‘Statistics and numbers can be very malleable’

To the Editor:

In an effort to strengthen the “vote yes” argument, some MEU proponents — some, not all — have tried very hard to paint Alliant Energy as a villain in this story. For my part, I don’t think there is a villain in this story, only differences of opinion, perspective and sensibility. Others have cited a plethora of statistics, complete with pie charts and bar graphs. Statistics and numbers, however, can be very malleable, very supple things, and can be misleading, especially when cherry-picked and presented in a context-free environment.

We have heard repeatedly that Alliant Energy customers in our neck of the woods pay some of the highest rates in the state of Iowa, higher than MidAmerican Energy customers, higher than customers of most other investor-owned electric utilities in the Upper Midwest, higher than customers of most municipal electric utilities and electric cooperatives in the state of Iowa. And we have heard repeatedly that Alliant’s rates are high mostly because Alliant is a for-profit enterprise, with a fiduciary responsibility to act in the best interest of its owners, otherwise known as shareholders.

While I am not an economist and make no claim to special knowledge or insight, common sense would suggest that if our electric rates are higher than average, a disinterested search for the truth may reveal not one but several, perhaps many contributing factors.

Surely one of the primary reasons Alliant customers in our corner of the state pay relatively higher rates has to do with what are called “delivery costs.”  Consider for instance the differences in delivery costs borne by the two investor-owned utilities that serve Iowa electric customers, Alliant Energy and MidAmerican Energy. The transmission and distribution of electric power to a rural, sparsely populated area such as northeast Iowa is, on a per-customer basis, an inherently more expensive enterprise than the delivery of power to, say, Des Moines, Cedar Rapids, Davenport, Sioux City, Iowa City, Waterloo, Ankeny, Council Bluffs, Urbandale and Cedar Falls, 10 of the largest, most densely-populated cities and towns in the state of Iowa. As it turns out, customers in those 10 cities get their electricity from the much-admired, highly-acclaimed MidAmerican Energy Company, an investor-owned utility, and a wholly owned subsidiary of Berkshire Hathaway Energy.

Any business that provides a service or manufactures a product — for-profit or not-for-profit — must, if said business hopes to remain solvent, first cover its expenses. In an urban area like West Des Moines or Cedar Rapids, two cities with relatively high population density, the electric utility — MidAmerican Energy — is able to recover delivery and transmission — infrastructure — costs from a large customer base, in some cases from a large number of people occupying a very small parcel of real estate. A large number of ratepayers living in close proximity will tend to reduce per-customer costs, which in turn will open the door to lower electric rates, sometimes vastly lower rates.  With fewer ratepayers per mile of power line, Alliant’s cost of doing business in a small town like Decorah — i.e. the cost of delivering electricity — must be distributed across — and recovered from — a smaller customer base, which will inevitably exert upward pressure on rates. The rates we pay for electricity in and around Decorah are driven higher in part because, on a per-customer basis, the cost of delivering that electricity is higher.

If we must compare electric rates, please don’t compare our rates with the rates MidAmerican Energy collects in Iowa’s most densely populated areas. To do so is neither helpful nor intellectually honest. For what it’s worth, I consider somewhat elevated electric rates a small price to pay for living in a beautiful small town, a town where I don’t have to spend hours every day sitting in traffic, a town where the night sky is stone-cold black, a town where some folks leave for vacation without locking the front door.

One other observation: If and when the dream of establishing an MEU is realized, “Decorah Power and Light” will be faced with the same economic and financial realities that keep upward pressure on electric rates in rural communities across the United States, i.e. the mismatch between high delivery costs in sparsely populated areas and the desire to keep rates low.

Finally, I have an idea for the next city council educational effort. And I’m sure it won’t cost anywhere near $15,000 bucks. It seems to me that before the MEU vote on March 4, and before the city council votes on April 21 to approve the FY26 budget, city taxpayers and ratepayers should have an opportunity to learn something about city of Decorah finances. The establishment of a municipal electric utility, if it can be done, will be expensive and will involve debt, lots of debt, millions of dollars in debt, debt that must be paid. This point is not arguable; it is a mathematical and fiscal certainty.

Before we decide about handing over the keys to the electric utility kingdom, let’s have a series of town halls, maybe two evenings and a Saturday morning. Our city manager could prepare an informative PowerPoint slideshow, complete with colorful bar graphs and pie charts, in which we learn about city of Decorah finances. By now I’m pretty much an expert on my property tax liability, but woefully ignorant when it comes to the spending side. So how are we spending $6.6 million taxpayer this year? And how has spending changed over the last 10 years or so? Let’s get fiscal.