Naperville’s Joint Ownership of Coal-Fired Generation

Naperville is a joint owner of coal-fired generation. Through IMEA, Naperville and IMEA’s other Members jointly own the assets of IMEA, which includes IMEA’s ownership shares of two coal-fired power plants:

  • a 15.17% ownership share of the Prairie State Energy Campus, and
  • a 12.12% ownership share of Trimble County KY Units 1 and 2

Naperville may state that Naperville is not an owner of the coal-fired power plants[i].  But if the statement is provided without any further clarification, then it serves as another example of the Lack of Transparency[ii] issues we have previously documented.

  • IMEA’s name on the power plant ownership agreements makes IMEA a part owner of these power plants, but an owner in name only.
  • The real owners of IMEA’s stake in the Prairie State and Trimble County plants are IMEA’s Members, who are the beneficial owners[iii] who actually receive the benefits from owning the power plants and pay the plants’ expenses.

Here are further facts to document that Naperville is a joint owner of coal-fired generation:

In accordance with the Illinois Joint Municipal Electric Power Act[iv],

  • IMEA “has been formed to provide a method for its Members to jointly plan, finance, own and operate, facilities for the generation and transmission of electrical power and energy …”[v]

Per the City of Naperville:

  • “The opportunity to become a member of IMEA will allow the City to share the ownership interests of IMEA’s assets and share in the costs of power with the existing members.”[vi]
  • “Membership in the IMEA will enable the city’s electric customers to reap the benefits of ownership in electrical generation facilities that provides a greater chance of rate stabilization to 2035 and beyond.”[vii]

Per the IMEA CEO:

At the Mascoutah City Council Workshop with IMEA on Sept 22, 2020:

  • “The combined equity of the IMEA right now is about $300 million on the books of IMEA, and that equity is likely to grow well over $400 million by 2035. And you [IMEA Member] will be an equity participant in your share of that output.”[viii]

At the IMEA Board Meeting on June 23, 2022:

  • “This is your [IMEA Members] property.”[ix]

Per the IMEA Agency Agreement:

  • “On the effective date of the dissolution [of IMEA] . . . title to all funds and other property owned by the Municipal Power Agency at the time of dissolution shall vest in the Members in proportion to the total payments made by the Members to the Municipal Power Agency during its entire existence”[x]

End Notes:

[i]
City of Naperville Managers Memorandum
https://www.naperville.il.us/globalassets/media/meeting-agendas-and-minutes/managers-memorandum/mm20220128.pdf

On pdf file page 6 / footer page 5 of 7:

Naperville Status/Comments: Naperville is not an owner of Prairie State and does not have owners’ reports. It is Naperville’s understanding that these reports are protected from dissemination by the participant agreement that was signed by owners of Prairie State. Operational and Capital expenses incurred by IMEA can be found in the 2021 IMEA audit (attached).

[ii]
Lack of Transparency
https://cleanenergynaperville.org/did-you-know/lack-of-transparency/

[iii]
Beneficial Ownership Meaning and Regulation
https://www.investopedia.com/terms/b/beneficialowner.asp

[iv] 
Illinois Joint Municipal Electric Power Act, contained at Division 119.1 of Article 11 of the Illinois Municipal Code
(65 ILCS 5/11-119.1-1) (from Ch. 24, par. 11-119.1-1)
https://www.ilga.gov/legislation/ilcs/ilcs4.asp?DocName=006500050HArt%2E+11+Div%2E+119%2E1&ActID=802&ChapterID=14&SeqStart=253300000&SeqEnd=254600000

(e) that the intent and policy of the General Assembly when enacting this Division is to enable municipal utility systems to jointly plan, finance, own and operate facilities for the generation and transmission of electrical power and energy and related facilities or other facilities necessary or convenient for the planning and operation of a system for the production and transmission of electrical power and energy.

[v]
IMEA Bylaws
https://drive.google.com/file/d/1x8ytvWVYqM5HV3_NxMfyPDaswPprK7e9/view

1. Purpose. Pursuant to the Illinois Joint Municipal Electric Power Act, contained at Division 119.1 of Article 11 of the Illinois Municipal Code, as amended (the “Act”), the Illinois General Assembly found that adequate, economical and reliable sources of electrical energy are essential to orderly growth and prosperity of municipalities in the State of Illinois and that a shortage of such sources would endanger the safety, health and welfare of the residents of the State of Illinois and the growth and development of municipalities. The Illinois Municipal Electric Agency (the “Agency”) has been formed to provide a method for its Members to jointly plan, finance, own and operate, facilities for the generation and transmission of electrical power and energy and related facilities necessary or convenient for the planning and operation of a system for the production and transmission of electrical power and energy all to the fullest extent permitted by the Act.

[vi]
City of Naperville Memorandum January 8, 2007
TO: Mayor and City Council; Peter T Burchard, City Manager
FROM: Doug Krieger, Finance Director; Margo Ely, City Attorney
SUBJECT: Agreement with the Illinois Municipal Electric Agency
https://drive.google.com/file/d/1D8SSl_ZdWK6ztn-4lv2-NkByN0WN3hH_/view

DISCUSSION: The Illinois Municipal Electric Agency (IMEA) is a joint action agency with twenty-nine current member municipalities who have entered into long-term Power Sales Contracts to provide the full requirements of their respective municipal electric systems. Illinois law allows municipalities that own and operate electric utilities to jointly plan, finance, own and operate electric generation and transmission facilities.

Over its 22 years of experience in power procurement, the IMEA has executed contracts to create a mix of resources, including asset ownership, projects under construction, member generation, and short-term and long-term power purchase contracts, necessary to supply the capacity and energy requirements of the twenty-nine Participating Members into the future. The opportunity to become a member of IMEA will allow the City to share the ownership interests of IMEA’s assets and share in the costs. of power with the existing members.

[vii]
City of Naperville Webpage: “Illinois Municipal Electric Agency (IMEA)”
https://www.naperville.il.us/services/electric-utility/your-electric-service/imea/

On June 1, 2011, the City of Naperville began purchasing electric power for its municipal Electric Utility with the Illinois Municipal Electric Agency (IMEA), a not-for-profit joint action agency comprised of 32 municipal electric systems that work together to provide power supply and other related utility services for themselves. Membership in the IMEA will enable the city’s electric customers to reap the benefits of ownership in electrical generation facilities that provides a greater chance of rate stabilization to 2035 and beyond.

[viii] 
Mascoutah City Council Workshop With IMEA Sept 22, 2020
Mascoutah’s YouTube Channel Video of the Zoom Recording:
https://www.youtube.com/watch?v=BDHRJ3AtJCo

At 57:53 (3473 seconds) into the recording:
https://www.youtube.com/watch?v=BDHRJ3AtJCo&t=3473

The combined equity of the IMEA right now is about $300 million on the books of IMEA, and that equity is likely to grow well over $400 million by 2035. And you will be an equity participant in your share of that output. And so, I think that’s something that you would and your successors in your positions may be something interested in continuing to take advantage of the investments that you’ve made over that period of time.

[ix]
IMEA Board Meeting June 23. 2022

During the presentation of a request to the board members for authorization to sell IMEA property, in this particular case a vehicle no longer needed in the pool of cars used by IMEA staff, the IMEA  CEO stated:

“Under my authorization, I’m required to get your approval to sell property on your behalf. This is your property.”

These words were noted and saved while attending the virtual board meeting on the GoToWebinar provided for attendance by IMEA during the covid emergency.

From the meeting minutes:
https://drive.google.com/file/d/1u7vkWBOb37QjGd8WIpgKEvo_sPf_zYLz/view

Authorizing CEO to Sell 2014 Honda Accord as Surplus Property – CEO Gaden stated that IMEA maintains “pool cars” for staff to use for member visits and other meetings. Since Kevin Wagner’s retirement, there is an additional pool car that still runs fine and has 100,000 miles on it. Mike Genin is currently using a 2014 Honda Accord with about 127,000 miles on it. Since IMEA does not need an extra pool car, IMEA Staff is recommending the sale of the 2014 Honda Accord as surplus property. Bob Coble moved to authorize the CEO to sell the 2014 Honda Accord as surplus property, seconded by Mayor Dominic Rivara. The roll call vote showed unanimous approval.

[x] 
IMEA Agency Agreement
https://drive.google.com/file/d/1wtmyFcLTqWZ_VAJLLT1JJg2IKuq0Uhne/view

ARTICLE X

Dissolution

10.1 Whenever the Board of Directors and the Governing Bodies of at least 90% of the Members by Ordinance determine that the purposes for which the Municipal Power Agency was formed  have  been  substantially  fulfilled  and  that  all  bonds issued  and  all other  obligations incurred  by  the Municipal  Power  Agency have  been fully  paid or satisfied  or  provision for payment thereof has been made in accordance with the terms of the ordinance, trust indenture or other security agreement securing the same, the Board of Directors and Governing Bodies of at least 90% of the Members may adopt ordinances to declare the Municipal Power Agency to be dissolved.   On the effective date of the dissolution as set forth in such ordinances, subject to all contractual obligations entered into by the Municipal Power Agency with respect to any projects, title to all funds and other property owned by the Municipal Power Agency at the time of the dissolution shall vest in the Members in proportion to the total payments made by the Members to the Municipal Power Agency during its entire existence, including payments of fees, payments of  assessments,  payments  under  contracts  for  the  purchase  of  power  and  energy  and  other services, and otherwise.


This webpage information is also available in pdf file format at:
Naperville’s Joint Ownership of Coal-Fired Generation
https://drive.google.com/file/d/1yi2xzndskwX7ycQGVPnKCNDi2ClyyCrt/view