Luther College Chips

Luther students should vote “yes” on May 1

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The local election involving the formation of a municipal electric utility in Decorah will take place May 1. If the vote passes the city council will be authorized to apply to the Iowa Utility Board — Iowa’s regulatory body for utilities — in order to buy out the local electric distribution infrastructure from our current utility, Alliant Energy.

The formation of an MEU in Decorah would be greatly beneficial for the town’s economy as well as Luther’s well-being.

Alliant, as an investor-owned utility, must run their business in a way that generates profit and growth for investors. This for-profit business model is incompatible with the electricity market for two primary reasons: There is no competition in the electricity market nor is there growth in the sector as a whole.

In a market economy, profits are meant to incentivize businesses to improve so that consumers will choose their product over their competitors’. However, electricity consumers have no such choice. Electric utilities are assigned their territories by the government and the customers within these territories are then forced to buy electricity from the assigned company, in our case Alliant. Additionally, the actual product, electrons, cannot be improved or increased in value over competing electrons. Thus there are no competitive pressures on IOUs to keep prices low. This is part of why Alliant’s rates are higher than average Iowan MEU rates.

If there is no way to grow a company through winning new customers, a business must try to sell more of the product to their existing customers. While electricity usage in the United States did increase for the better part of the 20th century, it has now been static or falling for the last 20 years. This change is due to both better electricity efficiency standards as well as the increase in household generation — solar and wind. This is a positive development to be sure but it poses fatal challenges to Alliant’s business model.

Thus, without the standard methods of profiteering available, Alliant’s remaining option is to raise the price of their product. And, unsurprisingly, they did so last year. By applying to the IUB, Alliant raised our electricity rates from 7.8 percent in 2017, although they sought to raise them much higher. In that same year they made $450 million in profits and paid investors over $77 million.

As Luther students, we pay $500 a year for electricity in our tuition. Luther pays Alliant over $1 million each year for electricity. These rate increases affect Luther students. To me it seems ridiculous that a portion of our tuition dollars are going to pay the salaries of corporate executives and line the pockets of investors for a service that is easily handled by local entities.

Indeed, the formation of an MEU is not the radically risky endeavor that Alliant’s messaging would have people believe. There are 136 municipalities with MEUs in Iowa alone. The entire state of Nebraska is run by public power. Major cities such as Los Angeles have MEUs as well. These communities choose public power because it is simply the more efficient way of distributing electricity.

A Decorah MEU would have no requirement to demonstrate growth or profits. This means that if Decorah were to establish an MEU the money that is currently sent to Madison for investors and for the multi million dollar salary that Alliant’s CEO receives could be reinvested into local projects that prioritize our community.

This could mean more renewable energy, lower rates, investments in the community, and many other exciting local opportunities. These decisions would be handled by a board of local community members who will actually use the services they are making decisions about.

Given these realities, it is in the best interest of the Decorah community — including present and future Luther students — to explore the opportunity to establish a municipal electric utility which will keep our money local, work in the interests of local citizens instead of investors, and operate at a lower overall cost. Vote yes on May 1 or vote now through early voting. Find out about free transportation to the polls on the Facebook page Luther Students for Municipalization.

Signed,

Forrest Stewart (‘19)

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The student news site of Luther College in Decorah, Iowa