The Clean and Reliable Grid Affordability Act passed by the state legislature in late October stands to impact the city of Rochelle-owned Rochelle Municipal Utilities and its customers, city officials said Nov. 19. Gov. JB Pritzker has pledged to sign the bill.

City Attorney Dominick Lanzito said that by 2027, the omnibus energy bill will require the city to put together an integrated resource plan with all of its current electric infrastructure, facilities and generation and expectations for growth and improvements in the system and submit to the state.

The work would be done every five years. The requirement affects municipal utilities with 7,000 customers or more. RMU has about 7,500 customers.

The new legislation also involves statewide battery storage and renewable energy requirements for utilities. Lanzito said the city is still working its way through the 700-page bill to determine what all it means for RMU. City officials are unsure of the cost of an integrated resource plan. Lanzito said the cost is “probably close to $250,000 a year.”

“The cost is likely going to be funded by ratepayers, which is why it’s important to grow the utility,” Lanzito said. “That cost will have to come from somewhere in the next 14 months. We’ll get started on that process. The city has done a great job of tracking its assets and planning for the future. It’s probably one of the most forward-facing municipal utilities.”

City Manager Jeff Fiegenschuh said a rate adjustment will be made to cover the new unfunded state mandate, but it’s too early to say on a timeline or amount. Once the bill is finalized, the city will work with Utility Financial Solutions, which handles its rate analysis, to determine appropriate next steps.

Fiegenschuh said city representatives had a hand in negotiating the bill. There was previously a desire for an integrated resource plan requirement every three years instead of five.

“That’s what happens when the state legislature gets involved,” Fiegenschuh said. “They tend to pass on unfunded mandates to localities. The bill could have been worse. We’re now required to do it and that’s what we’re going to do. The additional cost will be paid by our ratepayers. I don’t know what the numbers will be, but we’ll have a rate adjustment to help fund it.”

RMU Superintendent of Electric Operations Blake Toliver said the city is still reviewing the bill to determine what an integrated resource plan will consist of. The city will find a vendor to do the IRP for it. The process will involve future power load forecasting and “a lot of legwork,” Toliver said.

Lanzito said the load forecasting piece will be difficult for RMU due to its main source of baseload power, the Prairie State Energy Campus in southern Marissa, Illinois, being required to be carbon-free by 2045, either by going offline or installing sequestration technology. The state’s Climate and Equitable Jobs (CEJA) Act in 2021 put those requirements in place for the coal plant the city bought into in 2007.

The city’s baseload power it purchases from Prairie State would come offline completely in 2042 and be reduced by 45 percent in 2038 based on current legislation.

“These projects with RMU infrastructure and generation all have long lead times,” Lanzito said. “It’s something we’re going to have to start planning on now. That will create an additional expense with that level of forecasting and planning and how we’ll obtain electricity in the future. With a large push towards renewables, we’re going to have to change a lot of our practices and our dependency on some of that baseload power in order to meet some of those standards. That’s going to unfortunately cause rates to rise.”

Fiegenschuh said the city-owned electric utility being at the mercy of state legislation and dealing with unfunded mandates is “difficult,” with Rochelle’s mayor and city council being tasked with making rate adjustments to cover the costs.

“These costs are being pushed on us by the state legislature,” Fiegenschuh said. “The average person is looking to our mayor and council and our city staff and asking why our rates are going up. We’re the ones that will take the heat for it. But we have to implement these policies because we’re a political subdivision of the state and don’t have a choice.”

Lanzito said RMU rates have gone up by a lower percentage than “pretty much any” comparable municipal or investor-owned utility in the state recently. Fiegenschuh said rates went down when the city did a rate adjustment during the COVID-19 pandemic and reduced commercial electric rates by 2-8 percent.

“Our kilowatt hour rate to our residents has actually decreased,” Toliver said. “Our customer charge went up recently, but our hourly rate decreased. Good financial practices have put the utility in a great financial position. The negative effects of this legislation might not be seen right away, but they will be seen eventually.”