Because of the imprudent 28-year electricity contract agreed to by the Batavia City Council in 2006, residents of Batavia will be facing a 10-16% rate increase, plus a $4/month increase to the base rate, beginning in May. If the City Council imposes a home rule sales tax increase of .5 cents, the rate increase would be 10%; with no sales tax increase, it would be 16%. At the 10% level, that would mean a $12/month increase on the average electric bill, said Finance Director Peggy Colby at the City Council meeting Feb. 18. That is with the Council committing $2 million/yr in reserves to buffer the cost residents face. When all reserve funds are depleted in 5 years, Batavia property owners will face a property tax increase. However you look at it, Batavia residents get screwed.
On February 24, the Council held a public meeting to explain the situation and answer questions. There were many good questions, including those about environmental concerns and clean up costs incurred from our part ownership of the Prairie State coal power plant that got us into this mess. No matter how much Public Works Director Gary Holm insisted that NIMPA (the Northern IL Municipal Power Agency) is the de jure owner of the Prairie State shares, that the City of Batavia holds a contractual 45% interest in NIMPA leaves us Batavia residents as the de facto owners. If Prairie State were to close tomorrow, leaving a huge Superfund mess, Batavians would be on the hook for their share of cleanup costs.
How did we get here? The City Council in 2007 signed a hundreds of millions of dollars, long-term contract, not subject to citizen review or referendum, to purchase electricity through a share in the proposed Prairie State coal plant in southern Illinois. They ignored (or were ignorant of) the warnings that costs for building coal plants were going to skyrocket. There was likely conflict of interest within IMPA, the Indiana-based agency that was advising us (and now manages NIMPA’s day-to-day operations). And our city’s lawyers and administrators who should have known better, allowed the signing of a terrible contract that had no performance or penalty clauses.
This is so bad that cities in other states are breaking their contracts to avoid bankruptcy and finding sympathetic judges to let them off the hook. This is so bad that Peabody Energy, the country’s largest coal company who is responsible for Prairie State, maintained only a 5% share, and is the only owner with an option to get out after 5 years. This is so bad that the SEC (the federal Securities and Exchange Commission) has opened an investigation.
Now what? The City, from the presentations given, sounds like it has given up and given in, resigning itself to raising rates, increasing sales taxes, and eventually increasing property taxes. From this flyer comes a suggestion: “Tell the City Council that you want a state investigation of whether Peabody Energy told the truth when they sold Batavia on this deal. Let them know you want the city to look at every possible way to get out of this bad deal.” We don’t need ways to mitigate our individual losses; we need to get OUT!
For more information, see:
- Kane County Chronicle 2/12/14, 2/24/14
- Daily Herald 2/12/14, 2/25/14
- City of Batavia 2/18/14 agenda item 10
- IEEFA report
- Prairie State Coal Plant Tracker
- Midwest Energy News