Naperville IMEA: More Than a Contract

The Naperville IMEA relationship is more than a power sales contract. We can consider the analogy of a marriage without a pre-nup agreement.

Here are some important pieces of the Naperville IMEA puzzle:

  • In addition to the power sales contracts that IMEA has with each of its 32 members, including Naperville, the members are also bound by IMEA’s agency agreement (articles of formation) and bylaws. As described in the bylaws, IMEA is the legal entity by which its members “jointly plan, finance, own and operate, facilities for the generation and transmission of electrical power and energy.”
  • The power sales contracts require that IMEA members buy all their electricity from IMEA – “full requirements” contracts. (In 2009, IMEA membership changed such that members without “full requirements” contracts surrendered their membership and exited from IMEA, leaving only members who had “full requirements” power sales contracts with IMEA.)
  • The agency agreement and bylaws impose additional requirements on the members, such as assessments and obligations upon withdrawal.
  • Naperville was one of the original founding members of IMEA in 1984/1985, but Naperville did not begin purchasing its power from IMEA until June 1, 2011. Naperville’s 2007 power sales contract with IMEA states that IMEA will have to purchase a share of PSEC in order to be able to provide enough electricity to Naperville and the other members.
  • The IMEA members’ joint ownership of PSEC and Trimble County will continue beyond termination of the power sales contracts. The earliest termination date in the power sales contract is September 30, 2035, with 5 years advance notice.
  • IMEA’s outstanding bond debt will also be paid off in 2035. This is the bond debt that was used to purchase PSEC and Trimble County Unit 2.  Trimble County Unit 1 debt was paid off in 2021.
  • Naperville’s power purchases from IMEA represent approximately 35% of IMEA’s total sales to the members, such that:
    • IMEA bills Naperville (under the power sales contract) for approximately 35% of IMEA’s costs which also includes 35% of the operations and management (O&M) expenses of PSEC and Trimble County, as well as 35% of the continuing capital additions/investments into PSEC and Trimble County
    • Naperville should be considered to have an approximately 35% ownership interest in IMEA’s billion dollars of assets in PSEC and Trimble County
  • From our perspective (limited by lack of transparency), IMEA will find a way to keep the members on the hook for PSEC and Trimble County O&M and capital expenses after the power sales contracts end – IMEA will have no choice, because there is no other source of funds for IMEA to pay its PSEC and Trimble County ongoing obligations. We have not yet found documents that specify terms and conditions for members’ PSEC and Trimble ownership obligations and liabilities beyond the end of the power sales contracts, but IMEA’s agency agreement and bylaws may be ambiguous enough to allow IMEA to keep charging members for the coal plants even after their power sales contracts end.  
  • Finally, consider that Naperville, the largest member of IMEA, was the primary reason for IMEA to have purchased IMEA’s share of PSEC.  Naperville can be expected to be quite “challenged” to walk away in 2035 from Naperville’s 35% ownership interest in IMEA’s “debt-free” 240 MW of PSEC and 153 MW of Trimble County Units 1 and 2.

This webpage information is also available as a one-page pdf file “Naperville IMEA: More Than a Contract“.