CITY COUNCIL AGENDA ITEM
ACTION REQUESTED:
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Receive the report on the 2018 Electric Rate Study and approve staff's recommendation on rates, realignment of the Purchased Power Adjustment base, early payoff of the Water Utility loan, and increased capital
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DEPARTMENT: Electric Utility
SUBMITTED BY: Mark Curran, Director
BOARD/COMMISSION REVIEW:
On September 20, 2018, the Public Utility Advisory Board (PUAB) unanimously approved staff's recommendation on rates, realignment of the Purchased Power Adjustment base, early payoff of the Water Utility loan, and increased capital.
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. This is done 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 which allowed the Utility to improve cash flow while also maintaining the City's competitive residential rate position with ComEd.
Third, the Electric Utility recommended a phased approach in returning to the recommended level of cap...
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