Financial Advisory Board — Naperville, IL
Date: 2024-09-04

400 S. Eagle Street
 City of Naperville Naperville, IL 60540



 Meeting Agenda

 Financial Advisory Board

Wednesday, September 4, 2024 6:00 PM NEU


 Special Meeting



A. CALL TO ORDER:

B. ROLL CALL:

C. PUBLIC FORUM:

D. REPORTS:

E. NEW BUSINESS:
 24-1016 Approve the recommendations for electric and water utility rates for 2025
 through 2027

F. OLD BUSINESS:

G. ADJOURNMENT:
 Any individual with a disability requesting a reasonable accommodation in order to
 participate in a public meeting should contact the Communications Department at least
 48 hours in advance of the scheduled meeting. The Communications Department can
 be reached in person at 400 S. Eagle Street, Naperville, IL., via telephone at
 630-420-6707 or 630-305-5205 (TDD) or via e-mail at info@naperville.il.us. Every effort
 will be made to allow for meeting participation.




City of Naperville Page 1 Printed on 8/28/2024

400 S. Eagle Street
 City of Naperville Naperville, IL 60540



 Meeting Minutes - Final

 Financial Advisory Board


Wednesday, September 4, 2024 6:00 PM NEU

 Special Meeting


A. CALL TO ORDER:

B. ROLL CALL:

 Also Present: Raymond Munch, Finance Director; Darrell Blenniss, Director of
 Water; Brian Groth, Director of Electric; Melanie Smith, Accountant; Doug Splitt,
 Budget, Technology & Administration Manager - Water
 Present 7- Thomas Gavin, Mark Gizzo, Edward Harvey, Josh McBroom, Jignesh Patel, Michael
 Soenke, and Curtis Williams
 Absent 1- Jeff Walker


C. PUBLIC FORUM:

 None

D. REPORTS:

E. NEW BUSINESS:

 Approve the recommendations for electric and water utility rates for 2025 through 2027

 Director Munch gave a presentation on the electric and water utility rate studies.
 Munch began with an overview of the rate study process, noting that the Public
 Utilities Advisory Board reviewed service levels and capital improvement plans
 for each utility earlier this year. He then discussed the specific issues facing
 each utility that were significant considerations in building new rates.

 Director Munch noted that the Electric Utility is challenged by declining cash
 balance resulting from lower energy sales in recent years, while at the same
 time facing growing capital needs. Director Groth responded to several
 questions from the Board that spoke to specific challenges in procurement,
 supply chains, energy markets and cost escalations.

 Director Munch then addressed the challenges facing the Water utilities,
 specifically the need to fund significant capital projects at Springbrook Water
 Reclamation Center and water main replacements. Munch noted that the
 Springbrook plant requires $180 million in work over the next five to eight years.
 Director Blenniss provided some additional context around the projects, cost

City of Naperville Page 1 Printed on 12/13/2024
Financial Advisory Board Meeting Minutes - Final September 4, 2024

 and timelines.

 Director Munch then reviewed the outcomes of the Electric rate study beginning
 with a review of assumptions that were used. Munch noted that leaving rates as
 is would result in a negative cash position of more than $30 million by 2027. To
 avoid that scenario, the consultant and City staff recommend rate increases of
 6.1% in 2025 and 5.1% in 2026 and 2027. The financial model also includes
 $7.5 million in new debt. Munch also discussed a plan to increase the customer
 charge gradually over three years to align with the cost of service. The Board
 asked why that change would not be made all at once in year one. Munch noted
 this is a fairly substantial change to the fixed charge that staff felt should be
 incorporated over three years. Munch concluded with a review of the bill
 impacts for a residential customer based on these rate recommendations and a
 comparison to the current ComEd rate.

 Next, Director Munch reviewed the results of the Water rate study. Munch noted
 that the significant capital needs require a higher rate adjustment of 23% in
 water rates and 10% in wastewater rates each year over the next three years.
 The financial model also includes the issuance of $81.6 million in new debt over
 three years. Munch also noted that staff recommends an increase in the
 outside-the-city surcharge from 10% to 30%, which aligns with comparable
 communities. Munch reviewed the impact of the proposed rate increases on the
 residential bill.

 Board members expressed concern that the water rate increases were too
 high, specifically noting that the capital program should be funded through debt
 to the extent possible. Board member Gavin noted the generational equity
 issues with funding capital through rates versus debt. The Board requested that
 staff go back to the rate consultant and look at additional debt financing and how
 that could mitigate rate increases. The Board expressed support for the Electric
 rate model as presented.

 Director Munch advised the Board that staff would do additional work and report
 back to the Board before a final recommendation is made to City Council.

F. OLD BUSINESS:

G. ADJOURNMENT:

 Chairman Harvey made a motion to adjourn the meeting, second by Williams
 and approved by voice vote. Meeting adjourned at 7:43 p.m.




City of Naperville Page 2 Printed on 12/13/2024