Overpriced power: Why Batavia is paying so much for electricity
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Key Findings
The City of Batavia and the communities of Rochelle and Geneva purchase electric power for their customers from the Northern Illinois Municipal Power Agency (NIMPA). This power comes from the Prairie State Energy Campus (Prairie State), a new 1600-megawatt (MW) coal-fired plant in Southern Illinois.
The most recent data available from NIMPA reveals that the undercollection of power costs was approximately $5.99 million through the end of October 2013. Batavia’s share of this $5.99 million in under-collected costs is $2.745 million. These are costs that it will recover from its member communities in the coming months.
The two major reasons why the price of power from Prairie State has skyrocketed above $46 per MWh are (1) a more expensive construction price tag and (2) poorer-than-expected operating performance.
Executive Summary
The Institute for Energy Economics and Financial Analysis (IEEFA) has investigated why the price being paid by the City of Batavia for electric power is so high. The results of our investigation are as follows:
- The price of the power generated at the Prairie State Energy Campus is, and in the future will continue to be, significantly more expensive than the developer, Peabody Energy or the consultant, the Indiana Municipal Power Agency (IMPA), claimed when enticing Batavia to enter into a long-term take-or-pay agreement to buy power. At the same time, the plant’s operating performance has been significantly worse than Peabody or IMPA projected.
- Batavia has paid, and for years to come will continue to pay, prices for the power from the Prairie State Energy Campus that are dramatically higher than current and projected prices for power in the PJM competitive wholesale markets.
- Any strategy by Batavia to sell its excess power from Prairie State will be unsuccessful given that its costs are substantially above market prices. Ratepayers will continue to bear the costs of both the over-priced power from Prairie State and the losses on the sale of excess power either sold in the market or sold to larger use customers paying discounted prices.
Press release: Report- Overpriced power: Why Batavia is paying so much for electricity
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