When Naperville, Illinois, started its smart grid initiative in 2012, the city’s five-year plan was to invest in and implement distribution automation, smart meters, and demand-side programs; while at the same time keeping overall electric rates flat for the next two years, and then limiting subsequent rate increases to no more than 2 percent per year for each of the next three years. However, now that amnesty on rate increases is over.
The limit was vital to the Naperville initiative, given the rising cost of energy and the cost of the capital investments undertaken by the municipality – $11 million to match the amount of the grant distributed as part of the American Recovery and Reinvestment Act.
Today, the city’s survival is even more important: Inaccurate cost projections, overruns at the city’s power plant, and borrowing money from the city’s water utility have left the electric utility $44.3 million in debt, according to local broadcaster NCTV17.
That means a rate increase is imminent for 57,000 electric customers.
But, how that plays out is currently being considered by the city. Increases could come at a fixed percentage over the next few years or by variable amounts. In addition to those hikes, city officials have other options on the table to get the fund back on track.
“One would be the issuance of debt; one would be the incorporation of a purchased energy adjustment; one relates to our capital plan and how much maintenance we do over the next few years. But the bottom line is we need a rate increase to stabilize the electric utilities financial system,” Naperville City Manager Doug Krieger told the TV station.
City residents (population 145,000) were invited to a recent workshop to not only learn about the rate study options and provide feedback, but also to learn how the city delivers electricity.
Another workshop will be held on November 9, at which council members will evaluate the options presented for the rate study.