IMEA Board Offers its Member Municipal Electric Utilities a New Contract to Ensure a Reliable, Affordable, and Sustainable Power Supply into the Future

Date Posted: 2024-03-08

Thirty-two municipal electric systems have been offered a new contract by their wholesale power supply agency that would assure those municipal systems retain a voice in all policy matters related to their power supply needs through May 31, 2055.

The contract offering that was unanimously approved by the Illinois Municipal Electric Agency (IMEA) Board of Directors attending its February 15 meeting represents a continuation of the relationship of the municipal electric systems with the IMEA, a unit of local government formed by the municipalities in 1984.

Current IMEA member municipalities have between March 1, 2024, and April 30, 2025, to execute the contract.

The IMEA is charged with procuring reliable, affordable, and sustainable wholesale power for its municipal members and has done so for 40 years.

“The agency certainly has been successful in that mission,” said Cory Sheehy, who is the Director of Public Works for the City of Marshall, IL, and the Chairman of the IMEA Board of Directors. The IMEA estimates it will complete its fiscal year (FY) 2023-24 with an average total cost of power to members that is more than 3.0% below budget. “Over the past several years, IMEA has consistently finished the year under the budgeted rate. For FY 2022-23, we finished with an actual average cost that was 6.0% under the original budgeted rate, and IMEA’s energy supply cost for FY 2022-23 was 9.3% lower than it was in 2014,” said Sheehy.

The IMEA offers its municipal electric systems several advantages that other wholesale suppliers can’t provide. Foremost is direct involvement in all decision making related to the cities’ and villages’ power supply. Each IMEA member community has a voting representative on the IMEA Board of Directors. Input from each member community has not only been instrumental in forming policies that have assured a reliable, affordable, and sustainable energy supply, but it has also resulted in the agency’s providing value-added services that are tailor-made to serve the specific needs of Illinois municipal electric systems. These services include help with federal compliance issues, transmission and sub-transmission contract negotiation, representation in regional transmission organizations, and agency-managed programs to expand energy efficiency incentives to member communities and residents, to reduce resource capacity needs by accelerating demand response options, and to advance electric vehicles and EV infrastructure. In addition, agency personnel provide engineering, technical, legal, and programmatic support to members’ electric utility staffs.

The new contract being offered to IMEA members is a product of a working group of IMEA board representatives. “The obvious question,” said Sheehy, “is that if the current contract does not end until 2035, why are we asking members to extend their contracts in 2024.” The answer, according to the working group, is this: IMEA needs to work now to secure new renewable projects to transition and replace resources that are going offline between now and 2035. Without extensions with its member cities, IMEA can’t make agreements to procure power supply for members beyond 2035. The best renewable energy supply deals are 20-year deals that typically offer 20% to 30% lower pricing than short-term deals. With only 11 years left on the member contracts, IMEA can’t execute those 20-year deals at this time. IMEA needs to know how much new power to acquire to serve member needs beyond 2035, so the agency needs to know now who those members are that will continue their beneficial relationship with the municipal joint action agency beyond 2035.

Plans include adding 130 MW of solar in the 2025-26 timeframe and replacing an expiring wind contract in 2030.

“Conceptually – and formally – the new contract is much the same as the current contract that has served members well for so many years,” said Sheehy. The IMEA municipal members still retain governance over the organization, and the infrastructure that provides member municipalities with their value-added services is already built into the agency. IMEA member electric systems that own their own qualified locally sourced generation units are also being offered an extension of their capacity purchase agreement. Under that agreement, the agency compensates the city for the agency to have the ability to call on its municipally owned generation units and pays the fuel costs for those units when they run during critical times of high demand on the electric grid.

There is also one new offering in the contract whereby a member municipality can subscribe a percentage of its peak demand in Illinois-based renewable and carbon free resources. This option, called a “member directed resource” (MDR), can begin as soon as a member extends the contract with IMEA.

Member municipalities that will consider extending their relationship with IMEA under the new contract include Altamont, Bethany, Breese, Bushnell, Cairo, Carlyle, Carmi, Casey, Chatham, Fairfield, Farmer City, Flora, Freeburg, Greenup, Highland, Ladd, Marshall, Mascoutah, Metropolis, Naperville, Oglesby, Peru, Princeton, Rantoul, Red Bud, Riverton, Rock Falls, Roodhouse, St. Charles, Sullivan, Waterloo, and Winnetka.

“We realize that considering a long-term contract for wholesale power supply is an important decision for a village or city,” said IMEA President & CEO Kevin Gaden. “I hope the productive relationship that each of the member municipalities has had with this agency – an agency that they themselves collectively govern – will make that decision easier. IMEA staff are happy to attend city council meetings to explain the advantages of the contract and answer any questions city or village leaders may have. IMEA staff has been proud to serve our member municipalities for the past forty years, and we are looking forward to continuing those relationships,” said Gaden.