The Northern Illinois Municipal Power Agency returned to market for the first time in a decade as two of its three members look into their energy options.
The deal highlights both the strength of NIMPA's members and its take-or-pay contracts and the question mark hanging over coal power since the passage of a key Illinois climate law.
The agency's Series 2026A revenue refunding bonds refunded the Series 2016A bonds, which financed the acquisition and construction of unit 1 and unit 2 in the 1600-megawatt Prairie State Energy Campus, a coal-fired plant in Marissa, Illinois.
That project bought NIMPA a 7.6% ownership share in Prairie State and entitled NIMPA to 120 megawatts of the facility's output, according to the
Reevaluating options
The deal, which priced Aug. 31, refinanced existing bond obligations.
What the future holds isn't so clear.
Batavia, one of NIMPA's three members, contracted with Brattle Group to explore its energy options and as its
Batavia's
But it also found that about 37% of Batavia electric customers were unwilling to pay higher electric rates for environmental improvements.
The city council of another member, Rochelle, on Monday heard an energy action plan developed for the Rochelle Municipal Utility by the EnergySense Resilience Center at the University of Illinois. The council held off on a final vote on the plan until its next meeting. That city of 9,400 is about 80 miles west of Chicago.
The 63-page final plan calls for RMU to join a larger joint action agency to improve its buying power.
"Currently you're in a joint action agency," Shawn Maurer, associate technical director at EnergySense and the primary author of the plan, told the city council, referring to NIMPA. "That's how you bought into Prairie State Campus's generation initially. With only those two communities joining you, you do have some limited buying power… There are other national joint action agencies that could be joined," including
The integrated coal mine and power plant
Maurer pointed to Naperville — which withdrew from negotiations with the IMEA earlier this year and now has about 10 months to decide whether to extend its contract with the IMEA — and other communities that "have been looking for alternatives for joint action agencies to align more with their independent goals."
The energy action plan also calls for energy efficiency retrofits, the installation of a 5 MW solar and battery storage plant, a local generation planning study, microgrids at key community facilities, the construction of clean generation and building a sustainable energy test campus in Rochelle.
"This project started last year," Maurer told The Bond Buyer. "This was primarily due to (the Climate and Equitable Jobs Act)," a state law that calls for a 100% reduction in carbon emissions by 2045.
"One of the main sources of carbon emissions is Prairie State," Maurer said. "(Rochelle was) looking for a way to replace that energy and align with CEJA and also maintain affordable rates for their communities."
Maurer said they heard concerns from the community about data centers and electricity rate increases — the
The plan, he said, "laid out a way to implement renewables in a way that's cost effective."
Geneva's energy strategy unchanged
The third member of NIMPA, Geneva, approved a contract with Polar Energy Consulting for a new integrated resource plan in an Aug. 17 city council meeting. The IRP is required under a 2026 state law; speaking to the city council, the city's electric division superintendent, who doubles as NIMPA's president, called the exercise "a little bit of overkill."
In 2025, Geneva sourced 75% of its energy from NIMPA, Electric Division Superintendent Aaron Holton told The Bond Buyer. Of the remainder, 16% came from NextEra Energy, which includes a high share of renewable sources; 6% from Waste Management Renewable Energy's landfill gas generation; and 3% from the Geneva Generation Facility, a natural gas plant.
"The upcoming IRP will be performed in compliance with the Municipal and Cooperative Electric Utility Transparent Planning Act and at this time, prior to the IRP being performed, Geneva is not anticipating any large changes in our energy strategy," Holton said by email. "The various participants in NIMPA might have different goals for their respective energy strategies."
On
Last year, Prairie State said it was shelving its
Alyssa Harre, vice president of external affairs and organizational strategy for Prairie State, said while "carbon capture technology shows promise to help advance long-term decarbonization goals," Prairie State cannot "bear the substantial costs and risks of building and owning a CO2 capture facility at this time.
"We remain dedicated to advancing a responsible transition that maintains grid reliability, limits risk for our not-for-profit municipal and cooperative owners and preserves jobs for the hundreds of men and women who work at our facility," she said by email.
"All long-term compliance plans will reflect our mission while maintaining operational flexibility to meet the needs of our member communities as energy and capacity markets evolve," Harre added.
Rating agencies
The Series 2026A refunding bonds were rated A-minus by Fitch Ratings and A2 by Moody's Ratings. Both outlooks are stable.
Moody's looked at the strength of NIMPA's contracts with its members as well as the 200% step up provision in the event of default, which requires other participants to contribute 200% of their current level if any one of them defaults, said Bridgett Stone, assistant vice president of public finance at Moody's.
"The contracts are very strong here. It's a take-or-pay contract, and so essentially, they have to pay whether or not Prairie State is producing power," she said.
"We see stability both from the contract side, the legal side, as well as from the perspective that Prairie State tends to be a fairly low-cost (source) of power, with affordability being a pretty strong concern" right now, Stone added, pointing to "the unavailability of some other alternatives out there."
But the rating agency is tracking the implementation of CEJA and its impact on Prairie State, she said.
"The alternatives to make coal carbon-free are just extremely costly at this point, and so the likelihood of some of those technologies coming in — obviously there's about nine years until they hit that 2035 deadline, but our assumption is that they likely will have to shut down one of the units to meet that 2038 deadline, unless there is a change in the legislation, with the full closure by 2040," Stone said.
NIMPA's bonds tied to the Prairie State project mature in 2041. The agency did not extend any maturities in the refinancing, Holton said.
"We do form an internal view of the three members, of their credit quality, and essentially that is what ultimately drives the rating," said Julian Quintanilla, director at Fitch. "We do have operating cost flexibility assessed as weaker because it's a single project" that NIMPA relies on, Prairie State.
Fitch focused more on the intermediate term horizon, and "we don't expect the credit quality to be impacted over that term," he said. "We'd have to reassess when NIMPA and then the other owners of (Prairie State) come up with a plan for how to manage that" 2045 deadline.
"We don't expect (CEJA) to affect the credit quality of the bonds or the operations of the project" through the final maturity of the bonds, he said.
BofA Securities priced for NIMPA $134.25 million of power project revenue refunding bonds, Series 2026A, on Aug. 31, to yield from 2.76% for a December 2027 maturity with a 5% coupon to 4.47% for 5s of 2041. The deal includes a 10-year call provision.
The municipal advisor on the deal was Avant Energy. Ice Miller was bond counsel.
