Reader cites city property taxes in predicting high rates under proposed MEU

To the editor:

On the question of a municipal electric utility, “Decorah Power,” I bring numbers, a couple observations and a question.  Numbers first.

For ease of comparison, I’ll refer in each case to the 12-month period beginning on July 1 and ending on June 30, a span of 12 months that corresponds to the city of Decorah fiscal year.

$4,487,083. This was the city of Decorah property tax levy for the period July 1, 2017-June 30, 2018 (Fiscal 2018).

$6,369,016. This was the city of Decorah property tax levy for the period July 1, 2023-June 30, 2024 (Fiscal 2024).

41.94 percent. This is how much the city of Decorah property tax levy rose from July 1, 2017 to June 30, 2024, an increase of $1,881,933.

25.44 percent. This is the cumulative rate of inflation in the United States for the seven-year period beginning July 1, 2017, ending June 30, 2024 — source: US Bureau of Labor Statistics.

I note that between July 1, 2017 and June 30, 2024, the city of Decorah property tax levy rose at a significantly higher rate than did the overall cost of living in the U.S., nearly 65 percent higher.

As for the suggestion that our electricity is more expensive than it should be because Alliant is “beholden” to investors; that Alliant is fleecing its customers for the benefit of its shareholders; that shareholder demand for return-on-investment has been and remains the primary source of upward pressure on electricity rates:

Alliant Energy is most certainly profitable. While proponents of Decorah Power will often cite revenue growth as an indicator of extraordinary profitability, as evidence that Alliant is soaking its customers for the benefit of its investors, net income is considered by many to be a more important, more reliable indicator of a company’s profitability. For a business such as Alliant, net income is the amount of money left over after all expenses have been accounted for. Another important metric is earnings per share, which is a measure of how much money a company earns per share of stock. EPS is calculated by dividing a company’s net income by the number of outstanding shares of common stock.

For the 12-month period beginning July 1, 2017, ending June 30, 2018, Alliant reported earnings per share of $2.09.

For the 12-month period beginning July 1, 2023, ending June 30, 2024, Alliant reported earnings per share of $2.45.

So how profitable is Alliant Energy? Between July 1, 2017, and June 30, 2024 — from the third quarter of 2017 to the second quarter of 2024 — Alliant earnings-per-share grew by 17.23 percent, an increase of 36 cents per share. This is the same seven-year span — July 1, 2017 to June 30, 2024 — during which the city of Decorah property tax levy rose by 41.94 percent, an increase of $1,881,933.

Nobody invests in utility stocks in the hope of getting rich. Generally speaking, utility stocks — e.g. Alliant, Duke Energy, Dominion, Southern Company, NextEra Energy — are considered to be safe, low-volatility, relatively low-risk, relatively low-reward investments. Professional money managers sometimes refer to utilities as “defensive stocks,” favored by many retirees and other investors who — for whatever reason — are relatively risk averse. Historical data indicates that Alliant Energy earnings growth has been — and remains — modest when compared to other publicly traded companies.

From some MEU proponents — some but not all — I have heard arguments and rhetoric that suggest a pronounced animus toward large corporations and big business in general. In fact big companies create lots of jobs, good paying jobs with benefits. Alliant Energy provides employment for thousands of workers here in the Upper Midwest. Since January 2021, Alliant has collected a so-called “franchise fee” from its Decorah customers. Based on energy usage, the franchise fee — now 4 percent — is added to every electric bill, is collected by Alliant, then funneled directly to the city of Decorah’s coffers. Proceeds from the franchise fee will benefit the city of Decorah by almost $400,000 for 2024. Alliant Energy also pays property taxes to the city; for 2024, Alliant’s city property tax bill will land somewhere north of $170,000.

If the thought of a large, investor-owned utility making a reasonable profit while keeping our homes warm in winter and cool in summer; while providing stable employment income and health coverage for thousands of workers and their families, and the promise of modest but reliable income for retirement — if that thought keeps you up at night, I suggest your political and ideological commitments may be getting in your way.

My family and I have been blessed to live in this beautiful place for more than 27 years. My wife and I have raised two children here, and we’ve made a good life here. My opposition to the MEU initiative is not based in ideology or partisanship. My opposition stems not from any paucity of community spirit, or civic disloyalty, or contempt or distrust of our elected officials. I trust that our city mothers and city fathers would, if given the opportunity, do with our electricity rates what they have done with our property taxes, which is to say hike them relentlessly.

Finally, a question: why are the leading proponents of an MEU, including members of the Decorah Sustainability Commission, not talking about clean energy and sustainability? Why has the issue of renewable energy been virtually absent from the current discussion?