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DECORAH — On May 14, the City of Slayton, MN voted "yes" in a Municipal Electric Utility (MEU) special election. The decision meant buying out their current service provider, Xcel Energy, and starting their own municipal service. There was a 37 percent voter turnout, with 300 "yes" votes (73%) and 109 "no" votes (27%). The City of Decorah experienced a similar voter turnout for their referendum of the same topic. The vote instead concerned area provider Alliant Energy in May 2018 and saw drastically different results. "Our original referendum failed by 3 votes with a voter turnout of 42 percent," said Jim Martin-Schramm, a retired faculty member at Luther College. "The close vote reflected how controversial the matter was in Decorah." With a second referendum in the works, slated for March 2025, DecorahNews asked Martin-Schramm whether there are any key points Decorah can take away from the "yes" vote in Slayton. The City of Decorah's municipal government currently spends around $500,000 a year on energy. It can expect to spend between $72,000 to $100,000 more each year if Alliant's new rates are approved. Based on 2020 Alliant sales data for residential, commercial, and industrial customers inside the Decorah city limits, ratepayers are sending closer to $10 million a year to Alliant, says Martin-Schramm. "Which raises the question, 'why am I sending my money to a Fortune 500 company when I could be supporting a non-profit where profits can flow back to the community?,'" said Martin-Schramm. "That's a lot of money [for a small community]. I think that's in large measure why we've seen such a positive uptake from the 50 communities that have decided to join the CEDI Coalition." In retirement, Martin-Schramm works part-time as a Policy Analyst for the Clean Energy Districts of Iowa (CEDI). He also serves as the manager of the CEDI Coalition, which is an official intervenor in the Alliant rate case currently pending before the Iowa Utilities Board. The City of Decorah was the first community to join the CEDI Coalition. "Decorah is not alone in terms of a community being frustrated by the high costs from an investor-owned utility," he said. "I don't know much about Slayton, but it seems to be a more conservative community than Decorah. The fact that the City of Slayton was able to get such a positive vote is a credit to their city council and how they helped to educate their citizens about how and why the city should establish a municipal electric utility." Slayton's pursuit toward an MEU began in October 2021, according to Josh Malchow, Slayton City Clerk/Administrator. "Our franchise agreement with Xcel Energy was expiring, and shortly before that our council was starting to ask questions about how to fix our issues regarding rates, numbers and lengths of outages, and infrastructure," Malchow said. "We contacted an attorney from a Twin Cities firm who told us that the state allows a municipal buy-out of current utilities as long as you have a positive referendum." In October 2023, Alliant Energy asked the Iowa Utilities Board (IUB) to approve an electric rate increase to be phased-in over the course of two years. This process begins in October 2024 and concludes in October 2025. Alliant estimates the electric bills of residential customers will increase by an average of 13.4%, small businesses by 20% and large general service customers by 17.4% - 20%, according to Martin-Schramm. The driving factors for Slayton's formation of an MEU were rising rates and lack of community control. "The retail rate for Xcel Electric is 16-17 cents per kilowatt hour (kWh), while every region co-op ranges from 11-14 cents/kWh, which is quite a difference," said Malchow. "To that end, municipals and co-ops are nonprofits who operate on margins and are much more responsive to local needs." It was evident that Slayton was also generating a lot of money that was not going back into the local system, according to Malchow. "Xcel is private and operates to make a profit," he said. "We want to keep all money local and to have people know who to call when they have an electric issue or might not like a decision. We currently have to call an 800 number with Xcel." While the City did not need a referendum to establish funding for their electric utility buy out, Slayton covered their bases by including that information in the language of the referendum, according to Malchow. "$7 million has been identified as a comfortable maximum amount to purchase Xcel and to provide a municipal service margin with competitive rates, better service, and infrastructure repair," he said. Slayton City Council, Nobles Cooperative Electric and Xcel Energy were invited to present at a public forum held at Murray County Central High School. Each side provided their perspective and citizens could raise concerns. "It went well, there were good questions," said Malchow. "Xcel had taken the approach of having been there forever and claiming they'd do better to remain our service provider. They'd sent out a letter to all of their commercial and residential customers to vote no in the referendum but that was obviously ineffective." The positive referendum vote in Slayton now officially allows them to begin the process of attempting to purchase assets from Xcel in order to create an MEU and take over the utility. Xcel doesn't have to say yes and can make a counter offer. "We view the total costs of the buy-out and startup of an MEU to be $4 million," said Malchow. "Xcel has consistently told us they want $20 million but are not able to specify the drastic difference in worth besides the thought they 'don't believe it's fair to use staff resources to research that information when you want to leave us.'" Because of the wide difference of Slayton's electric system valuation, this case will almost certainly end up in front of the Minnesota Public Utilities Commission (MPUC) and both sides will present their perspective. The MPUC will deliberate and determine a price if it believes the sale would be in the best interests of the citizens of Slayton, Minnesota. If the system evaluation is under $7 million, Slayton can move forward. If not, Xcel will continue service coverage. "We could go back to voters and call another election to approve a higher budget but the Slayton council has said if the worth was not found to be $7 million or below, it seems disingenuous to ask again," said Malchow. "Our next steps include negotiating with Xcel a bit and hopefully move pass that step quickly as we are confident that the case will need to be presented to the MPUC." Decorah faces the same tribulations if they were to achieve a positive referendum vote. For Decorah, Alliant Energy also got directly involved with marketing leading up to the referendum held on May 1, 2018. "Alliant got quite involved and spent a lot of money with ads and postcards," said Martin-Schramm. "They also stated that if the referendum passed, and the IUB approved the sale, that Alliant would appeal in the courts." Decorah Power, a non-profit formed to investigate the formation of a Decorah MEU, commissioned a feasibility study through a reputable firm that gave $8 million as the price for an MEU to buy out Alliant in Decorah. Alliant produced their own study for $50 million. Reflecting on the differences in the feasibility studies in Slayton and Decorah, Martin-Schramm said "It seems the for-profit, investor-owned electric utilities have a playbook for communities trying to municipalize. Assuming Decorah also achieves a positive referendum vote, and the city council decides to proceed, the IUB would determine whether the sale would be in the best interests of the citizens of Decorah, and if so, what the buy-out price would be." Related articles: Keeping the Lights On: Council Votes on Municipal Electricity Jim Martin-Schramm Urges Pre-Council Vote on Municipal Electric Referendum Elevate your inbox with the DecorahNews.com newsletter! 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Decorah Looks to Slayton, Minnesota for Municipal Electricity Decision