Council to weigh utility study

Council to weigh utility study

CHAMPAIGN – The cities of Champaign and Urbana are apparently starting to get serious about looking into municipal ownership of electric service.

The Champaign City Council will consider next Tuesday whether to conduct a feasibility study of the cities' acquiring electric system assets in the cities owned by Illinois Power.

Under the plan, Urbana and the University of Illinois would share in the costs of the study and would also need to sign off on it. It's estimated the study would cost between $50,000 and $100,000.

The issue will be considered at Tuesday's 7 p.m. study session in council chambers at the Champaign City Building, 102 N. Neil St.

Champaign Mayor Jerry Schweighart said he personally favors going ahead with the study, and two other council members, Kathy Ennen and Ken Pirok, said they agree. That view is somewhat surprising in that Champaign council members frequently express support for free enterprise and market forces over government solutions.

The cities could acquire electric assets in their respective communities through court condemnation or by negotiating a purchase with Illinois Power. Either option would likely be expensive and time-consuming.

"I think we'd be negligent if we didn't look at it," said Schweighart.

Council member Ken Pirok said the study, which would look into the legal, financial and technical issues of an acquisition, would represent only a first step. A full-fledged feasibility study would cost in the neighborhood of $1 million, he said.

But Pirok said he believes the need for improvement of local electric service is a pressing need.

"Electric service has been horrible for years and years," he said. "It has become an economic development issue for us. It hinders us in some cases from attracting business."

Having a city-owned electric utility that could supply reliable power to local businesses and industry, and respond promptly to calls for service and business needs, "would be a very good economic development tool for us," Pirok said.

Ennen said she believes "it is important to the community to go forward," she said. "Champaign needs to be ahead in the process."

Both the Champaign and Urbana city councils in recent weeks filed informal complaints with the Illinois Commerce Commission, expressing concern about Illinois Power's record in regard to electric service reliability and customer service.

The complaints arose out of a June 25 public hearing where dozens of local people testified about difficulties they had experienced with Illinois Power, particularly the development, commercial and high-tech community.

Chicago-based Exelon Corp. is now in negotiations to buy Illinois Power, currently owned by Texas-based Dynegy.

Shirley Swarthout, a spokeswoman for Illinois Power, said the company believes it is "premature for the cities to focus on one single potential solution.

"We'd like to work with them to find optimal ways of addressing their objectives."

"It only makes sense to let us gather additional information before they proceed with a study that may be unnecessary," Swarthout said.

Champaign City Manager Steve Carter said that even if the cities were to decide against having a municipal electric service, the city could gain valuable advice from the electric study about how to have its concerns about reliability addressed as part of the merger process between Exelon and Illinois Power.

Urbana Chief Administrative Officer Bruce Walden said he believes the Urbana City Council will support funding the study.

"We're working together with Champaign," he said. "I think on this issue we're joined together at the hip."

The cities had, until Wednesday, also planned on pursing a preliminary study of what it would take to buy the local water assets of Illinois-American Water Co. But Carter said today that Champaign had decided to put off such a study for the time being.

He said the city is still engaged in franchise negotiations with Illinois-American about the company's use of the city's right of way.

Those negotiations are going well, he said, and the more pressing need is to deal with the Illinois Power issue. Illinois-American's parent company, American Water Co., merged this year with RWE, an Essen, Germany-based multinational company.

You can reach Mike Monson at (217) 351-5370 or via e-mail at mmonson@news-gazette.com.

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