Governors' Wind Energy Coalition

Energy independence is a buzzword in Decorah, Iowa.

Voters in the town of 7,900 residents in northeastern Iowa go to the polls today to decide whether to break from investor-owned Alliant Energy Corp. and form a municipal utility that could accelerate the shift to renewable energy.

A pitched battle over the town’s source of electricity reflects tensions across the country between regional utilities and customers who want more choice over where their electricity comes from. In Decorah, the referendum is part of a grass-roots effort by a group of residents known as Decorah Power. They want public support to go to state regulators with a request to split with the Madison, Wis.-based utility.

Alliant, an electricity provider for nearly a million customers in Wisconsin and Iowa, isn’t watching idly. The utility is running a rival campaign complete with newspaper and radio ads to defeat the ballot measure, arguing the city would be hurting itself if it’s allowed to secede from its service territory.

The weeks leading to today’s vote have only seen the efforts to sway voters and the rhetoric intensify. The two sides have produced competing feasibility studies and dueling social media campaigns. Both groups say they’re working in the public’s interest.

“This is not an anti-Alliant campaign in any way,” said Emily Neal, an instructor at Luther College who’s the spokesperson for the group. “This is a pro-Decorah campaign.”

Many residents have a progressive vision of the city’s energy future, including a goal of being 100 percent powered by renewable energy by 2050. But it’s been an elusive goal, Neal said. “We have tried over the last 15 years or so to be innovative,” she said. Having no luck, “there was this idea of, ‘Do we need to look elsewhere?'”

Decorah Power members saw an opening last year after they found out that the city’s franchise agreement with Alliant was expiring. The City Council approved a moratorium on franchise agreement renewal discussions through December 2017, and later, the council voted to allow Decorah Power to commission a feasibility study.

Decorah Power, which is led by a retired banker, raised $90,000 in private funds, including a small grant, to commission the study, Neal said.

The 31-page study by Dallas-based NewGen Strategies and Solutions concluded that a city-run utility could provide service at a lower cost and with a greater emphasis on renewable energy and energy efficiency. It estimated that rates over the next decade would be almost one-third less than Alliant’s.

The report estimates the cost of acquiring a substation, poles, conductors, transformers and meters for the 3,400 customers would be about $5.1 million. The city would also incur startup costs of about $2 million to cover attorney, consultant and regulatory fees; labor; spare inventory; and establishing a billing system.

The consultants, however, cautioned that the study relies on estimates and publicly available information to develop upfront costs and comparisons for purchasing assets and establishing an electric distribution utility. That’s because Alliant declined to provide data citing confidentiality concerns.

The utility, meanwhile, hired Concentric Energy Advisors to do its own study of the costs of starting and operating a municipal utility in Decorah based on a 2021 transition date and came up with staggeringly different results.

That 145-page study, which the authors said used the same methodologies relied on by regulators in past municipalization cases, estimated that residents would see their electric bills increase 4 to 14 percent.

The difference between the estimates is in part driven by certain costs that the Decorah Power study didn’t include, but also different assumptions about the total amount of energy used each year.

The critique of the Decorah Power study didn’t end there. The utility said the city would actually get more of its energy from renewable resources if it stayed on Alliant’s system, which continues to add new wind resources. The city would also benefit from fewer and shorter outages, the report said.

Decorah Power questions the cost figures provided in the Alliant study, especially because the utility refused to turn over data such as total sales, peak load or how many miles of overhead line are located in the city.

“Some of the numbers [in the Alliant study] are just outrageous,” Neal said.

Alliant Energy representatives didn’t respond to interview requests regarding today’s election.

Ultimately, it will be up to the Iowa Utilities Board whether members think forming a municipal utility is in the interest of residents. The three-member board will also establish how much the city would pay Alliant to acquire the distribution system.

Chad Bird, Decorah’s city manager, said approval by voters in today’s election doesn’t necessarily mean the city will file a petition with the IUB. Nor does the vote establish any timetable for making a decision.

“The yes vote is simply a yes to proceed,” he said.

Bird said the City Council has lots of options to consider if the vote succeeds, including using its leverage from the election results to negotiate a new franchise agreement with the utility or doing additional analysis to explore the costs and process of forming its own utility.

“At the very least, they should do a comprehensive review of the study by Alliant,” he said.

If the measure is defeated at the polls, the question of whether Decorah creates a municipal utility has to wait four years before it can be brought before voters again, Bird said.

Even if Decorah Power ultimately chose to petition the IUB to form a municipal utility, the road won’t necessarily be an easy one.

As cited in the Concentric study, just 16 of 51 municipalization efforts across the U.S. since 2001 have been approved, including in Boulder, Colo. One community acquired the utility’s system and later sold it back. Others have decided not to proceed for a variety of reasons.

In Iowa, where there are more than 130 municipal electric utilities, six small cities filed municipalization petitions with the IUB more than a decade ago. One withdrew its application, and the board rejected the others.

Neal, meanwhile, isn’t making any predictions on the outcome of the election, acknowledging that opinions vary depending on “who your friends are and where you get your information,” she said.

But even if the ballot measure fails, the campaign has achieved something worthwhile, she added, by raising awareness about electric rates and where the city’s energy comes from.

A sustainability instructor at Luther College in Decorah, Neal compares what’s happening today in energy to the heightened attention given to the food system years earlier that has led to locally produced food and away from industrial agriculture.

“Certainly people are engaged,” she said.