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Letter to the Editor: Facts and logic favor a yes vote May 1st

Posted: Sun, Apr 8, 2018 2:29 PM

(The following Letter to the Editor has been submitted by Bob Haug of Ames, the retired director of the Iowa Association of Municipal Utilities):

"There has been a lot of discussion about costs to form a municipal electric utility and the savings that would accrue to customers and the community.  I had the opportunity to assist Decorah Power in evaluating proposals from firms qualified to conduct the feasibility study.  The chosen team has exceptional experience in valuing utility property and in the economic standards applied to the purchase of monopoly assets.  Their business is built on that experience and they have no reason to find feasibility where there is none or to exaggerate results.

By contrast, a 'yes' vote holds risks for Alliant/IPL.  It might encourage other communities to start similar efforts, their stock value could decline, and shareholders might blame a loss on the company's senior executives, including the top six whose compensation in fiscal year 2016 averaged just under $2 million.  Is it possible that these risks might have influenced assumptions made about the value of their assets?  Could they explain the millions of dollars related to the unsupported claim that the service territory could not include customers outside the city?  Do they explain millions more for "going concern value," which does not apply to the valuation of monopoly assets?

Consider the company's latest brochure, entitled "The Numbers Tell the Story."  In truth the numbers tell the company's story.  For example, that the Decorah feasibility study projects first year average rates nearly 32 percent lower with a municipal utility.  Alliant/IPL asserts in their analysis that first year rates would be 4.6 percent higher.  So how do they get from 4.6 percent to the 30% rate spread claimed in their brochure?  With no justification, they assume their rates which have increased at 2.5 percent per year over the last 15 years will increase in the future by less than 1 percent per year, while municipal utility rates will increase by 2.4 percent annually.  Even with their cost assumptions and the apples-to-oranges difference in assumed rate inflation, it would take 16 years to get to a 30 percent rate advantage details not noted in the brochure. 

Don't be fooled.  Facts and the logic that supports them favor a YES vote on May 1st."