Decorah Franchise Under Duress?
The Decorah City Council is currently being pressured by Alliant into signing a long-term electric franchise contract. The issue at stake is, who will own and reap the prosperity benefits from the clean energy future – our community, or Alliant shareholders?
The Council has passed – and Alliant has rejected – a franchise contract that would meet all of Alliant’s terms except for the binding contract length. Council wants to keep the option open to pursue a municipal electric utility at a time of the community’s choosing. Alliant demands at least five years (of rate hikes, lavish spending, and other complications) before the earliest contract exit, and limited opportunity beyond that.
Alliant says 1) the company needs a long-term binding contract to recoup their investment, 2) without a signed franchise the company will have to bill the City for utility work on the Locust Road, and 3) that cost will run about $1.5 million dollars.
The Council has held firm so far, but the threat of a $1.5 million bill may be the last straw. What if that figure, and the other Alliant claims listed above, were false or seriously misleading? Would a franchise contract signed under such duress be valid?
Alliant’s claim that they need a long-term franchise contract to recoup infrastructure investment is bogus. Virtually all infrastructure investments of Alliant are recouped through rate cases that spread those costs among all ratepayers in the state, over long periods of time. We just went through a 15% rake hike that included these costs (despite Alliant’s 2018 claims to the community that rates would rise less than 1%/year for at least 20 years).
The threat to bill the city, supposedly because Decorah does not have a franchise agreement that protects us from such billing, is discrimination. Alliant has apparently not levied such charges against other communities in Iowa for over a decade, regardless of franchise status or protective language. Selective and punitive levying of such charges now would be discriminatory, and possibly prohibited by Iowa law.
Finally, what would about a mile of line relocation really cost? Undergrounding may sound expensive, but in this case the city will be doing the heavy work of excavating and creating a “joint utility trench” as part of the road project. Alliant will lay a new line in the trench. A utility executive with extensive experience in undergrounding of lines recently shared an itemized estimate with us that suggested in this scenario, the true cost of a three-phase line may be in the neighborhood of $200,000.
In the recent Alliant rate case ruling, the Iowa Utilities Board severely criticized Alliant for its behavior during the 2018 Decorah municipalization campaign, saying it “failed to meet the expected standards of a regulated monopoly” for not telling the whole truth, and stated “the lack of transparency and misrepresentation in the Decorah municipalization vote is of significant concern to the Board.”
“Lack of transparency and misrepresentation”: here we go again.
We hope the Council holds firm in rejecting Alliant’s strongarm tactics, and submits a complaint or request for clarification to the Utilities Board. We won’t blame them if they feel compelled to sign a franchise, in order to protect Decorahans from the threatened, extortionist charges. But we also suspect any contract signed under such duress and misrepresentation of the facts may not be well regarded by regulators or courts in the future if the community were to take the bull by the horns and pursue ownership.
Andy Johnson and Lyle Luzum are Director and Board Chair of Winneshiek Energy District