Consultant outlines options as St. Charles weighs IMEA contract renewal

Energy consultant Sean Kessler gave St. Charles officials a detailed briefing on the city's power-supply choices as the city considers whether to sign a proposed Illinois Municipal Electric Agency (IMEA) contract by an August 19 deadline.

Kessler said the decision before the council is whether to accept the IMEA contract as written by the deadline or to pursue an alternative path. "The current decision on the table is whether or not to sign the proposed IMEA power supply contract by the deadline of August 19 as is," he said.

The presentation outlined three practical paths: sign the new IMEA contract that would begin Oct. 1, 2035 and run under the proposed terms; decline and pursue a competitive procurement with third-party power suppliers; or pursue partial or full self-supply or membership in a different joint action agency. Kessler emphasized that, regardless of the council's decision by Aug. 19, IMEA would continue serving the city under the existing contract through September 2035.

Why it matters: IMEA represents a pool of 32 municipal members and owns shares in coal-fired plants that currently supply a large fraction of St. Charles's power. Kessler said retirement of debt service on the agency's coal plants around 2035 should reduce IMEA's cost to members by roughly 25 percent, which he described as roughly "about 4'cents per kilowatt hour," but he cautioned that other costs could change and that the reduction is not guaranteed in every future scenario.

Key facts and tradeoffs - Current contract and timeline: The existing full-requirements IMEA contract runs through September 2035; the proposed replacement contract would begin Oct. 1, 2035. IMEA set an Aug. 19 deadline for members to accept the proposed contract as presented. - Scope of service: Kessler said IMEA currently supplies full requirements (energy, capacity, transmission, ancillary services) to the city; PJM, the Regional Transmission Organization, manages grid reliability and delivery irrespective of which supplier provides energy. - Renewable carve-out: The proposed IMEA contract would allow members to source a small portion of supply from renewables (described in the contract as up to 10% of peak billing demand, which Kessler explained equates to roughly 2.5'to 3% of energy consumed). - Alternatives: St. Charles could run a competitive procurement and contract with retail power marketers (examples cited included Constellation and NextEra) for fixed or variable terms commonly in the 3'to 12-year range. Kessler said such providers can supply full requirements without the city having to build a trading desk or add staff.

Financial and operational considerations Kessler presented historical price comparisons showing IMEA's delivered prices were higher than an average of several large retail power marketers in past years after adjustments for delivery voltage and customer mix. He said estimates for prior years suggested a premium in the range of millions per year (his analysis cited figures roughly in the $7'to $9 million per year range for 2016'2023 under particular assumptions), but he cautioned that comparisons are sensitive to methodology, timeframe and customer-class mixes.

On contract length, Kessler said IMEA's long-term approach is linked to past financing for generation projects and debt service obligations. By contrast, private power marketers generally prefer shorter rolling terms. "Most of their contracts are probably in the 3 to 7 years," Kessler said of private suppliers, though he added that some marketers now offer longer terms.

Reliability and emissions Kessler noted that day-to-day delivery reliability would be unchanged by a change in supplier because PJM manages dispatch and transmission. He also described IMEA's stated sustainability target of zero emissions by 2050 but cautioned that the contract does not legally commit members to that schedule. He referenced a state-level law discussed in the presentation as "the CJA law," noting the law's role in setting statewide emissions limits and transition timelines as described in the briefing.

Next steps and public engagement Council members and staff asked follow-up questions about procurement timelines, the feasibility and cost of high-renewables portfolios, and whether partial requirements (splitting supply between IMEA and other suppliers) would be possible; Kessler said partial requirements are feasible and pointed to Batavia as an example. Staff indicated a follow-up meeting had been scheduled for Aug. 11 to address remaining questions.

Quotes from the briefing - "The current decision on the table is whether or not to sign the proposed IMEA power supply contract by the deadline of August 19 as is," Kessler said. - "There's plenty of municipalities that do that in some form or fashion," he said when describing municipalities that self-supply or use alternate procurement arrangements.

What the council did: discussion and direction The presentation was informational; the transcript records no formal council vote on the contract during the meeting. Staff announced a follow-up meeting scheduled for Aug. 11 to continue the discussion and to permit additional outreach to alternative suppliers before the Aug. 19 decision date.

Ending: The briefing closed with council members thanking Kessler and noting the topic will return for further committee and council consideration. The presentation included data appendices and Kessler said he would send an updated slide deck the following morning.