A proposed hike in Naperville’s electric and water rates to fund water main replacements and other infrastructure work would add about $4 or $5 to the average monthly residential utility bill over the next three years, city officials said.
If approved by the Naperville City Council, which will review the request next week and is expected to approve it on Nov. 2, the increases would go into effect Jan. 1.
The average homeowner who this year pays a combined electric, water and sewer bill of $188.55 can expect their bill to go up 2.1% in 2022, bringing it to $192.45. In 2023, the bill would increase 2.6% to $197.55, and 2.7% in 2024 to $202.86.
The numbers are based on average monthly electric use of 844 kilowatt-hours and water use of 750 cubic feet.
There is the smaller increase in the first year is because the electric rate hike won’t start until 2023.
Brian Groth, director of the electric utility, said the city plans to move the purchased power adjustment base rate from $85.55 per megawatt hour to $86 per megawatt hour.
“This is to support the revenue neutral goal,” Groth said. “A purchase power adjustment allows the electric utility to continue its capital plan, even though power supply prices may fluctuate.”
There is a slight increase in energy cost paid by the city, he said.
“But we want to be revenue neutral over the three years so we don’t want it to always be a collection or always be a rebate. It should even out over the three years,” he said.
The income generated by the increase will allow the city to escalate its capital spending by about $1 million per year, bringing it to an annual total of $15 million through 2024, Groth said.
Money generated by the electric rate hike will be used to repair a substation along Interstate 88, which often has issues during the winter related to salt spray from the road. The work is necessary to ensure service reliability for customers along I-88 and portions of downtown, Groth said.
Rate changes vary for commercial electric customers.
Small business customers — gas stations, fast-food restaurants and small retailers — will see less than a 1% increase in 2023 and 2024, according to city documents.
Large commercial electric users, such as grocery stores, hotels, big box retailers and office buildings, won’t see any increase, and industrial customers such as manufacturers and Edward Hospital will see rates fall, documents show.
Water and sewer increases reflect the need to fix the city’s aging infrastructure.
Darrell Blenniss, the city’s water utility director, said the average household that uses 750 cubic feet of water will see a rate increase of 4.7% per year in 2022, 2023 and 2024.
Commercial customers that use 2,000 cubic feet of water will see rate hike of 4.2% in 2022, 4.5% in 2023 and 4.6% in 2024.
The increased revenue is needed, in part, because a larger number of water mains are reaching the end of their useful life, Blenniss said.
Typically, a water main will last 100 years, he said. But those built in the 1960s and 1970s were made with materials that are lasting only 50 to 60 years, he said. As a result, the city is starting to see more water main breaks.
“Every time you have a water main break, we have customers that are out of a service. You don’t want that. We want to reduce that as best we can,” Blenniss said.
In addition to those 50- and 60-year-old mains needing replacement, the city also has a list of older mains waiting to be replaced, he said. The goal is to add three more miles a year to the water main replacement program, he said.
Another expense is the cost of improvements the city needs to make at the Springbrook wastewater facility.
To pay for the work, the city is considering a new capital charge to be added to the monthly water bill. It is projected to bring in $800,000 in revenue the first year.
“It’s a fixed charge based on the size of your meter. It’s the same every month,” Blenniss said. “When you see your bill and when you see this charge, you know that money is going for capital infrastructure.”
The fixed monthly charge is a predictable revenue stream for the city that is not subjected to changes in weather, such as dry or wet summers, and is more immune to the patterns the city has observed on a per capita demand consumption, which is going down year over year, he said.
City Finance Director Rachel Mayer said the fixed charge should ultimately help to stabilize the rate increases over time.
Even with the projected rate hikes, Naperville’s utility services would still cost less than most comparable communities, Groth and Blenniss said.
subaker@tribpub.com
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