City looks to have state ethics board review proposed MEU materials

The Decorah City Council on Monday night discussed the possibility of creating a master list of educational material which could be used to inform the public on a potential municipal electric utility, and the city intends to have the Iowa Ethics and Campaign Disclosure Board review the materials before they’re distributed to city residents. 

The question of establishing an MEU in Decorah will be posed to local voters on March 4, 2025, and the city hopes to provide voters with specifics on the proposal ahead of the election.  The council approved a resolution earlier this month, allowing the city’s sustainability commission to spend up to $15,000 on flyers, mailers and similar materials regarding a proposed municipal electric utility. 

Alliant Energy — which currently provides electrical service to the Decorah area — emailed a three-page document to the city council staff less than two hours before Monday’s council meeting (see below article for letter text), claiming initial drafts of the materials indicate a potential bias, contain inaccurate information and omits important information. The letter, authored by Alliant’s legal counsel, highlights six concerns the company has regarding the proposed educational materials and claims — among other things — that the drafted materials misrepresent the reason the March vote is necessary as well as the potential outcome of the proposition’s passage. The letter also claims the city could move forward with what Alliant called significant expenses without additional approval following said vote. 

Alliant went on to question whether the city’s proposed materials might violate a section of Iowa Code, which prohibits cities from spending public funds to advocate for political purposes, such as “expressly advocating” for or against a ballot issue. Alliant asked the city to delay approval of the educational materials “until a thorough review and necessary revisions are completed.” 

City Manager Travis Goedken said some of the points made in Alliant’s letter had some substance, but he indicated that didn’t necessarily mean the statements in the city’s drafted materials were misleading or untrue. Rather, he indicated the city and Alliant may be looking at the situation from two equally-valid points of view.

“If I were to say it is dark outside and someone else says ‘No, it’s nighttime,’ they are both factually correct,” Goedken said. “Both have factual merit to them, but they tell a different story.” 

Several city council members questioned the timing of Alliant’s letter – the scheduled election was already less than 12 weeks away as of Monday’s council meeting.

“They may have sent this to use two hours ago, but they have been thinking about these responses longer than that,” said Decorah City Council Member At Large Emily Neal. “I do believe it is a delay tactic — the longer Alliant delays us, the less information we have out there.” 

Some council members suggested any further discussion of the matter be tabled until Decorah’s city attorneys could review Alliant’s claims. The council was split on a formal vote directing the materials be sent to state officials for review. However, the council did reach a general consensus that the ethics board should vet the information to ensure neutrality before they are distributed to residents, and the city’s attorney supported the council’s decision. Ultimately, the council made an informal request for city staff to send the drafted information and materials to the ethics board, and a special session will be set in the near future after city officials have looked into Alliant’s claims. 

The creation of a local MEU was posed to the public in 2018 and failed by three votes. The topic of a proposed MEU was discussed again earlier this year, following increases in Alliant rate — city council members had considered joining a coalition in mid-March which opposed the rate increases. 

Alliant Energy emailed the following document to the city council staff less than two hours before Monday’s council meeting:

December 16, 2024 

City Council 

City of Decorah 

PO Box 138, 400 Claiborne Dr. Decorah, Iowa 52101 

Dear Members of the City Council, 

On behalf of Alliant Energy, I am writing to address item 8 on your December 16, 2024, Council Agenda, which pertains to the proposed “Master List of Educational Material for MEU Vote” (Educational Materials). Upon reviewing the proposed Educational Materials, we have significant concerns regarding the Council’s approval of these materials without further oversight. Below, some of the concerns are outlined in detail. 

1. The proposed educational materials incorrectly state why a municipalization vote is needed. In fact, the stated reason contradicts an Order of the Iowa Utilities Commission. 

The educational materials answer the question “Why is Decorah holding a MEU referendum?” with the following statement: 

Under Iowa law, the proposal of a city to establish a MEU must be submitted to voters for their approval before the city may undertake the operation of the MEU, including communication with the Iowa Utilities Commission regarding the costs of purchasing infrastructure. Decorah needs information on electric infrastructure, operational costs, and projected revenue to make an informed decision on whether or not to proceed with municipalization, and that information cannot be acquired unless voters authorize the city to proceed. 

This statement is disconnected from the Iowa Utilities Commission’s (Commission) Order Denying Request for Formal Complaint Proceeding (Order) in Docket No. C-2021-0179. The Order states “there is nothing stopping Decorah from completing its own feasibility study using information it already has, and can gather from other sources, to assist in deciding whether Decorah should put municipalization option to a vote of the people.” The proposed Educational Materials imply the City must proceed with the municipalization effort before making an informed decision to proceed with the municipalization effort, which is circular logic and incorrect. The City conducted a feasibility study before the last vote to municipalize and could do the same here. 

1. The proposed educational materials incorrectly state what would happen if the referendum passed, stating that the City could gather more information before deciding to file a petition to purchase Alliant Energy’s assets. Instead, the City would have to file the petition first, incurring potentially huge costs. 

The proposed Educational Materials answer the question “What happens if the referendum passes?” with the following statement, in relevant part: 

If a majority of Decorah residents votes to establish a municipal electric utility, the City of Decorah will be authorized to initiate proceedings with the Iowa Utilities Commission (IUC) and request information about Alliant’s current service area that is not accessible otherwise, including information on Alliant’s infrastructure inventory, expense, and revenue data. Obtaining this information would allow the City to make an informed decision about whether to conduct a new feasibility study or to update the study completed before the 2018 referendum. If the feasibility study indicates that the City could serve customers in Decorah cost-effectively and reliably, then the City would consider creating a business plan for the MEU. 

The proposed Educational Materials fail to recognize the need for the City to file a petition with the Commission requesting a certificate of authority to furnish electric service, as required by Iowa Code § 476.23, to invoke discovery rights against Alliant Energy. The Order clearly states, “there is nothing in Iowa Code § 476.23 which grants Decorah the right to the information it seeks prior to the filing of a petition with the [Commission].” (Emphasis added). In the required petition, requesting a certificate of authority to furnish electric service must show “that service to customer by petitioner is in the public interest” and “any certificate issued shall require that the petitioner pay to the electric utility presently serving the customer, the reasonable price for facilities serving the customer.” Iowa Code § 476.23. The proposed Educational Materials fail to recognize the significant expense the City will incur to prepare a petition and initiate these proceedings. 

3. The educational materials incorrectly state that another vote by the citizens of Decorah would be needed before significant expenses are incurred. That is simply not true. 

In response to the question, “What are the financial implications to the City of Decorah for establishing a MEU?” the document states that “A referendum may be required to seek voter approval to issue bonds to cover these expenses. At that time, the City would have more specific information on the operational costs of the MEU. A general obligation bond referendum would need a 60% majority to pass.” This response suggests to voters that the MEU vote doesn’t permit a lot of money to be spent without another public vote. Similar comments were made by members of Council that the upcoming vote is simply to create a harmless “paper utility” and doesn’t impact voters financially. 

The reality is that, if voters approve an MEU, there is not necessarily a need to for additional votes by Decorah voters before significant dollars are spent on their behalf. Expenses incurred in the petition process can be funded with property tax revenue (even if the petition is denied by the IUC). And should the IUC approve the petition for the MEU to begin operation, then the MEU could issue revenue bonds to cover the multi-million dollar cost of purchasing Alliant Energy assets, and no additional vote is needed by the public beforehand. In other words, residents in 

Decorah could effectively pay the multi-million dollar costs of acquiring the Alliant Energy system without any additional public votes. 

The financial impact of the upcoming vote is critically important, and the proposed educational materials would seriously mislead voters on this crucial issue. 

4. The educational materials omit critical facts important to voters, indicating a potential bias by the author(s). 

The proposed educational materials selectively provide information, in a way that supports the case for municipalization. There are numerous instances in the document, and here are some examples: 

• • In response to the question “What are the differences between a Municipal Electric Utility (MEU) and an Investor Owned Utility (IOU)?”, the document fails to mention the most important difference: Alliant Energy must go before the Commission with evidence when requesting a change in rates. A municipal utility does not face the same regulatory oversight and can raise rates at any time, as high as it would like. 
• • In response to the question, “Will electricity rates be higher or lower under a MEU?” the answer omits some critical points. First, as mentioned above, a MEU can raise rates at any time. Second, Alliant Energy has agreed to a multi-year stay out that stabilizes rates in Iowa for at least five years. And should a MEU be formed; it would presumably have to add the cost of purchasing Alliant Energy’s assets to customer bills for several years – this important fact is missing from the educational materials. 
• • In response to the question, “Why haven’t more communities municipalized,” the only answers given are that the process is “hard” and that cities are part of long-term franchise agreements. It doesn’t mention many more potentially obvious reasons, such as the high costs of municipalization, the difficulty of maintaining reliable operations, and the trust that voters have in their current providers. Nor does it mention the significant financial benefits received by communities from utilities like Alliant Energy through those franchise agreements. 

Council should ensure not only that objective answers are given to voters, but also that the questions are objective as well. Several members of the Sustainability Committee and MEU Task Force are known to have publicly supported municipalization. Is this a proper group to be drafting objective educational materials for voters? 

1. The proposed Education Materials provided to City Council for approval are incomplete. 

The proposed Educational Materials contains the phrase “Short Version for City Council.” This should concern the Council. Is the Council aware of what other inaccuracies or lack of context is in the final “long version” of Educational Materials? Why is an incomplete version of the document being submitted for approval? We have heard a report that a longer version of the document exists, where the missing portions of the document contain even stronger biased statements in favor of municipalization – this should be investigated by the Council. Council has a duty to ensure that all educational materials distributed by the City do not run afoul of Iowa law. 

1. City Council has a legal obligation to not spend public money for political purposes. 

Iowa Code § 68A.505 states “the governing body of a . . . city . . . shall not expend or permit the expenditure of public moneys for political purposes, including expressly advocating the passage or defeat of a ballot issue.” It is imperative for the Council to be fully aware of this prohibition and to ensure that any educational materials distributed by the City comply with the law. We strongly urge the Council to review all current and future materials, prior to distribution, to ensure they adhere to this legal requirement and to take immediate corrective action if any violations are identified. 

1. Improvements to the educational materials are needed. 

Alliant Energy respectfully requests the Council delay approval of the proposed Educational Materials until a thorough review and necessary revisions are completed to ensure voters are receiving accurate information with the necessary context to make an informed decision about their vote. The Company is willing to provide input into future educational materials if reasonable notice is provided and the Company has adequate time to review materials and provide comments. 

Thank you for your attention to this matter. 

Sincerely, 

Matthew Sowden 

Counsel 

Alliant Energy