A response to Daniel Baldwin’s letter

I’m writing to respond to a recent letter to the editor submitted by my good friend and former Luther College colleague Daniel Baldwin. I am responding as a private citizen and not in any official capacity as the chair of the Decorah Sustainability Commission. I have some additional information to share that I have learned in my role as a policy analyst for the Clean Energy Districts of Iowa.

Dan surmises that “the primary argument for a municipally-owned electric utility is a financial argument.” Every year, every electric utility in Iowa files an annual report with the Iowa Utilities Commission. IUC staff review these annual reports and then post a large spreadsheet with the consolidated information on the IUC’s website.

The Clean Energy Districts of Iowa analyzes this consolidated information each year and produces an annual report that compares the two investor-owned electric utilities — Alliant Energy and MidAmerican Energy — as well as Iowa’s 136 municipal electric utilities and the state’s 42 rural electric cooperatives. Here are the key findings from CEDI’s analysis of the most recent (2023) annual electric utility reports:

• In comparison to MidAmerican Energy, Alliant’s revenues per kilowatt hour in 2023 were 62.4 percent higher for residential customers, 49.3 percent higher for commercial customers, and 26.5 percent higher for industrial customers.

• Alliant Energy’s bundled, all-in revenues for residential customers in 2023 were higher than every rural electric cooperative in Iowa and higher than all but two of Iowa’s 136 municipal electric cooperatives.

• Alliant Energy fares a little better with commercial customers, but the company’s bundled, all-in revenues still place it in the bottom third of Iowa’s 181 electric utilities.

• Alliant’s bundled, all-in revenues for industrial customers place it in the top third, but there are still 34 Iowa electric utilities with lower costs.

It is important to note that none of these comparisons reflect Alliant’s most recent electric rate increase, which was approved by the Iowa Utilities Commission in the fall of 2024.

If the primary reason to establish a municipal electric utility in Decorah is financial, then I can understand why the Decorah City Council has scheduled a second referendum. Alliant’s 413,000 residential households — including around 3,000 Decorah households — are paying more for their electricity than almost every other household in the state of Iowa.

Dan notes correctly that rural electric utilities and municipal electric utilities are not subject to the same level of regulation as investor-owned utilities. He points out that Alliant’s rates are subject to approval by the three members of the Iowa Utilities Commission who are appointed to staggered terms by the governor of Iowa. Dan would prefer his rates be determined by the commission rather than by the city of Decorah, which he fears “will raise our rates, as the city sees fit, when the city sees fit, as much and as often as the city sees fit.”

I want to make two comments about this matter. The first is to point out that Alliant has raised its rates seven times over the last 22 years, which averages out to about once every three years. The other thing I’d like to point out is that all but two of Iowa’s 136 municipal electric utilities provide electricity to their residential customers for less — and often much less — than Alliant does. I don’t know how often these MEUs raise their rates, but I do know their rates are lower than Alliant’s.

Finally, Dan addresses concerns that Alliant’s rates are high because it is an investor-owned utility with a “fiduciary duty to act in the best interest of the investors who own the company.” Dan points out that Alliant’s largest shareholders are “institutional investors . . .like the Vanguard Group, BlackRock and TIAA,” and he notes that many of us are probably invested in Alliant through our mutual funds and retirement accounts. I think he is right about that.

Alliant’s stock price reached a 52-week high on the day the Iowa Utilities Commission issued its final decision and order approving Alliant’s recent rate increase. Wall Street has loved Alliant because it has consistently provided ever higher dividends and good earnings per share. This is due in large part to Alliant’s high rates of capital spending and the high return on equity the Iowa Utilities Commission has awarded the company over the last two decades. The Iowa Environmental Council reports that Alliant’s approved ROEs for capital projects are among the highest in the Midwest.

Dan is right that Alliant’s shareholders have benefitted from their investments in the company, but it is important to remember that those dividends are derived from ratepayer revenue. Alliant estimates that approximately 25 percent of their residential customers are low-income households. My guess is that few of them are Alliant shareholders.