
Randy Bauer, director of operational resources with Alliant Energy, spoke to community members during a Jan. 22 informational meeting at Alliant’s operations facility in Decorah. (Photo by Seth Boyes)
Officials with the Iowa Utilities Commission are considering concerns presented to them last week by representatives with the city of Decorah.
The city is seeking clarification from the IUC as to whether a previous ruling from the commission applies to information Alliant Energy is currently disseminating ahead of a local March 4 referendum, during which area voters will decide whether the city may establish a municipal electric utility. A similar question was posed to Decorah’s voting public in 2018, failing by a total of three votes, and the city said in its recent petition to the IUC that inaccurate information provided to the public at that time by Alliant and Interstate Power and Light Company — the division of Alliant Energy which serves Iowa — may have affected the outcome of that referendum. The IUC issued an order in 2019, saying it found the company’s opposition to Decorah’s 2018 municipalization effort had demonstrated “a lack of management efficiency by withholding from and not providing to the citizens of Decorah accurate information about anticipated rate increases.” The commission also required Iowa Power and Light to submit a plan outlining how the company would improve its customer relations.
Alliant, which provides electrical service to most of the city of Decorah, has pursued multiple rate increases since the 2018 referendum, and city officials previously indicated they aim to explore alternatives for providing electricity to Decorah residents, if Alliant’s rates become cost prohibitive for locals.
The city of Decorah filed a petition with the utilities commission in late December, asking whether the commission’s 2019 order also applies to information Alliant has shared ahead of the March 4 referendum, such as the claim that Decorah residents could pay up to 48 percent more for their electrical rates over a 20-year period under a municipal system — the city has called that claim unsubstantiated. The state commission met with city officials during an informal meeting on Jan. 22 and, while no formal decisions were made, representatives of the IUC did say orders like the one issued by the commission in 2019 remain in effect unless modified or ended by a subsequent order, adding “there is an ongoing expectation that an investor owned utility is truthful and forthcoming with their customers.”
Other specific questions posed to the commission by the city are expected to be taken up at a later date in a more official setting — representatives at last week’s informal meeting noted the city’s petition may spur broader questions regarding the right to free speech. Decorah City Manager Travis Goedken said the commission has since requested documentation showing the information Alliant recently shared with the public, documentation of informational materials the city intends to provide to residents and documentation showing the Iowa Ethics and Campaign Disclosure Board found no violations of state law during its review of the city’s proposed materials.
“We want to make sure the information given to our residents is factually accurate,” Goedken said. “That was the whole premise on the initial filing. Our voters — our residents — need to make an educated decision on this matter.”
Representatives of the IUC indicated during last week’s meeting the commission may reach a decision regarding the city’s concerns ahead of the March 4 vote. Initial docket filings indicated the commission might be required to respond no later than Feb. 28, unless both parties agree to a later deadline.
Accuracy and feasibility
Jim Martin-Schramm with the Clean Energy Districts of Iowa, an organization which has been recognized as an intervening party in the city’s recent IUC petition, told the commission last week that some of the recent information Alliant posted to its website in opposition to the March referendum seems to be drawn from a feasibility study the company commissioned in 2018 — a study Martin-Schramm argues the commission already determined contained inaccuracies.
City officials previously indicated, if the March 4 referendum is approved by Decorah voters, the IUC could potentially compel Alliant to provide accurate data and statistics to the city to complete its own feasibility study to determine whether establishing a municipal utility and purchasing Alliant’s local infrastructure would be a reasonable option — the Iowa Utilities Commission would also be involved in setting that purchase price. Officials with Alliant reiterated during a Jan. 22 informational meeting held at its operations facility in Decorah that nothing prevents the city from conducting its own feasibility study at any time. Randy Bauer, director of operational resources with Alliant Energy, said last week that an engineer and interns from Luther College in Decorah helped the city estimate the value of Alliant’s local assets ahead of the 2018 referendum, and he believes a competent engineer could calculate a reasonably accurate value again — Alliant’s study ahead of the 2018 referendum differed from the study conducted on behalf of the city by more than $43 million.
Both Martin-Schramm and Goedken questioned why the city would expend taxpayer money conducting a study based on guesses and estimates rather than seeking more accurate numbers through the utilities commission.
Officials with Alliant also criticized a Jan. 20 decision by the Decorah City Council to amend language in the city’s proposed public informational materials. Council members agreed to soften absolute some terms which might have required the city to conduct a feasibility study if the referendum is approved. Alliant officials questioned the move during the company’s meeting last week, saying the city’s argument for holding another referendum hinged on acquiring data for such a study.
Goedken said Monday softening the terms may prevent the city from potentially being locked into a specific action. The city manager stressed he doesn’t speak for the council, but he said council members will now have the option to consider whether the results of the March referendum demonstrate a clear public mandate before potentially moving forward if, for example, the matter passes by three votes as opposed to failing by three votes as it did in 2018. He also noted submitting an application to the Iowa Utilities Commission may cost hundreds of thousands of dollars, and the council may need to consider its financial situation before moving toward an application and conducting a feasibility study.
Both he and Bauer agreed the city can wait any number of years to submit an application to the state following a successful referendum but, if the matter reaches the commission and is unsuccessful, the city would need to begin the process anew if it still aimed to establish its own utility.
Bauer noted, should the March 4 referendum be approved and the city submit its request to the state commission, Alliant would also be granted access to the city’s information as part of that process, allowing them to question how the city calculated its numbers.
Both he and Goedken agreed any potential municipalization process will take years to complete.
Bauer said the last municipal electric utility to be established in Iowa was in the city of Aurelia, which did so in 1974. He said about five other Iowa communities have attempted municipalization since 1990, and he knows of only five which currently offer net metering for customers who generate renewable energy, such as solar — Mike Wagner, a community development manager with Alliant, said Decorah has a higher percentage of solar production than many Iowa communities in the company’s service area. Bauer said each of the applications filed by the five communities during the past 35 years failed after state officials calculated specific numbers and found municipalization was not in the public’s best interest.
“Typically, every one of these things that I’ve seen — every one of these things — the cost to acquire and the cost to operate is vastly understated, so the benefits are greatly overstated,” Bauer said of the failed applications.
Bauer went on to indicate Alliant plans to release its own updated feasibility study in the near future, which he said would likely provide a clearer picture of the company’s presence within Decorah.
Rate and financing
Alliant’s average residential rate in 2023 was higher than all but two of Iowa’s 136 municipal electric utilities, according to information compiled by the Clean Energy Districts of Iowa, yet Alliant’s industrial electric rates for 2023 were within the lowest third out of all the state’s electrical utilities.
Bauer said during last week’s meeting that Decorah isn’t charged a higher electrical rate than Alliant’s other Iowa customers. Rather, he said the electrical rate is consistent across the state, and other factors, such as franchise fees imposed by individual cities, can change the specific amount customers pay.
“Rate comparisons are interesting, but they’re meaningless,” Bauer told last week’s audience.
Wagner said Decorah’s current franchise fee of 4 percent is one of the highest in the state. The local fees partially help fund sustainability efforts within the city, and Wagner questioned why the city hasn’t put those dollars toward its own feasibility study — Goedken said Monday the available funds for sustainability efforts currently sit at approximately $375,000, and he noted it would require an affirmative vote from four of the seven Decorah City Council members to spend the funds.
Bauer noted, if Alliant no longer provides electrical services to Decorah, the city revenue generated from the 4 percent franchise fee would cease. He went on to say he doubts the city currently has enough bonding capacity to fund the proposed municipal utility through general obligation bonds — which would require at least 60 percent approval from the public to issue — and he said he expects the city could fund the purchase of Alliant’s infrastructure through revenue bonds — which he said do not require a vote of public approval.
Goedken agreed the hypothetical revenue bonds wouldn’t require such a vote, but he also pointed out the city won’t be eligible to issue revenue bonds without a successful referendum in March, as well as a positive result from a feasibility study and ultimately approval from the state utilities commission to establish a service territory. In addition, he said any general obligation bonds the city might have issued for the effort prior to that point can be refinanced into the revenue bonds associated with acquiring Alliant’s electrical system.
The city manager reiterated city officials plan to rely on an accurate feasibility study to develop a business model for the proposed utility, but he also stressed the Iowa Utilities Commission has the final say.
“If that acquisition, plus the business model submitted at the time are going to be too costly, or the utilities commission doesn’t think the city can pull it off or retain the reliability, then they’ll say, ‘No, you don’t get it’” Goedken said, saying the commission acts as a sort of stop-gap measure to protect the public. “The utilities commission is also responsible for making sure that our residents are getting not just the best rates but the best provider too.”
Clarity regarding MiEnergy
The Decorah City Council on Jan. 20 also voted to add information addressing concerns regarding residents who already receive electrical service from MiEnergy Cooperative, which serves portions of nine counties in northeast Iowa and southeast Minneota. Goedken confirmed the city does not intend to bring current MiEnergy customers in Decorah under the umbrella of the city’s proposed municipal utility. However, both he and Bauer noted MiEnergy customers living within the city of Decorah will be allowed to vote during the March 4 referendum.
Goedken said MiEnergy has agreed to partner with the city of Decorah, if plans for the municipal utility come to fruition, but he said it’s still unclear what the specifics of that partnership would be — he said the cooperative could potentially supply power, provide assistance with operations and maintenance or simply aid the city with administrative aspects of the utility.
Bauer also told audiences last week that residents outside Decorah’s city limits, such as those who live in the unincorporated Freeport area, will not be able to cast a ballot on March 4 and can’t be drawn into the proposed MEU without further state approval. He said, if the city should hypothetically annex Freeport in the future, the city would be required to prepare and submit an entirely new petition to the Iowa Utilities Commission before bringing residents there under a municipal utility.
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