In 2016, the Electric Utility also implemented a Purchase Power Adjustment (PPA). This adjustment on customers' monthly electric bills is designed to recoup or credit the difference in costs associated with power purchases to ensure customers are not over or under charged for what electricity they use. This tool is used by approximately 75% of public power systems and all investor-owned utilities to address variability in the power market. This action was a measured approach, allowing the utility to improve cash flow while also maintaining the City's competitive residential rate position with ComEd.
In addition, the Electric Utility recommended a phased approach in returning to the recommended level of capital spending of $12 million a year in 2019 ($8.3 million, $8.3 million, and $10 million in 2016 through 2018, respectively). These dollars are used for infrastructure maint...
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