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Fact Sheet*

*All statements below are allegations provided by the plaintiffs. None of these allegations have been proven yet.

KEY PLAYERS

  • Batavia Utility Users – Residents and businesses that have been charged an increased rate for electricity by the Batavia Municipal Electric Utility since 2012.
  • Peabody Energy, Inc. – The world’s largest private-sector coal-mining company with numerous high-sulfur coal reserves in Southern Illinois.
  • Consultants to the City of Batavia, including;
    • IMPA Service Corp. (“ISC”) – The consulting division of Indiana Municipal Power Agency hired by the City of Batavia to study the Prairie State Energy Campus project.
    • Raj Rao – President and CEO of ISC and Chairman of the Prairie State Generating Company Management Committee.
    • Sargent & Lundy, LLC – A Chicago based consulting firm hired to study the Prairie State Energy Campus project.
    • Skelly and Loy, Inc. – A Pennsylvania based consulting firm hired to study the quality and quantity of the coal at the Prairie State Energy Campus.

PURPOSE

This class action is brought to investigate the increase in electricity rates in the City of Batavia since 2012.  It is believed that this rise in monthly electricity rates is as a result of the City of Batavia’s participation in the Prairie State Energy Campus.

In 2001, Peabody Energy, Inc. announced plans to construct a pulverized-coal-fueled power plant in southern Illinois on top of Peabody’s existing high-sulfur coal reserves. The power plant, coal mine and wastre disposal facility was called the Priarie State Engery Campus. After failing to secure a partnership with an established utility enterprise, Peabody devised a plan to liquidate its high-sulfur coal and transfer the economic risk associated with the power plant onto municipal power agencies throughout the Midwest.

In 2004, Raj Rao, IMPA ISC, made presentations to the Batavia City Council to invest in Prairie State Energy Campus.  They were selling affordable, reliable, long term, and environmentally friendly power. Sargent & Lundy, and Skelly and Loy, prepared reports regarding the feasibility of the project.

On April 10, 2007, Raj Rao informed the City of Batavia Public Utilities Committee that if it did not approve ownership in the Prairie State Energy Campus by the “fatal” date of April 17, 2007, Batavia would lose its right to be reimbursed for the $1,821,566.00 the City had already spent on development of the Prairie State Energy Campus.

On April 16, 2007, the City of Batavia approved a “take-or-pay” contract whereby the City of Batavia agreed to purchase what would eventually be 55 Megawatts of power generated at Prairie State Energy Campus.  Under this take-or-pay contract, Batavia ratepayers are charged for Batavia’s pro-rata costs of the Prairie State Energy Campus and related debt whether the plant produces any power not.

Around the same time the City of Batavia approved the “take or pay” contract, Peabody began decreasing its interest in the Prairie State Energy Campus.  In April of 2007, Peabody had a 25% interest in the project.  By August of 2007, Peabody’s interest had dropped to 19%.  By April of 2008, Peabody had decreased its interest further to only 5.06%, with an option to sell all interest in 2017.

The estimated cost of constructing the Prairie State Energy Campus increased again and again from $4.095 billion in 2004, to $4.933 billion in 2010, to $5.1 billion in 2013.  The ultimate cost of constructing the Prairie State Energy Campus has never been disclosed and is still unknown.

Following the opening of the Prairie State Energy Campus in 2012, Raj Rao, was appointed chairman of the Prairie State Generating Company Management Committee.

During 2013, City of Batavia’s electric rate was substantially above the presented price of $46 per megawatt-hour.  The average cost of power from Prairie State Energy Campus for the first 11 months of 2013 was $94, reaching a high of $179.92 in the month of November, and an average monthly cost of $90 for the first three months of 2014. The cost for the City of Batavia to purchase electricity on the open market during this same period would have been approximately $30 to $45  per megawatt-hour.

In recent months, City officials have been forced to dip into Batavia’s $2 million electric reserve funds and raise both the City’s sales tax and electric rates to offset the rising cost of power from the Prairie State Energy Campus and have provided specialized rates to large electricity users out of fear of losing them.

CONTACT

The success of this class action is dependent upon the involvement of a large number of Batavia citizens.  Utility users within Batavia who are unhappy with their monthly utility bill and wish to join this class action and obtain more information should call 1.630.457.1015.