Clean Energy Alliance of Naperville

Clean Energy Transition Off Coal-Fired Electricity

MDR: A More Complete Story of Paying Twice

What is MDR?

Naperville residents and city leaders are interested in increasing our community’s use of clean, carbon-free energy. The IMEA (Illinois Municipal Electric Agency), which provides our wholesale power, has introduced a new option in its proposed power sales contract called MDR (Member-Directed Resources).

MDR is an option that allows an IMEA Member, like Naperville, to request approval from the IMEA Board of Directors to procure self-directed, carbon-free power supply resources.

On the surface, MDR seems like a great option for clean energy. However, a deeper look at the new IMEA contract reveals a critical financial challenge for Naperville: utilizing MDR means Naperville will have to pay twice for the same power supply resources.

The “Pay Twice” Problem

Why does Naperville pay twice if it uses MDR? The double payment results from the structure of the IMEA contract, which includes “take and pay” full requirements provisions, combined with the MDR provisions.

The Two Required Payments:

  1. Payment to the MDR Vendor: Naperville must pay its MDR power supply resources  vendor for the cost of the MDR resources, as defined by the specific contract Naperville signs with that vendor.
    AND
  2. Payment to IMEA: Naperville must also pay IMEA for the same level of power supply resources, even though Naperville has self-directed a portion of that supply with MDR.

How IMEA Billing Works:

Our understanding, based on our citizen research and discussions with our Naperville Electric Director, tells us that IMEA will not adjust Naperville’s monthly bill to reflect the energy and capacity resources that Naperville self-directs using MDR.

  • No Reduction in Billed Usage: Naperville’s IMEA billed levels of demand and energy will continue to reflect our full requirements. This billed usage is what IMEA uses to allocate Naperville’s percentage share of IMEA’s socialized costs each month.
  • Credits Only: IMEA intends to provide only credits at the end of Naperville’s monthly bill. The value of these credits will be equal to the liquidated market value of the MDR resources in the PJM or MISO markets.

In short, Naperville pays the vendor’s contract price (payment 1), and continues to pay IMEA’s full charges (payment 2), only receiving back the market value of the MDR resources as a credit from IMEA.

The Financial Impact of Using MDR With A New 36MW Load Datacenter

To illustrate the significant financial impact of these “full requirements costs” on the IMEA side of the equation, we created a spreadsheet model using the example of Naperville utilizing MDR with the additional 36 MW load of a proposed new datacenter.

We modeled the impact on Naperville’s annual IMEA costs using IMEA Fiscal Year 2025 costs and Naperville’s IMEA purchases plus that new additional 36 MW load.

Our spreadsheet is posted here:
https://docs.google.com/spreadsheets/d/1vIaS3_TY60M7Ey0cwOdsGFgIwMo6PzOn/view

Our model shows significant cost increase impacts to Naperville:

  • Naperville’s total IMEA Demand costs increase by $2.4 million
  • Naperville’s total IMEA Energy costs increase by $7.5 million
  • Added together, Naperville’s total IMEA costs increase by nearly $10 million

By increasing Naperville’s overall demand and energy usage, as billed by IMEA even when using MDR, that means Naperville’s percentage share of IMEA socialized costs increase:

  • Naperville’s percentage share of IMEA demand billing units increases by 2.8% to 37.4% of IMEA’s total demand.
  • Naperville’s percentage share of IMEA energy increases by 4.4% to 38.6% of IMEA’s total energy.

The percentage increases in Naperville’s share of IMEA’s socialized costs are the cause of the large total dollar amount increases to Naperville.

The Coal-Fired Generation Connection

Significantly, of that nearly $10 million total cost increase, $5.9 million represents the increase in Naperville’s percentage share of the IMEA socialized costs for the Prairie State and Trimble County coal-fired generating plants.

Note: Our Naperville beneficial ownership through IMEA of the coal-fired generation s also includes revenue benefits (offsetting credits) for capacity market sales and net energy market sales. But Naperville’s total financial support of that coal-fired generation increases significantly as Naperville’s percentage shares of total IMEA demand and total IMEA energy increase.

What about MDR for Existing Load?

If Naperville were to utilize MDR with existing load (instead of new load), there would be no change in the levels of IMEA billed demand and energy. Likewise, there would be no change in Naperville’s IMEA demand and energy costs. The credits at the end of the IMEA bill for the liquidated market value of the MDR resources would still apply, and those credits would be used to offset the MDR vendor’s contract price.

Conclusion: Need for Clarity

Although MDR appears to be a promising new IMEA option for Naperville to procure additional clean energy, a more complete picture shows that Naperville will pay twice for the resources, and our city’s financial support and beneficial ownership though IMEA of coal-fired resources will not be reduced.

Our assessment is based on our citizen research and study, attending IMEA board meetings, and questions and discussions with IMEA and our Naperville Electric Director.

Since there appear to be different understandings of MDR within the Naperville community and among our city leaders, we suggest that Naperville request that IMEA publicly provide proforma statements of our Naperville IMEA bill, both with and without MDR. This transparency is essential for our City Council and the public to make fully informed decisions about MDR and the new contract.

Resources for Further Information

We suggest the following resources from our website for additional information on IMEA socialized costs, the proposed new contract, and MDR: