Alliant, Decorah residents battle over power control

DECORAH — In the northeast Iowa town of Decorah, a battle brews over control of the community's power.

A group of residents called Decorah Power are exploring the creation of a public electric utility for the community of about 8,000 people. Doing so would seize control of the city's energy infrastructure away from Alliant Energy, the current energy provider.

In a Tuesday special election, residents will vote on whether to authorize the Decorah City Council to pursue a municipalization request with the Iowa Utilities Board, which regulates such matters.

Supporters of a municipal utility say local control could reduce energy rates and allow the community more control over the use of renewable power.

'For us, this has never been an anti-Alliant movement. This has always been pro-Decorah,' said Emily Neal, a volunteer with Decorah Power. 'What can we do for our community to move us forward in a direction we want to go in?'

However, officials with Alliant Energy — which has provided power to Decorah for a century — argued the opposite, that cutting ties with Alliant could raise energy rates and put local reliability at risk.

'We believe Alliant Energy is the clear choice when it comes to delivering reliable, affordable and increasingly clean energy to the residents of Decorah,' Terry Kouba, vice president of operations with Alliant, said in an email.

What's a municipal utility?

There are about 2,000 community-owned utilities in the United States, according to the American Public Power Association.

Iowa is home to 136 municipal electric utilities, which serve about 900,000 total customers, according to the Iowa Association of Municipal Utilities.

Tim Whipple, general counsel with the utilities association, said much of the state's public power was built decades ago during the electrification of rural Iowa.

Building the infrastructure needed to run power from generation hubs out to smaller communities was expensive, so many towns powered themselves.

'Communities kind of decided to bootstrap it a little bit, do it themselves — buy their own generators, build their own plants in their own communities and provide power to their residents,' Whipple said.

A municipal utility manages its own power and places energy rates and grid investment in the hands of a local entity, such as a city council or appointed board.

As technology and energy transmission methods advanced, for-profit utilities expanded their footprints. Cities seeking to get out of the power business could dissolve their municipal power operation and become customers of an investor-owned utility.

In 1976, the Iowa Utilities Board established exclusive service areas for all state electric utilities, which essentially allow a monopoly of service within a defined geographic area — with rates regulated by the state board.

If Decorah wishes to become a municipal utility, the Iowa Utilities Board must approve the acquisition of a portion of Alliant's service territory. The city would use eminent domain to acquire the infrastructure and pay Alliant a board-approved price.

In 2006, the communities of Everly, Kalona, Rolfe, Terril, Titonka and Wellman each filed municipalization requests with the utilities board. Titonka ultimately dismissed its petition, and the state board in 2008 denied the remaining five applications.

Whipple said one challenge communities often face is the financial effects of municipalization.

If the shift to municipal power appears too costly for a community, it could effect rates, which would run counter to the Iowa Utility Board's mission to ensure customer reliability and reasonable rates.

'When you cut one little piece out, your costs get dramatically smaller, but the number of customers over which you have to spread those costs also gets smaller,' Whipple said. 'What the board has to figure out is, what will everyone's bills do as a result of this process?'

Back in Decorah, feasibility studies by Alliant and Decorah Power came to very different conclusions on the overall cost of the infrastructure, including a substation and all components downstream, that carries power to about 3,600 residential, commercial and industrial customers, according to Alliant.

Decorah Power estimates the cost at about $5 million, but a feasibility study by Alliant puts the cost at close to $50 million.