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Letter to the editor: "$50 Million is Fear, Not Reality"

Posted: Thu, Apr 12, 2018 4:45 PM

(The following Letter to the Editor has been submitted by Andy Johnson of Decorah):

"I wanted to write about how a municipal electric utility fits so well into the community entrepreneurial spirit (in addition to the individual entrepreneurial spirit) that has helped build our community, and must continue for our community to thrive for generations.  I wanted to describe the many ways in which our local public servants elected and otherwise have exhibited that spirit of entrepreneurialism and professionalism in this and other efforts. I thank them genuinely for their service, and for the community they continue to help build.  Instead I feel compelled to address fear and confusion, specifically the 50 million points of fear and confusion represented by the $50 million buyout and debt figure Alliant is threatening.

Here are five reasons we shouldn't be afraid.

1. Alliant's "study" is not based on Alliant data. Rather, it is (in the study's words) a "preliminary estimate that can only be refined after a complete system inventory". "Nothing in this Preliminary Feasibility Study is intended, nor shall be construed, to be information, admissions, statements, assumptions, opinions, positions, or conclusions made or provided by or on behalf of Alliant." Hmmm.

This is especially relevant because after authorizing the NewGen feasibility study (that suggests $5 million/year in savings with a municipal electric utility), the Decorah city council formally requested real data from Alliant. When Alliant refused, the NewGen team brought in engineers to conduct a boots-on-the ground system inventory, and based their analysis and conclusions on real data.

2. Both a 2008 Iowa Utilities Board ruling and the 2015 voluntary sale of Alliant's entire southern MN distribution territory to a group of rural electric co-ops provide "comparable" buyout figures. When adjusted by population and customer data, both cases suggest Decorah's distribution system is worth near or under $10 million, much closer to the NewGen analysis than Alliant's "study".

3. A NewGen project team lead Dave Berg has provided a detailed "what-if" analysis. It demonstrates that even if the buyout and regulatory costs are double the NewGen estimates, Decorah could still operate a municipal utility for 10-15 percent less than Alliant, with savings of nearly $2 million/year. You can watch Dave's presentation at www.decorahpower.org.

4. Even after Alliant's consultants throw the kitchen sink and the bathtub into their estimates of up-front costs (remember, it is not real data) to burden a new Decorah utility with $50 million in debt, their "study" still suggests a mere 4 percent higher estimate for municipal utility rates from day one not the 30 percent you may have heard about.

5. The only way Alliant can then arrive at their other big scary number "30 percent higher rates" is by assuming a local utility's costs and rates  would rise almost three times faster than their own in coming decades. Reality shows the opposite: according to the US Energy Information Agency, in the past decade Alliant rates have risen roughly 35 percent, while the average municipal utility rates in Iowa have risen just 25 percent. More hmmm.

A YES vote is LOW RISK, PRO COMMUNITY, because 1) the city will access real Alliant data during an Iowa Utilities Board application, 2) the Utilities Board--not Alliant--will determine buyout cost and service territory, and 3) if the costs are too high, Decorah does not have to buy.

Yes, we'll need to invest public funds in that application process, but as a potential and hopeful customer of a future municipal electric utility, my wife and I are happy to pledge to reimburse the city our share of the costs if that application does not succeed. We consider that a very worthwhile investment in an innovative, entrepreneurial community, and also a vote of confidence in our professional, local public servants willing to act on reason, not fear. I hope you'll agree, and also vote yes on May 1st."