Alliant Energy seeks to quell a municipal uprising in Iowa

Voters in a rural Iowa community go to the polls May 1 to decide whether the municipal government should try to buy the local electric distribution system from investor-owned utility Alliant Energy.

A local non-profit group in Decorah is urging voters to approve the idea so city leaders can apply to state regulators for approval to acquire the poles, wires, transformers, meters and other equipment that deliver electricity to about 3,400 customers.

Representatives from the utility urge voters to defeat the proposal, saying the company can do the job more efficiently than the city. Alliant said residents should save the high cost of a municipalization effort and allow the city and the company to work together on common goals.

The referendum represents the next major step in a year-long effort by the citizens group named Decorah Power. A 25-year franchise agreement between the city and Alliant expires in May and the group is urging city leaders to use the expiration as an opportunity to break away from Alliant and start a municipally owned and operated electric system.

Decorah Power said the acquisition would save customers money and that local control would keep millions of dollars a year circulating in the community. Supporters also argue that it would give the community more autonomy in developing renewable energy from sources such as wind and solar.

The non-profit group, operating on behalf of the city council, has completed a feasibility study, concluding that the conversion would be in the public interest and would save about $5 million a year.

Alliant refutes the non-profit’s estimate in a separate study, saying municipalization would increase costs and would risk the quality of service. The utility also says its renewable energy plans will surpass those envisioned by the grassroots effort.

Decorah Power predicts the city could buy the assets and launch the municipal utility for as little as $7.6 million. Alliant said the non-profit far underestimates the cost. The price would be about $50 million, Alliant said, which the city would need to take on as new debt.

Alliant said a city-owned utility would need a double-digit rate increase to provide the same level of service that Alliant now provides. On its website, Alliant said it is committed to Decorah, having served the city for a century. It has invested $1.8 million in the last 5 years on system upgrades and, at the same time, has provided customers $1 million for energy efficiency.

The company said it operates the largest solar array in the state and is committed to expanding renewable energy. A $1.8 billion investment in Iowa wind energy will mean a third of the power delivered to Decorah will be renewable, according to the company’s website.

Alliant touts $160,000 a year in local tax payments. The company plans to build a new multimillion-dollar operations center in Decorah and said it is considering the city as a site for a future utility-scale solar garden.

“Seeking municipalization can be an expensive process for everyone involved,” Alliant spokesman Mike Wagner said in an email. “So if we can help our customers reach their goals and help the city and our customers avoid unnecessary legal fees, everyone wins.”

Alliant has seen other municipalization efforts in Iowa. Wagner said that in 2006, five communities – Everly, Kalona, Rolfe, Terril and Wellman – asked state regulators for permission to establish municipal systems. But the board denied those petitions in 2008, finding that the municipalities had underestimated the costs and were not prepared for ownership, Wagner said.

If voters approve the municipalization proposal, the city would then apply to the Iowa Utilities Board for permission to buy the assets.

The matter has been contentious. Earlier this year, the City Council asked Alliant to postpone installing advanced meters while the community explores the municipalization, according to a report in The Decorah Newspapers.

Council members who supported the request, and members of Decorah Power, argued that the equipment might cost too much or be inconsistent with the city’s needs if it ends up buying the distribution system.

Alliant declined the Council’s request, saying a municipalization process can take years and such efforts are not always successful. Alliant said it would not wait and risk the cost of having to restart the deployment.

The grassroots municipalization effort developed after Alliant and members of the community were unable to agree on a proposed 2.5 megawatt community solar initiative that would have served five big users including two local colleges, the city and county governments and a local hospital.

Alliant’s Wagner said the company never rejected the initiative. “As proposed, the solar projects didn’t comply with existing tariffs,” he said in an email. “Throughout the process, we proposed different ways to help the groups meet their goals. But they were not interested in the alternatives we presented, which would have ensured benefits to all of our customers. Our door has remained open to revisit these projects.”

Luther College, one of the five involved in the community solar project and the biggest electric customer in the city, positions itself as a leader in sustainability and has close ties with Decorah Power.

The college has a variety of solar arrays on campus. In 2011 it installed a 1.6 megawatt wind turbine at a cost of $3.2 million that meets about 27 percent of the school’s needs. According to Luther College’s website, the turbine offsets about 10 percent of the school’s carbon footprint.

The school, established in 1861 as a seminary by Norwegian immigrants, has a goal of being carbon neutral by 2030, said Emily Neal, assistant director of the Center for Sustainable Communities at the college. Neal also is a volunteer for Decorah Power.

She said the expiration of the franchise agreement represents a new opportunity to address sustainability issues.

The landscape for renewable energy and distributed generation is entirely different from 25 years ago when Decorah and Alliant signed the existing franchise agreement. The price of solar panels, for example, has fallen dramatically and has made renewable energy much more affordable.

“We have an opportunity like we never had before,” she said. “There are a lot of people — not just Luther — in town who got wind that we could do something different.”

The municipalization effort, she said, adheres to the college’s mission. “What’s consistent with the mission is to be joyful stewards of the land that surrounds us. We have a responsibility to the community and to be a leader within the region. These are things we hold dear,” Neal said.

Decorah, with about 8,000 residents, is about 15 miles south of the Minnesota border in northeastern Iowa. It serves as the seat of Winneshiek County and is a hub of Norwegian-American culture.