Ballot Initiative Shapes Iowa Town’s Fight for Local Power — Episode 54 of Local Energy Rules Podcast

Podcast: Local Energy Rules
Source: whisper-base
Language: en
Duration: 1309s
URL: https://media.blubrry.com/localenergyrules/content.blubrry.com/localenergyrules/Local-Energy-Rules-andy-johnson-joel-zook-e54-2018-04.mp3
Fetched: 2026-03-03 04:29:02

In 30 states, communities and individuals have no choice for their electricity provider. Instead, states have granted monopolies to electric companies in exchange for sometimes inadequate oversight of public regulatory commissions. As a final accountability check, however, cities have often retained the power to take over the utility and run it as a public service. Andy Johnson and Joel Zook are with Decora Power, an effort in the small town of Decora, Iowa to put the public back in public utility. On May 1st, they're asking Decora residents to support a ballot measure to move ahead with forming a city-owned electric company. Johnson and Zook recently spoke with me about the feasibility studies showing Decora electric customers could save 30% on their bills, the advantages of local control, and the uphill fight against a company using their utility bill payments to finance the opposition. I'm John Ferrell, Director of the Energy Democracy Initiative at the Institute for Local Self-Eliance, and this is Local Energy Rules, a podcast sharing powerful stories about local renewable energy. Joel and Andy, welcome to the program. Joel, I'd like to start off early quick and first ask, you know, you had this feasibility study in the field looking at basically what it makes sense for Decora, Iowa to take over and be its own electric company. What did you learn? Now, when we found that it was very favorable, you know, we were hopeful that we would have some positive economic benefits of the feasibility study just looking at what our rates are currently and compared to what other municipal utilities around Iowa are, but we were a little overwhelmed but I think, honestly, how good that the rates looked. The study projected that the city could basically offer the same reliable service at about 30% less cost, and so it's sort of the bottom line that it would need to charge for power. And so that turns into about a savings of about $5 million a year and then the question would be, you know, what is it that the city would do with that savings, is that something that you can offer the customers' rate relief, is it something that you want to pay down your debt more quickly from that acquisition, or more investment in local infrastructure or, you know, other things like that, so it's pretty exciting. So what would be the difference between power provided by a client energy who's your current utility company and Decora, Iowa's municipal utility department that's $5 million less? I mean, is there anything different about the energy that people would receive? Well, you know, maybe in terms of the actual electrons coming through, I don't think that there would be a difference. The difference is in the ownership structure and how the utility is managed and the fact that it would be managed locally, not part of a big investor-owned utility, and that there would be no payments to investors or, you know, indivitance at the end of each year. I think that you'd have a little bit smaller overhead too without having to pay no of the dollars to big executives. Right. And I'll just, Andy, do you want to jump in there too? Yeah, there are, I think there are at least a couple of major categories, one of the categories of savings, obviously, is the profit. Investor-owned utilities are guaranteed a very significant rate of return, which is why there are attractive investments across the country. And of course, we're all paying that, and when you're publicly owned consumer-owned utility, there's no profit being siphoned off out of state investors. The other side of it though is that large companies, typically people think about as being possibly more efficient and having economies of scale, but that only works when there's a competitive marketplace. An electric distribution of electricity, retail electricity in many states, including Iowa, is not a competitive marketplace. So, the investor-owned utilities, including our current income, and has had no competitive pressures to be leaner and more efficient. And so they're very big and possibly quite bloated, and that's what I think the studies that look at municipal utilities, ours, and others find many of our peer municipal utilities in Iowa function actually much more efficiently than many of the investor-owned utilities. So, Andy, I'd love to follow up on that notion of competition, because what you have coming up May 1st is in fact one way to inject a little competition into your electricity market, which is to say that the city has this option then to take over. Tell me a little bit about what's involved in this vote. Are you going to have something on the ballot? Is it a special election for just this issue, and how many people do you expect to turn out for this out of the voting population? Well, turnout is a $64 million question, we don't know, it is a special election, yes, and so in Iowa, and this process varies by state, because electric regulation varies by state, but in Iowa, it's a two-part process. Iowa code says if the community wants to pursue this, first they have to hold a community referendum, and if the referendum vote is positive at a 50 percent level, plus one, then the community can take an application to the Iowa Utilities Board, which is the state regulator, and apply essentially for the exclusive service territory and the right to serve the customers within that territory. So if there's a yes vote on May 1, then the city of Decora could spend probably a little bit of time further developing that application and eventually apply to the Iowa Utilities Board. And at that point, see if the economic still holds up, and utility board can rule, essentially rules in quote the public interest, and so they're not required to rule in favor of community, they can rule either way, and then eventually whoever comes out in the losing end of that could go to the courts or not, but that's the process. So I'm curious, you know, with the feasibility study that was completed, that showed some significant potential benefits for electric customers in Decora. Is that kind of information, the stuff that you'll share with the Utilities Board, should the vote go your way, and folks agree that you should move toward a municipal utility, or are they going to be looking for a lot of different information? We would certainly share, the city would share that feasibility study, and probably flesh it out even further with some additional analysis, and would need some legal counsel to present all that to the utility board. Now the incumbent utility, a lion, of course, would object and would then be sharing their own competing information, saying it's not in the public interest, and probably challenging some of the city figures at that point, and the utility board and their staff, of course, would have to do a great deal of analysis to sort out where the truth lies, and where the public interest lies. One of the things that I think Joel mentioned in the implications, or maybe it was you Andy, was this notion about local management, and then kind of the decision-making power the city would have about what to do with the savings that come from being a municipal utility. Are there things that the utility board is not going to consider, but that people who are voting on May 1st may actually want to take into account in having a municipal utility. This is one of the challenges, and I'll be brief and let Joel jump on this too, because it's an unknown, really. There was only been one case this century in Iowa, and that was a 2006 to 2008 case where communities applied, and in that case the utility board said no, it was a set of five very small communities, combined there smaller than our relatively small community of Decora. And the board said no, but they said really this is not an absolute no, it's just that you didn't dot all your eyes and cross all your teeth when it comes to the study, when it comes to economics, when it comes to reasoning. You're welcome to return here, but also they essentially were saying here's a roadmap in the future for communities, here's what we'd like to see. And they actually opened it up to a wide variety of reasons that they will seriously consider, one of which is economic viability for sure, but also the ability, their understanding of the ability of a community to actually manage utility, their understanding interpretation of communities and motivations beyond just economics and cheaper energy, for example, stewardship and whatnot. So they said they would look at all of those things. Now this is a different utility board, and so it's an open question what exactly they're looking for. Joel, did you have anything you wanted to add? No, I don't think, I mean other than just to say that the community has been really engaged in them, I think on all of those issues, and that everybody is asking about, you know, not just rates, not just reliability, not just where the energy is coming from, and what kind of energy efficiency programs a new utility would have, all of that gets asked, I think by everybody, and of course other people are going to have different priorities than each other, but everybody's interested in the big picture. So it has been, I will say this, it's been really interesting to watch the community start to get engaged in energy issues, and I think the core is probably one of the most energy you would have at small towns in America. And if not before this, then certainly through this process. So Joel, tell me a little bit more about what opposition alliance has put up to this, because as, you know, as Andy alluded to, this has not been a competitive market, and in fact there are some pretty interesting stories over the past couple of years in Iowa about just how far utilities would go to defend their turf with regards to solar installations, for example, a very significant Supreme Court case in Iowa around whether or not folks could lease solar on their rooftops. What is alliance done to oppose this, presuming that they oppose it, and what is that meant for the local efforts to inform people about what this choice means? Well, we expected all along with it would not be exactly happy about initiatives, and they have got a right to defend their own business interest, which of course we're doing. But, you know, I mean, I think that we've been told at the beginning that there's an energy playbook for dealing with a misalculation efforts, and, you know, you've only got to get 51% of the people to vote no, and if you can scare half the community off, that's a special strategy, and I think that that seems to be the basic strategy that they're using. There's a lot of numbers that they've thrown out there that are wildly inflated, and I think that they're inflated beyond even what's reasonable, but, you know, to someone who doesn't want to look at the numbers, who doesn't really know how to dig in to the numbers and to access what do these numbers really mean? Your first instinct is just to kind of split the difference, and if, you know, if we say 10 and may say a million, it must be somewhere halfway in between there, even though it's not quite the case. Do you find it difficult, then, in order to kind of give people straight answers when the utility is exaggerating to such a degree, and is that a problem for the city itself in terms of what it's able to say? You know, obviously the, I'm sure the municipal government is kind of a trusted entity. And they plan a role in helping to mitigate the kinds of things that the utility is saying in order to defend its ownership of the grid system. Sure. Well, you know, I mean, it is easy to talk to people, I think, one of the great things about being in a small town is that you know a lot of folks, and so being able to talk to people and present them with facts and to back up the numbers, that's certainly something where I think that we as a, you know, this group of students have the advantage that the tough place is how do you distill that to the sound light? And we're name another serving of being marketers, and it is a big issue, and it's hard to maybe get that onto the back of the postcard where you can sell some fear of higher rates, and you just, they fear the unknown. It's just that, that maybe plays better into a one sentence sound light. But as far as the city taking a look at and getting information out to the citizens, they have done a very good job. The city itself can't take a stance on the issue of a vote, yes or no, but they have held several town hall meetings to talk about, to get questions from the community and to be kind of a neutral third party to say, look, here are the facts, and those have been very helpful, and just in terms of kind of separating some of the misconceptions and even misunderstandings of people of what this really means. You're listening to an interview with Joel Zook and Andy Johnson from Decora Power. I'm John Farrell, and local energy rules will be right back. Hey, thanks for listening to local energy rules. If you've made it this far, you're obviously a fan, and we could use your help for just two minutes. As you've probably noticed, we don't have any corporate sponsors or ads for any of our podcasts. The reason is that our mission at ILSR is to reinvigorate democracy by decentralizing economic power. Instead, we rely on you, our listeners. Your donations not only underwrite this podcast, but also help us produce all of the research and resources that we make available on our website, and all of the technical assistance we provide to grassroots organizations. Every year, ILSR's small staff helps hundreds of communities challenge monopoly power directly and rebuild their local economies. So please take a minute and go to ILSR.org and click on the donate button. And if making a donation isn't something you can do, please consider helping us in other ways. You can help other folks find this podcast by telling them about it, or by giving it a review on iTunes, Stitcher, or wherever you get your podcasts. The more ratings from listeners like you, the more folks can find this podcast, and ILSR's other podcasts, Community Broadband Bits, and Building Local Power. Thanks again for listening. Now, back to the program. In Boulder, Colorado, which is kind of famously been going through a process of taking over the utility from Excel Energy since their first ballot initiative back in 2011, they were outspent something like 10 to 1, the local activists in favor of the city owned utility compared to Excel Energy. I'm curious if that squares with what you're seeing in terms of the amount of money and resources a client is willing to put in here and whether or not you feel like there's a way to overcome that disadvantage. Yeah, we don't know exactly what a line is spending, but I suspect it may not be too far from that 10 to 1. It's hard to say. It's a very large advantage for sure, which raises a fair amount of questions, too, doesn't it about the regulated monopoly approach to investor-owned utilities? The money a client is spending or any investor-owned utility around a country that might engage in a no campaign like this to try and prevent the community from sort of taking its destiny into its own hands. The money they spend is our money originally, in almost all cases. I mean, there may be cases where an investor-owned utility has other lines of business, but generally investor-owned utilities in the energy business, and they're granted by we, the people and our regulators, the right to serve us and make a profit. So then what they can say at this point in efforts like this is, well, we're not using rate-payer dollars, we're using our shareholder dollars, or we're using a different pot, political action dollars, right, except that all those dollars, as far as I know, originated from the rate-payer. So the regulators grant the utilities, the right to earn a profit, the utilities then can take those profit dollars and turn around and distribute them to shareholders, but also for other uses like this that can turn around and use our own dollars against us in the community and drop maybe half a million dollars in a small town to spread fear and confusion and try and prevent the community again from sort of taking its own path. So raises a lot of questions, free speech is one thing, honesty and truth in these conversations is a whole different ball game. I am obviously it will be on the morning of May 2nd when you'll be able to look back on this and ask or answer the question about whether or not it was worth it in its entirety, but I'm curious what we would offer for other communities that are looking at this issue of controlling their energy future and considering municipalization as a method for getting there, whether or not this process has been worthwhile, that even if you don't succeed on the ballot that you alluded to earlier that you have gotten one of the most energy literate populations in the country and if there is something in that that communities should be excited about even if they may be are not successful in moving to a utility system takeover. Well, like you said, I think we've got people engaged and I think that's a really good thing that they're paying attention at thinking about how this impacts their daily life and the economy of the town that they live in. You know, I think going forward we'll still have a long road to go regardless of how the vote comes out and in terms of thinking about this, one of the things that I'll be interested in is to be watching how the community reacts to alliance rate increases that they've got planned for the future, that they've already indicated to the IO utilities board that they have in the works and they're laying the groundwork for, and then also just any changes that they make to their energy efficiency programs. There's still a bill alive in this Iowa state house that would got the energy efficiency programs that are mandated by the state and, you know, Alliance beginning this campaign before that bill had showed up and before they had signed on and supported it talked a lot about how great their energy efficiency programs are and all the dollars of that brought to the community, which is true. There's a lot of good work that is done there, but, you know, in our feasibility study we left 5% of gross annual revenue into an energy efficiency fund that would be managed again locally by the electric utility here that we own as a town. And so after that study came out and we saw that we were very serious about energy efficiency and serious about funding it, and after this bill comes up in the state legislative that they're in support of and it's signed on to, they really haven't talked a lot about energy efficiency since. I think it's a very telling omission. I'll just add to that real quickly to the values to the community, you know, I do think are there. I mean, it is a very, it's a big job to bite off, you know, to do a feasibility study, the high quality cost quite a bit of money takes quite a bit of time. So there's that and then there's engaging in the political process of your city council needs to be friendly enough to say, all right, let's vote and now this campaign and the campaign gets, can get very unpleasant. And so people need to be aware of that if they're thinking of going down this road. Part of the awareness though, this community was very energy aware because many, many of us, many organizations have already been doing a great deal of efficiency here and we have higher penetration of customer own solar than just about anywhere in the Midwest. But you know, the economics have been an eye opener, I do think, because a lot of folks are still unsure what to believe, yes, but when we realize the amount of energy we all stand and that in most communities, certainly in the heartland, but most communities across the country, it's a giant sucking sound of dollars leaving our community essentially the energy sector and not coming back. It's year after year after year after year. And so this, I think this process has awoken a good chunk of folks, the community, to the reality that that, where those dollars are going and the opportunities to keep them local. And so I think that conversation will not end with this vote. Andy, and Joel, you alluded to earlier that it's hard to put these concepts around energy in a sound bite, but a giant sucking sound of dollars leaving our community sounds like a pretty good way to summarize the fight that you're up against. Well, we wish you the best of luck, come may first, and thanks so much for talking with us. Thanks, John. Thank you. This is John Farrell, director of ILSR's Energy Democracy Initiative. I was speaking with Andy Johnson and Joel Zook of Decora Power about the campaign for public power in Decora, Iowa. For more information on how cities from Minneapolis to Boulder, Colorado have taken control of their energy future, and for a map of all 2,000 existing municipal electric utilities, check out ILSR's Interactive Community Power Map, which is available at ILSR.org. While you're at our website, you can find more than 50 past episodes of the local energy rules podcast. Until next time, keep your energy local, and thanks for listening.