Illinois power agency's largest member is closer to exit

Bloomberg News

The Illinois Municipal Electric Agency hasn't lost its largest member yet, but Naperville's city council withdrew from negotiations over a power sales agreement extension with IMEA on Tuesday.

Following a deluge of written comments and public statements from citizens, mostly in favor of halting negotiations, the City Council withdrew from negotiations after a 6-3 vote, until such time as the council directs staff to resume them.

Opposition to IMEA within Naperville, a city of 153,000 in the Chicago suburbs, is driven by opposition to the agency's reliance on coal for electricity generation.

The IMEA has 32 members spanning municipal electric systems across Illinois. It is seeking a 30-year extension to contracts that now run through 2035.

The permanent loss of Naperville as a participant "would be negative for IMEA's credit profile," Gayle Podurgiel, a vice president and senior analyst at Moody's Ratings, told The Bond Buyer last year.

"The city of Naperville's Aaa GO rating is a supportive factor for IMEA's A1 credit rating," Podurgiel said then.

Twenty-nine members have approved the contract extension, Staci Wilson, IMEA's vice president of government affairs and member services, said by email Friday. 

The IMEA's second largest member, St. Charles, voted down the contract extension terms in August, the Daily Herald reported.

"IMEA is disappointed that the City of Naperville has chosen to pause consideration of our long‑term power supply offer," Wilson said, adding that the IMEA will now focus its long‑term planning on the members that have agreed to contract extensions.

"IMEA has pursued these contract extensions to help members expand renewable energy resources and prepare for the challenges of meeting the state's Climate and Equitable Jobs Act," she said.

"For nearly fifteen years, IMEA has provided Naperville with dependable service, predictable rates, and wholesale power costs that are lower today than a decade ago — even as many others in Illinois have seen significant increases," Wilson said.

The IMEA owns 15.17% of the Prairie State Energy Campus, a Marissa, Illinois-based coal-fired power plant.

Around 80% of the IMEA's power comes from coal-fired power plants: 49% of it from Prairie State, and 29% from a coal-fired plant in Trimble County, Kentucky, according to Clean Energy Alliance of Naperville, a grassroots advocacy organization.

There is currently no timeline for resuming negotiations, Naperville Communications Director Linda LaCloche said by email.

The city faces a variety of options if it chooses not to extend the IMEA contract, including market purchase with PJM Interconnection, power purchase agreements, city-owned generation, joining a different joint action agency, starting its own joint action agency, and supply contracts via auctions, according to a report prepared for Naperville by a consulting firm and shared with The Bond Buyer.

"Any future potential bonds — we've heard talk about, well, the bonds will be paid off on the coal plant. That's probably true, but we don't know what will come after that; there could be carbon capture, that would be a billion-dollar project at least," Councilman Patrick Kelly, who voted in favor of withdrawing from negotiations, said at Tuesday's meeting. "Or if the coal plant does get decommissioned, there will have to be some generation, so it's not as if the costs will just go away."

Councilman Benjamin White called for a request for proposals and a request for quotes. "When the city makes major purchases… we seek competitive pricing, safety, quality and value," he said. "We are discussing a multibillion-dollar contract."

The City Council debate drew 36 position statements in support of the withdrawal and two opposed, and 15 written comments in favor and two opposed to the pause.

"Current headlines warn of increasing stress on the grid, and price spikes as demand surges from things like data centers, electric vehicles and economic growth," Naperville resident and Affordable Naperville member Patrick Hughes said at the meeting, urging approval of the contract extension. Without it, he said, "price hikes will act like a regressive tax, hitting the neediest families first and hardest."

In 2025, IMEA was 43% more expensive than PJM/ComEd zone electricity, Theresa Hus of the Naperville Environment and Sustainability Task Force said at the meeting. 

"Are we getting value for the millions of extra dollars we're spending each year with IMEA?" she asked. "Our hope is that Naperville develops a real energy strategy, and ultimately an RFP."

In a written comment, Naperville resident Ted Bourland noted the city had recently shared its counter-proposal and the IMEA's response with community members. 

In response to "our request for a back door, an early exit from the contract," Bourland said, "IMEA didn't just say no, they said hell no. And they refused to include in the power sales contract a rectification to our problem that for most matters, Naperville has only 3% of the vote, yet we pay 35% of the bill." 

IMEA's Wilson said it's not certain Naperville can come back to the table any time it chooses.

"Whether Naperville can later participate (in an extended contract) will be a future decision by the IMEA board," she said, noting that the decision will hinge on timing of resource planning and contracts surrounding those resources; market conditions; and the costs of service.

"As a member‑driven agency, IMEA is open to discussions with Naperville on solutions that protect the city's interests while preserving the shared framework that keeps energy affordable, reliable, and sustainable for all members," she said.