Voting (Again) on Municipal Power in Decorah, Iowa — Episode 229 of Local Energy Rules

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Emily Neal:
To me, the whole methodology of a regulated monopoly makes sense in the context of being run as a nonprofit and never as a for-profit entity because you’re already building in excess into a rate that doesn’t need to be there.
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John Farrell:
Do residents of decor Iowa have the seven year public power itch? Actually, they’re probably just steamed about the two double digit increases in their electric bills since they last considered creating a city owned electric utility. In 2018, that ballot initiative fell short by just three votes in part because the utility suggested it wouldn’t raise rates for a decade. This time, the advocates promoting a yes vote on public power on the March 4th ballot. Think that Alliant Energy’s lies and bill increases could flip the outcome. Early voting starts today for Decorah voters and I spoke with Councilwoman Emily Neal of Decorah, Iowa about the public power ballot measure just two weeks ago. I’m John Farrell, director of the Energy Democracy Initiative at the Institute for Local Self-Reliance, and this is Local Energy Rules, a podcast about monopoly, power, energy, democracy, and how communities can take charge to transform the energy system. Emily, welcome to Local Energy Rules.

Emily Neal:
Thank you so much.

John Farrell:
I just want to start off with the same question I ask everybody. What’s your history? How did you end up on a city council advocating for the exploration of a municipal electric utility?

Emily Neal:
Alright, well it’s a long story, so I’ve been trying to figure out how to make it shorter. So back in 2017 I was working up at Luther College as the assistant director for their Center for Sustainable Communities. So in that role I paid a lot of attention to the regional food system energy, thinking about how we can affect our impact on the planet. And there was a group of citizens getting together because at that time the decor franchise agreement was going to be open and it hadn’t been open for 25 years and there was already a group considering could public power work better for Decora, would that be in our best interest? I knew nothing about the difference between public power. I mean I was about as energy ignorant in terms of how utilities operate than probably anybody could be. But I started to attend their meetings and learn a little bit more about it and as I started to learn more and understand the roles that public utilities can play in their communities, whether that is just keeping energy dollars local to be able to invest in the infrastructure as that communities fit or to be able to do payment in lieu of taxes and provide the city with a diverse revenue stream.
There were so many ways in which I saw MEUs across Iowa doing this pretty tremendous stuff for their community and I got pretty excited. So I was working integrally with Decorah Power who was a citizens group at the time, and we did a feasibility study and when the feasibility study came back, it had sort of shown that there was a way to save $5 million on our electrical use in Decora and that just seemed like too good to be true. So I dived even deeper and then I started talking to all the engineers and Dave Berg who was one of our experts and trying to poke a hole in this thing and couldn’t say that by the time the end of 2018 rolled around, I felt pretty confident that a public utility was in the best interest of Decorah if we could make the infrastructure payment work.
And so I helped run that campaign. So I was pretty instrumental in the 2017-18 campaign and what I became really frustrated with was the Decorah City Council as Decorah Power started this process, they had kept the city in the loop. Two city council people were on the Decorah power, they came to all the meetings and when we chose the person due to the feasibility study or the group, the council made that decision with us. But when it came down to being in the public, the council kept distancing themselves and were unwilling to sort of put themselves behind this effort. And that made me really angry as a citizen because I felt like we had done our due diligence to try to not use taxpayer money to investigate any of this information, and yet the council wanted to essentially say that alliance information was equal to the core power.
And I was very frustrated by that and that was one of the strong impetus for me getting on council. When we lost by three votes, I knew this issue would come up again, it wasn’t the only issue in our community that was frustrating to me with the council before me. Things like we hadn’t gotten a new elementary school worked out yet. There were things about some policies within our community and I felt like at some point you can complain about things or you can put yourself out there and get in the game. And that was sort of how I got on council. One of the things I always like to say about utilities when people ask me why is this so important to you is that when I look at a municipal electric utility or energy dollar staying locally anyway, it aligns very much with one of my core values.
So I am someone who has sort of spent their life in different ways thinking about how do we become independent in a manner that allows us to live well within our own communities to think about sovereignty if things go bad elsewhere, knowing that within our community we have what we need. These are things that resonate really well with me. I always thought that a municipal electric utility was something that didn’t matter if you were red or blue or young or old, you would get behind this because this was all about keeping your own energy dollars local. Of course, I realized really quickly into that first campaign that industrial owned utilities will find many different ways to split you apart, whether that is rural and urban or red and blue or old and young or whatever it is, they will find a way to build that wedge.

John Farrell:
Let’s talk about the context there a little bit. You knew suspected that everyone could find a reason to like it and then obviously in the heat of the campaign people were peeled off or convinced otherwise. But why for you, does Decorah need a publicly owned electric utility instead of being served by Alliant Energy? And how do you explain this to your constituents when you talk to them about it?

Emily Neal:
Yeah, I mean the simplest way to think about it I think is why rent when you can own, there’s a certain amount of investment when you own something that you then get to harness that investment. You get to choose where energy dollars go, but it’s beyond that. Energy is a basic need. Water energy to some degree, they’re the same. And why would we ever think about a for-profit model on a system that could easily be a not-for-profit, that could easily be run in a manner that keeps costs low because you’re not trying to create this profit and all the investment goes into the infrastructure itself, not into padding corporate profits or anything like that. So to me, it’s electricity, right? Everyone needs it. We’re all beholden to buy it, and it’s a monopoly no matter who owns it. It’s going to be a monopoly in the free market.
Society to me has the ability to take advantage of its customers because they’re the only option you have. You can’t use your dollar to vote for who’s going to provide your electricity. You have to pay it no matter what. Alliant raises their rates. I’m beholden to Alliant unless I can figure out how to either not use electricity or put up my own solar panels. So to me, the whole methodology of a regulated monopoly makes sense in the context of being run as a nonprofit and never as a for-profit entity because you’re already building as a for-profit, you’re building in excess into a rate that doesn’t need to be there for the sole purpose of creating profit for the shareholders.

John Farrell:
One of the things I was thinking about coming to this conversation is that we could sort of call it seven years later since the town last had this vote and you noted it was only a three vote difference. It was incredibly close. Now, sadly, despite the widespread benefits of public power, both in Decora and outside of it, showing that public power generally means lower rates and better reliability. For example, most public power campaigns sadly don’t result in a change in utility ownership. My podcast itself is littered with conversations with folks who are working on public power and didn’t succeed. So what do you think might be different for Decorah this time?

Emily Neal:
Well, I think that the landscape is much different. So after our first election, one of the ways in which Alliant had manipulated that was they had a feasibility study that essentially held their rates steady. It was remarkable, it was glaring. We tried to point it out, what do you mean? How can any utility keep their rates essentially the same for 10 years? And on the flip side, they were saying that a public utility would have to raise their rates about 2% every year, which we weren’t arguing because you think by inflation alone you should be raising your rates one and a half to 2%. But Alliant in their feasibility study was holding it completely steady for their rate as they compared what rates would be like. Well, not a year later, and it really was a year to the day of the vote, Alliant essentially raised the rates and had asked for, I think it was a 25% rate increase, not even a year after this election.
And so people were really angry because Alliant had billboards and signs about how their costs were going to be lower, how their rates were going to be steady, how they weren’t going to change them, and flooded our community with all of this misinformation. And then over that course of that year during the rate case, our community learned of the ways in which they weren’t being transparent, that they knew before they ever did their feasibility study, they were asking for this rate increase and yet another rate increase. So in the time that we’ve, in the seven years since we’ve had that election, we’ve had two rate increases, two double digit rate increases that amounted to, I think the first one on residents was about 18%. This one is going to be about 15% and all of that in light of them saying they weren’t going to raise their rates, but on top of that, they asked for even more, right?
The first ask was for 25% rate increase, and it was only through some intervention in those rate cases that those rate increases came down. And I think the public was really aware of that. We like to say that for a town of 8,000 people, there are more educated people now about power in general than just about probably anywhere in the country because of the first election. But then I think that first election followed by two significant rate increases that Decora as a city intervened in to try to keep them lower. So there was always articles about the cases and all of that

John Farrell:
Just for people who are curious. I was doing the math as you were talking, and that 2% per year that they attributed to the municipal utility, it would’ve taken 15 years to add up to the same rate increases that Alliant has done in less than seven. And those are just the ones that you noted that were approved. But speaking of timeline though, I kind of wanted to come back to something you mentioned in your intro about the franchise contract because this policy, this contract is kind of a linchpin of how cities have this power to decide what utility serves them. So you said previous to 2017, the town had this franchise agreement with the utility that lasted for 25 years and it was expiring. Now it’s often the expiration of these contracts that creates the opening for cities to make an evaluation of do we want a different utility provider? I’m assuming then that the city didn’t just sign another 25 year agreement because here you are seven years later. But I’m curious, could you talk a little bit more about it if there’s more explanation you think is needed for listeners about how that franchise agreement works? What’s the purpose of it, but also how does it have that interplay with this decision to have a vote on municipal power?

Emily Neal:
Yeah, that’s a great question. So my arm still hurts from being twisted to sign that franchise agreement because we did sign a franchise when I got on council in 2019, we were working on a project for a major road construction, and in that major road construction, we needed pulls and wires moved, and Alliant had been trying to get the council to sign the franchise agreement since 2018 essentially. So now we’re three years without a franchise agreement, and my dates might be a little off, but in 2020 it was kind of like we were going to start the road and Alliant was going to charge us over a million dollars to move the polls unless we signed a franchise agreement. It felt manipulative, it felt frustrating. They say that franchise agreements allow them to move infrastructure freely because they have an agreement with the city that they can use right away and vice versa.
To me, it’s a very manipulative process, but in that negotiation, we made sure to have outs. So we have a five year out, a seven year out and I think a 10 year out. And so 2025 is the five year out from that franchise agreement. So that’s why. But we did, we ultimately signed the franchise agreement because every time they were going to move a pole, if we had to do some sidewalk work or we had to do street work and they had to move a pole, they were going to charge us every time they did it, but they negotiate within the franchise that if you sign a franchise agreement, they don’t charge you. So to me, it’s such a manipulative system.

John Farrell:
This is so interesting because in the conversations of Minneapolis, where I’m from right now, it’s in the middle of its franchise negotiations, 10 years out from the last time that they’d been signed, and I remember 10 years ago and also recently having this conversation about the franchise agreement as sort of a two-way street, at least according to the people I’ve talked to at the city of Minneapolis where they said, we don’t require the utility to go through the process of pulling a permit to move things around or to build infrastructure under a franchise contract. They’re just presumptively able to do it, but we could nickel and dime them on permitting. We just don’t want to do that because we don’t want to make it harder to provide energy to our constituents. So I don’t know. It’s interesting to hear in your negotiation that the line was like, well, we’re just going to slap you at the big expense if you don’t sign this franchise. It just gets pretty complicated. And I guess I also don’t find city attorneys to be very interested in exploring the creative solutions to these kinds of legal problems.

Emily Neal:
Yes. I mean, I’ve learned that city attorney’s job is to just say no whenever they can, but if we didn’t have a big road project, there would’ve been a little bit more of, okay, well we will charge you every time you’re going to pull. You’re going to need into our infrastructure then too. But I don’t think a city would ever be able to out charge a utility because of street work and because of moving a pole and the costs of that kind of work.

John Farrell:
Yeah. I’m kind of curious, as you mentioned, and I think it’s continually worth mentioning, Alliant Energy lied very badly to the residents of Decora about their plans for rate increases and got caught Baldly doing it twice in the past seven years. Have they ever shown any shame for having published that study where it said no rate increases for 10 years and then turning around and just coming back and asking for ridiculous amounts of money from everybody.

Emily Neal:
Not only have they not shown any shame they’re using it again in this election, so they’re making reference to their 2018 study that the utility board outright said was a misrepresentation and they shouldn’t use it. So not only are they using an 8-year-old study, they’re also promoting the very lies that they told in the first election. And so the city actually filed a few weeks back a declaratory order asking utility board to oversee what they were saying. Based on this, the city and the Iowa Utility Commission had a meeting last Wednesday. We have not heard the result of it in which we sort of presented our concerns that Alliant was once again using misrepresentation in order to sway the vote, but we have not heard a reply yet from the Utility Commission on that.

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John Farrell:
We are going to take a short break when we come back. I ask Emily about a catch 22 created by the Iowa Utility regulator. I ask when the voting starts and whether the Federal Inflation Reduction Act improves the feasibility of a city owned utility. You are listening to a local Energy Jewels podcast with Councilwoman Emily Neal of Decorah, Iowa. Hey, thanks for listening to Local Energy Rules. We’re so glad you’re here. If you like what you’ve heard, please help other folks find us by giving the show a rating and review on Apple Podcasts or Spotify, five stars. If you think we’ve earned it. As a bonus, I’ll gladly read your review aloud on the show if it includes an energy related joke or pun. Now back to the program.
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John Farrell:
That actually reminds me of another question I wanted to ask you about the utility board. So I remember talking to folks from Decorah after the last election, and one of the things that folks wanted to be different next time around was in the creation of these feasibility studies, you’re trying to gather information about how much are we going to need to pay to buy this grid?
How old are the poles and wires? How much maintenance do they need? That kind of thing. Essentially, what is it worth and imagine to compare trying to buy a used car, you just want to know, can I put it up on a lift and have a mechanic look at it to tell me something about it? Typically, utilities say in this situation, no, you can’t have a look at any data about our system. And in fact, the only way you’re going to get a price in terms of how much it’s worth is when you try to buy it, and then we’re going to tell you what that price is and you’re just going to have to take our word for it or take us to court. But advocates from decor went to the Iowa Utilities Board and said, Hey, we need this information to be able to make a good decision to put in front of our voters. And if I recall correctly, the Iowa Utilities Board basically put you in a catch 22 and said, effectively, you can only get this information after an affirmative vote to create a municipal utility, and then Alliant will be required to disclose the information about its grid to you sort of defeating the whole idea of trying to get the information first. Has anything changed with that? Will this vote finally give you access to data as part of that whole catch 22 situation?

Emily Neal:
Yeah, nothing has changed other than we had that clear order from the utility commission that they can’t really compel Alliant for any information until we both have a positive referendum and then petition to the utility commission. But that petition doesn’t have to be the full on whole thing. We can write simply that we’re interested in pursuing this, and I have every indication it seems like from the communications that then the utility board could compel Alliant to give us that information. It’s definitely a whole catch 22 and the whole process of municipalization is a catch 22. You’re essentially trying to have a vote as your utility is fighting you with your own rate dollars. I mean, there are so many ways in which municipalization is favored towards the investor owned utility. They clearly have more resources than a city does. Their ability to just hide behind whatever they want to, right?
Cities have to be completely transparent. We can’t even have a meeting about this in private. Everything we do has to be public. So there are so many ways in which the system is unfair in the municipalization process, so that we only lost by three votes last time is quite miraculous. I think going back to your question you asked me earlier about what’s different this time, it’s a little bit like a school bond in my mind. School bonds don’t often pass on their first time either, but people become more informed and more aware to the nuances in any vote. And so I think that’s important to recognize it in this next vote. Even though Decorah has obviously had turnover, new people have moved in, some people have left. There is a memory of that last vote, which I think bodes well for Decorah, especially since Alliant has been caught red handed. Cheating in lying.

John Farrell:
I will link back to this on the show page, but I did an article that we wrote on I LSRs a website right after the vote last time with the vote totals linking to some of the conversations that have been had and some of the news stories about it, as well as the fact that Alliant Energy outspent the advocacy campaign four to one, as you say, with the dollars of residents, the money that you pay on your bills. So I guess one of the questions I have as you’re coming close to this is could you just explain the logistics here? When is this vote? What will be happening in the next few weeks as you hope to win this vote?

Emily Neal:
So the vote is March 4th and early voting will start on February 12th in the next few weeks. So the city is unable to advocate for any political as a whole, right? I can as a council person say my viewpoint, but as a city, we can’t make a stand one way or another on a ballot issue, but what we can do is provide educational materials. So the city over the last couple months worked with our lawyer and the Iowa Ethics Committee, and we came up with a list of what we consider the 20 most common questions on this issue and created some language that we’re trying to get out into the community through our local newspaper, but then through flyers at home, perhaps some PSAs on the radio just so people know what the vote is. The other complicating factor behind this vote is that when you go to vote, you’re going to read a sentence that says, the city of Decora shall establish a municipal electric utility.
Well, that’s confusing, right? That seems like, okay, we’re going to have utility all of a sudden we’re going to have electricity to homes, but that’s not what it gets us. It gets us a piece of paper that says, yes, we’re a utility on paper only. We have no service territory, which means we have no revenue and we have no expense at this point. And so it’s confusing just figuring out what that vote means. It gets us the seat at the table. It gets us to be able to talk with the utility board and Alliant. It doesn’t guarantee us that we’ll ever be able to put an electron to anyone’s home. And so trying to get that across to people that this is a vote, that’s the first step. Even though it says we’re going to have a utility, it’s still just a first step in a very long process. That doesn’t mean your utility provider is going to switch in the end, although we hope it does.

John Farrell:
I wanted to ask you one thing I know has changed in the past seven years, which is that the federal government passed the Inflation Reduction Act, and of course the caveat here is that the current administration seems very intent on trying to stop any federal dollars going out for anything, at least as of the time of this podcast recording. But I was curious if that changes the economics at all in the feasibility analysis. Does it, for example, make things look better? In particular, I’m thinking about direct pay as a part of the inflation reduction Act that allows not-for-profit entities like municipal utilities to actually get federal tax credits for making clean energy investments. And I was curious if that has played any role in terms of this analysis.

Emily Neal:
It’s hard because of the switch in government, and we knew this was coming, right? I mean, the election was about November. We’ve known this. We haven’t as a city, what I’d say tried to delve into the analysis of how this could work until we got the vote, because anything we do without oversight of the utility commission is always just going to be the alliance, says city says Alliance, says city says. So. I mean, I guess the straight answer to your question is yes, that would be advantageous. Do I think that those dollars or that ability with the Inflation reduction act will be there for communities given the new administration? Probably not. Maybe that won’t change, and that would be a good thing for us if it didn’t, for sure. If we were able to get our own utility up and running, that would certainly be something we could take advantage of, and I hope it’s there in the future. I hope lots of things are available in the future in terms of renewable clean energy, certainly for municipals, but for any other utility as well.

John Farrell:
Is there anything that I haven’t asked you about the work that’s gone into this campaign or any of the factors that you’ve had to deal with? I’m thinking about other people who are doing public power campaigns across the country. It’s happening right now in San Diego and Ann Arbor, Michigan. Is there any advice that you’d have for them or for other folks who are thinking about this issue of public power?

Emily Neal:
Well, one thing I would say we haven’t talked about, so I’ve given you the good, what the city’s doing. There’s a group of residents that have organized to try to help get the yes vote. The city can only educate on behalf of the taxpayer what the vote’s about, but there is a group that is really working hard on trying to promote the information and encouraging people to vote yes as well. I do think the last time we had this vote, as I told you, I was frustrated about the city’s government sort of apathy to it, just sort of not willing to get involved. And I think that the partnership is important, right? That you have both an advocacy group and the community, but also that your city government is pretty involved. One, because they have the ability to work with the Utilities commission to try to reign in Alliant. I mean, that’s what we’re trying to do. So I think that’s important. Their public power has a playbook that even though I know it, it’s still really hard to understand. The first thing they say that your incumbent utility will do is try to divide your community. And this goes back to my negativity in the first election. I kept thinking, how are they going to divide a community when literally the ballot question is to keep your energy dollars local and do what’s best for your community?
Yeah. So they figured out a way. They figured out that the service territory is urban and rural, and that’s a really easy division in this country right now. If you take a bunch of any issue and you can figure out how to divide it by rural and urban or red and blue, you’ve got yourself a battle. And that’s hard for sure. I’m trying to think of advice I would tell other people. I mean, I do think calling people who have been through it, who’ve done it just for marketing techniques, what resonates with people is helpful. Every state is different. You said, I’m thinking about Slaton Minnesota right now, or you were just talking to Minneapolis, right? In Iowa, the infrastructure cost is going to be set by the Utilities Commission. It’s not going to be a bargain between Alliant and us. The Utilities Commission will set that price, so that would look very different than communities elsewhere. You have to deal with trying to negotiate with their utility provider what the price will be.

John Farrell:
So I think you gave a really good piece of advice earlier that I just want to reiterate here. I wanted to give you the open question first, but I think you said something that I’ve really never heard anyone say before about how to think about a municipalization vote like a school referendum, essentially, that a lot of them do fail on the first try, but that’s just part of the process. You’re educating people about what is needed. You’re having a chance to communicate with people. I don’t know if you want to expound more on that, but I thought it was a really insightful way of thinking about this for folks setting it up as you’re probably going to lose this first time. But I just think maybe it’s helpful framing in terms of how optimistic you are, but also just recognizing that this is a process.

Emily Neal:
It’s a total process. If you think about electricity in a community, nobody thinks about it. They turn their lights on and that’s all they care about. I bet if you were to go to any town but decora and say, what kind of corporation, what’s the way in which your corporation works? I don’t know that everyone would be able to figure out that it’s actually a monopoly that they’d actually come up with a monopoly when it comes to electricity or that transmission and distribution might be two different companies. There’s so many nuances that people could know. So it does take a long time for people to get educated, and campaigns are short periods of time, and people tribe up pretty quickly and they close their mind to it. But as we talked about earlier, the landscape changes, right? The rate structure, people’s rates, what they’re paying for their electricity has dramatically changed in the last seven years in Decora.
Just the feeling about being taken advantage of, I think has changed a lot. I think people are tired of being taken advantage of that costs keep rising and services keep getting less. And so at some point, we have to take back control. And to me, that means owning our utilities. We didn’t talk about this much, but in 2020, the city appointed a task force to look into municipalization, and that task force created a series of educational events about MEUs. All of those events were taped, and they’re now available online and are part of that educational tab on our website. So I can direct you there. I do have, I mean, alliance feasibility study, their old one can be summed up in one slide where you can literally look at the slide and be like, what kind of utility keeps their rates steady for that seven years, 10 years? So I can send you that slide. I have it circled with red and it’s kind of fun.

John Farrell:
Well, Emily, thank you so much for taking the time on relatively short notice during this campaign to talk with us about Decor’s vote on the municipal electric utility. It’s so great that you’ve got another bite at this apple in a relatively short period of time, and certainly a much better circumstance in terms of the lived experience that residents have with Alliant to help inform their decisions. So as I said before, best of luck.

Emily Neal:
Yeah. Hey, thank you so much. I really appreciate you taking this issue up and all the work that you do to promote public energy. So thank you.

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John Farrell:
Thank you so much for listening to this episode of Local Energy Rules with Councilwoman Emily Neal of Decorah, Iowa, about the vote for public power on the ballot on March 4th. On the show page, look for links to information provided by the city of Decorah, including the answers to 20 common questions, as well as information from Decorah Power. The citizen advocacy group that’s promoting a Yes vote will also provide a link to our recap of the 2018 ballot measure and our 2017 podcast, episode 54, with leaders of that year’s advocacy effort for a broader view on public power campaigns. Check out the Promise and Peril of Publicly Owned Power, an alliterative and six-part local Energy Rules podcast series, starting with episode 163. Local Energy Rules is produced by myself and Ingrid Behrsin with editing provided by audio engineer Drew Birschbach. Tune back into Local Energy Rules every two weeks to hear how we can take on concentrated power to transform the energy system. Until next time, keep your energy local, and thanks for listening.