With a deadline pending on its electricity contract, Naperville council rejects hiring energy consultants

With a deadline pending on its electricity contract, Naperville council rejects hiring energy consultants

The Naperville City Council has opted not to award two energy consultant contracts despite staff insisting the help is needed if the city is going to make a decision on the future of its electric supply.

Naperville is starting the process of looking at how it will supply the electricity used by residents and business owners after 2035, when the contract with its current provider, the coal-heavy Illinois Municipal Electric Agency (IMEA), is set to expire. The agency wants the city to extend its contract by mid-2025 instead of waiting until closer to the expiration date.

The consultants requested by staff would have explored what the energy world will look like in 11 years to help determine the options available. The two contracts would have cost a total of $250,000, but were rejected by the council last week because of concerns over timing, necessity and the bid process.

In the first, Philadelphia-based Customized Energy Solutions would have been hired to lay out alternatives to IMEA and evaluate how they measure up to what the agency already offers the city.

The second would have gone to 1898 & Co., headquartered in Kansas City, Missouri, to provide a forecast of energy and capacity prices in 2035 and beyond.

Staff requested the consultant work, saying it was necessary for helping them understand and plan for Naperville’s long-term energy needs. But their pitch was met with concerns from council that it was too early to have these conversations.

“I’m a planner,” Councilwoman Jennifer Bruzan Taylor said at last week’s meeting. “So I understand the importance of planning ahead. But there is such a thing as planning too soon.”

Councilman Patrick Kelly agreed.

“When we’re 11 years away from the contract expiring and granted, we would need multiple years to figure out what to do after that point, but I have not heard the case that we need 11 years,” he said.

However, staff say planning should start now to ensure the city flexibility in addressing future electricity demands, especially if it wants the possibility of continuing on with IMEA.

Thinking ahead to its own long-term demands, the agency also has asked that the city consider extending its current contract by two decades to 2055. The snag is IMEA officials have given the city until April 30, 2025, to decide.

For years, the agency has played an integral role in powering Naperville’s electric grid.

Naperville, unlike most other municipalities in Illinois, provides electricity to taxpayers as a local service, rather than residents relying on an investor-owned utility such as Ameren or ComEd to keep their lights on. But doing so takes a lot of resources and industry expertise that the city doesn’t have in-house. So instead, it purchases its energy from IMEA, an organization that offers an already assembled power supply to members at a wholesale price.

City staff say that in the time they’ve worked with IMEA, the agency has provided stable energy pricing to Naperville and performed utility work the city wouldn’t have been able to tackle on its own.

The drawback is the bulk of IMEA’s energy portfolio comes from coal, which is not only an emission-heavy power source but one the agency will soon have to move away from amid pressures to transition to clean energy at both the state and federal level.

Meanwhile, IMEA’s plans to do so have earned skepticism from clean energy advocates and energy experts.

The request for contract extensions, which went out to all municipalities reliant on IMEA in March, are in anticipation of those changes, says Staci Wilson, IMEA’s director of government affairs.

“IMEA cannot make agreements to procure power beyond … 2035 unless we know who our members will be after that date, and, accordingly, how much power to acquire,” she said in an emailed statement.

Asked if a member could miss next year’s extension deadline and later decide to continue on with IMEA, Wilson said, “(That) will have to be a future decision of the IMEA board.”

Speaking to extending IMEA’s contract with Naperville, the city’s electric utility director Brian Groth said, “It would be irresponsible at this point to exclude any option, no matter what it is.”

During council discussions last week, though, a few council members balked at being told the city had to meet IMEA’s time restraints.

“What I don’t understand … is why IMEA is dictating the timeline here?” Councilwoman Allison Longenbaugh said.

Groth tried to assure members that staff would have started planning this early regardless of whether or not IMEA had posed a contract extension. Yet even apart from timing, other reservations kept the consultant work staff sought from getting the go ahead.

A few council members cited that both vendors having ties, either past or present, to IMEA. Though they received assurances from staff that any potential conflicts of interest had been vetted ahead of the council being asked to approve them, not everyone was convinced.

Consultant questions were compounded by CES and 1898 & Co. being pretty much the only vendors that chose to bid on the work.

Still, not all members were against hiring.

“We’re going to need this information now or later,” Councilman Josh McBroom said. “I don’t see what the downside is to planning now.”

“The point is so you have optionality,” Councilman Nate Wilson added. “The closer you wait to a maturity date, the less your options are and it puts you at a higher risk.”

With the contracts being voted down, the council cannot take any further action until at least August. Failed items must wait at least 62 days before they can return for consideration.

Asked how the delay affects the city’s ability to make an informed decision over a contract extension with IMEA, Groth said, “All options still would be on the table.”

Chicago Tribune reporter Michael Hawthorne contributed.