ROCHELLE — It appears the city’s sale of its transmission assets has hit a snag.
The city of Rochelle reached a purchase agreement with NextEra Energy Transmission MidAtlantic, LLC, an indirect subsidiary of NextEra Energy, Inc. for the sale of 20 miles of 138 kV transmission lines and associated substation facilities at Caron Road.
The city stands to receive a payment of just over $13.1 million at closing.
Reportedly, “Commonwealth Edison, the utility subsidiary of Chicago-based Exelon, has intervened …,” according to a recent Crain’s Chicago Business article. “In its ICC filings, ComEd argues that it should have the right of first refusal under state precedents for the sale of any municipally owned power lines.”
The article further states ComEd attributes a “first in the field” doctrine, essentially claiming it to be the first electrical provider in the area; therefore, it should have had first option prior to the sale to NextEra.
Exelon had been one of several respondents after Rochelle Municipal Utilities issued a request for proposal over a year and half ago.
“They reopened the records,” confirmed City Manager Jeff Fiegenschuh. “At this point we don’t know how long it will take. We are working through the process.”
City attorney Dominick Lanzito added the administrative law judge assigned in the matter had given the sale approval and it was sent to the Illinois Commerce Commission for a vote.
“[The commission] reopened the record before making a formal and final decision,” Lanzito said. “The briefing will take place in June and a decision will be made the end of June or early July.”
Responding to what would happen if the ICC votes against the sale, Lanzito is confident that won’t be the case.
“That’s something the council will have to determine at that point,” answered Lanzito. “We have the utmost faith it will be approved, considering the administrative law judge has already put together the order in August to approve the Certificate of Public Convenience and Necessity. So, we are of the belief it will be approved.”
The process leading up to the agreement began in July of 2017 when Rochelle Municipal Utilities issued a request for a proposal (RFP), inviting respondents to bid on two different scenarios — either for a transmission-related strategic partnership, or an outright sale of its transmission assets to a transmission-focused company.
Six RFP responses were received and RMU staff and its consultants conducted interviews with the respondents, including representatives from ComEd.
Last April, city officials approved an agreement to sell its transmission facilities to NextEra for 200 percent of the net book value. The agreement included the following: Payment for use of the city right of way; payment of $20,000 for the next 10 years to be used for community development projects; and a commitment on NextEra’s part to design, develop, construct and energize a third east-west transmission line to DeKalb.
Last September Fiegenschuh indicated upon the sale’s closing, the funds generated would have to be used in the electric department.
“We don’t know when the actual closing date is at this point, but when we receive those funds, they will be deposited into a CD and we won’t spend that money,” Fiegenschuh said in September of 2018. “We will hold it for a year and use that interest that we generate off of the CD to help fund capital improvements, which will benefit all of our rate payers.”
He added that with the sale, RMU’s focus would turn to the city’s distribution system, and the transaction is subject to state and federal regulatory approvals before it can be finalized.