Naperville electric customers could see their rates reviewed every quarter. That's one consequence of a plan the city council is weighing to exit its long-term power contract and buy electricity on the open wholesale market.

City Manager Doug Krieger laid out the stakes at the council's July 21 meeting: joining the PJM Wholesale Market as a direct buyer would require a deposit of roughly $24 million, plus a $15 million rate stabilization fund, according to NCTV17's report on the presentation.

"The $12 million figure was for one month, but typically they would require two months of your highest electric use. So for us it would be about $24 million," Krieger told the council.

The presentation was the third in a summer-long series exploring what happens after Naperville's contract with the Illinois Municipal Electric Agency expires in 2035. The council voted 6-3 on Feb. 3 to pause negotiations on extending that contract, setting the current review in motion.

What the open-market option means

Under this model, Naperville would buy power through contracts and market transactions rather than owning generation or transmission assets. Krieger identified flexibility as the chief advantage: no long-term assets means no long-term liabilities.

The chief risk is volatility. Krieger said price swings "can provide significant adverse financial risk," noting that the council would need to evaluate rates every quarter to keep up with wholesale fluctuations.

The city would also need to staff or outsource an energy management office, a function IMEA currently handles. Councilwoman Mary Gibson pointed out at the July 21 meeting that Naperville already pays for that service through its IMEA membership fees, so the cost would shift rather than appear from nowhere.

Only one U.S. city has closely adopted a straight-market model: South Sioux City, Nebraska, which hired a private firm as its market manager and scheduling agent.

Council members push for hedging details

Councilman Patrick Kelly, who is not seeking re-election after eight years on the council, asked staff to bring back examples of how other communities hedge against price swings.

"I would hope nobody's just thinking about straight market purchase with no hedge at all," Kelly said at the July 21 meeting. "That would not seem to make sense."

Councilman Josh McBroom, a financial advisor first elected in 2023, pressed Krieger on an anticipated 2028 rate increase that would help build the stabilization fund.

What comes next

The council's next electric utility presentation is scheduled for Tuesday, Aug. 18. The spring and summer review series is expected to culminate in a strategic workshop later this year, where the council will set specific goals for Naperville's energy future.

Naperville will remain an IMEA member through at least 2035 regardless of any decision made now. Residents who want to weigh in can attend the Aug. 18 council meeting or submit public comment through the city's website.