Winnetka power supplier wants to extend contract through 2055

Winnetka officials have begun a process to help them answer a question that will have long-lasting effects on the Village: Should they renew their power contract?

That question was the focus of a Winnetka Village Council study session on Tuesday, May 14, when officials from the Illinois Municipal Electric Agency made a pitch to trustees to continue a working relationship that has existed for 40 years.

IMEA is a nonprofit that provides “an affordable, reliable and sustainable energy to 32 municipal electric systems from all across Illinois,” according to its website. Winnetka first began receiving power from IMEA in 1991, and according to officials, the Village was a founding member of the agency back in 1984.

The contract consists of a power sales contract and a capacity purchase agreement. According to Village documents, IMEA “acquires power and energy by generating it at an IMEA-owned plant; purchasing it from other power generating entities; and/or utilizing the capabilities of the Village’s Electrical Plant and/or other members’ municipal generation operations.” Additionally, “the output capacity of the Electric Plant is solely dedicated to the agency in exchange for monthly capacity payments and fuel cost.”

Since 1991, Winnetka has received $46.2 million in capacity payment credits from IMEA, according to Village documents.

While the current contract between Winnetka and IMEA will not expire until Sept. 30, 2035, Brian Keys, the Village’s strategic development manager and IMEA board member, said IMEA is transitioning from carbon-based to renewable resources, with the goal of achieving “net zero” carbon emissions by 2050.

Keys said IMEA wants to get the contract renewals with all the agencies they serve prepared and negotiated so they can prepare for the transition.

If the Village agrees to renew its contract with IMEA, it will last 20 years, from 2035-2055.

Troy Fodor, IMEA’s vice president and general counsel, said the proposed new contract is mostly the same as the current one, with most of the differences dealing with rules regarding regional transmission organizations.

The biggest change, he said, is an opportunity to have locally driven renewable resources.

“IMEA is going to do renewable … but if your Village wants to do more, we wanted to give you that option,” he said. “Right now, the option starts at 10 percent of peak demand.”

Fodor added that IMEA will manage the resource on behalf of Winnetka for its regional grid operator requirements, and the process can begin as soon as the contract is renewed, without having to wait until 2035.

Of the 32 communities that IMEA serves, Fodor said 10 have agreed to the new contract so far, while four others are awaiting final approval by the IMEA board.

Many of trustees’ questions were focused on the future and what IMEA expects will happen with energy.

Trustee Rob Apatoff asked how IMEA would protect Winnetka from an instance of a power grid overloading and the Village losing power.

“How are we forecasting that so we don’t get caught short?” he asked.

Fodor said power grids are the responsibility of PJM, the regional transmission organization they work with, but IMEA can help keep costs down in a hypothetical situation where a data center would overload a power grid thanks to a “cost-causer principle” in the new contract.

“If your village wants to bring that data center in and if it’s going to cause a risk to the rest of the membership, we would ask you to pay for that,” he said. “That’s how we’re trying to protect our members from this kind of thing happening.”

Trustee Tina Dalman asked what would happen in the “worst-case scenario” where the Village decided not to renew its contract.

Keys said Winnetka would then have to figure out an alternative path forward, which “would take literally years to plan.”

Their options could include contracting with Commonwealth Edison for power, or handling operations internally within the Village.

“We could look at adding staff and go it alone, which is, from a cost structure, not going to be palatable,” Keys said, adding that he believes if the Village went that way, they would have to hire up to 24 new employees to help provide 24/7 service.

“I don’t see the scenarios being less cost-effective,” he said.

Some trustees brought up the unknowns of the future in terms of what may or may not happen in terms of energy usage.

Trustee Bridget Orsic said she’s “less uneasy with the amount of risk that is involved with the unknown because everybody has the same unknown, but I feel like with this, we at least known the knowns because there’s a group talking about it.”

Village President Chris Rintz said Tuesday’s conversation provided “a lot to ponder” and said more discussions will be coming.

“And we’ll get it on the agenda again when it feels like it’s right to talk about again,” he said. “We don’t have to rush it and we shouldn’t rush it. We should be diligent on this just like we are with a lot of stuff we’ve worked on over the years.”

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