News Track: Decorah voters will be asked again about municipal utility

Decorah voters in 2018 narrowly rejected a proposal to start the process of creating a municipal utility — and severing ties with Alliant Energy, which now provides electricity to customers in the city.

In 2018, Decorah voters rejected the referendum with 1,380 in favor and 1,384 opposed, only a few votes short of the simple majority needed for approval.

But the proposal will come back for voters in March 2025.

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What’s happened since

Decorah residents once again will go to the ballot box for a special election on the public utility after the City Council approved a referendum for March 2025.

The measure would allow the council to further study municipalization of the city's power. The vote could be a first step in establishing a utility that would replace Alliant.

“As far as the referendum, it is essentially the same as 2018,” Decorah City Manager Travis Goedken said. “This is a vote to establish a municipal electric utility on paper. It doesn’t give us any assets, no customers, no revenues (or) anything like that.”

During the first referendum, Emily Neal was a volunteer with the pro-referendum group Decorah Power and told The Gazette at that time the group would stay committed to a clean energy future. Now, Neal sits on Decorah’s City Council. The council voted 5-2 in May to set the new referendum date.

Goedken said the council still needs to vote on specific ballot language.

“We're not voting in this election to say, ‘Yes, I want my electricity to be run by Decorah,’” Neal said. “All we're doing is we are saying that we want to have a municipal electric utility. But that doesn't mean we have coals and wires and an infrastructure, right? We have no revenue. We will have no expenditures.”

The Iowa Utilities Commission ultimately would decide on Decorah’s municipalization, including details such as how it’s financed.

“We would never think of letting an investor-owned utility control our water supply, because water is a basic need, and no one should be able to profit on a basic need as an investor utility would. Yet we do it for energy,” Neal said.

In a statement to The Gazette, Alliant Energy spokeswoman Melissa McCarville said the company is invested in all customers and communities including Decorah.

“We are dedicated to partnering with the community to create future growth and we are working cooperatively with the city to continue providing residents with safe, reliable and affordable energy,” an Alliant statement said.

“We believe, in the interest of the citizens of Decorah, a referendum should be avoided,” Mike Wagner, a community development manager with Alliant, said in a separate statement to The Gazette.

Possible steps ahead

Jim Martin-Schramm is a Decorah resident who voted for the referendum in 2018 and plans to again in 2025. The part-time policy analyst with the nonprofit Clean Energy Districts of Iowa and outreach and engagement coordinator for the Allamakee Energy District said it's “reasonable” for Decorah to explore municipalization.

“At this point that's primarily due to customer affordability and very high rates,” Martni-Schramm said. “Alliant’s rates, in comparison to MidAmerican, the other investor-owned utility, are 61 percent higher for residential customers and about 50 percent higher for Main Street commercial businesses.”

If the proposal is passed, the city would next need to pass a bond referendum to fund the utility. The measure requires voter approval of 60 percent, Goedken said. Starting the electric utility would be financed with general obligation bonds until the system could be purchased. Then, Decorah could refinance the debt into revenue bonds.

If voters pass the referendum, Goedken said it would take “years” for the municipal electric utility to take shape.

Voters ‘hurt’ by Alliant rate hikes

Alliant in 2018 urged residents to vote against the referendum. The company released a feasibility study conducted by Concentric Energy Advisors that showed three years with 2 percent annual increases through 2027 to account for inflation.

The study said there were 3,673 Alliant customers in Decorah in 2016. Using census data, it projected the customer base would stay close to that number through 2027.

In the years after voters opposed municipalization, Alliant proposed rate hikes higher than the municipal electric utility’s rate increases outlined in the study.

Neal said one year after the failed referendum, Alliant proposed a 24.5 percent increase.

Decorah residents in May 2019 gathered to voice their frustrations.

“Hundreds of people filled a room to basically say, ‘If I had known that they were going to do this, I would have voted yes for the referendum,’” Neal recalled. “People felt betrayed. They were hurt.”

Over the course of 2020 and 2021, the Iowa Utilities Commission, then named the Iowa Utilities Board, issued rulings that questioned if the Interstate Power and Light company — Alliant’s subsidiary — withheld information about upcoming rate hikes from voters.

“The facts of the study performed by CEA with regard to costs to residents of Decorah may have been true at the time of the study; however, there was further information with regard to timing of rate cases and expected rate increases that was known prior to the municipalization vote. IPL’s management decided not to share, incorporate or update its messaging with Decorah residents,” the commission stated in a January 2020 decision.

“The lack of transparency and misrepresentation in the Decorah municipalization vote is of significant concern to the Board,” the commission continued. “It is not definitively known whether the information IPL withheld would have changed the results of the vote.”

Alliant provided data to The Gazette from the Edison Electric Institute showing average rate increases from 2013 to 2023 in Iowa of 2.5 percent for large general service users, 2.72 percent for residential customers and 2.74 percent for general service users.

“Our company takes great pride in our purpose-down driven strategy that’s focused on serving customers and building stronger communities. We are committed to being transparent as we deliver the reliable energy our customers need to support their family or build their business,” Wagner said in the statement.

Comments: (319) 265-6828; cleo.westin@thegazette.com