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Freeborn-Mower files to buy Alliant Energy operations

Published 10:06am Thursday, April 17, 2014

A dozen southern Minnesota electric cooperatives and Alliant Energy filed their joint application this week with the Minnesota Public Utilities Commission for the sale of Alliant’s Minnesota electricity operations.

The filing announcement was made Wednesday.

The 12 cooperatives include Freeborn-Mower Cooperative Services and is called Southern Minnesota Energy Cooperative. It was formed for the purposes of transferring Alliant’s electric distribution business to the cooperatives. The announcement of the sale was in September, at which time the transaction was estimated at $128 million.freeborn

Freeborn-Mower is expected to gain the most customers, said Freeborn-Mower CEO Jim Krueger. It would more than triple in size, growing from serving roughly 6,000 customers to about 21,000, he said.

“There is no other single undertaking that could match this opportunity to grow our cooperative and secure its position as a distributor of electric energy,” he said.

Alliant Energy filed for the sale of its Minnesota natural gas holdings to Minnesota Energy Resources in February. It is a subsidiary of Chicago-based Integrys Energy Group.

Alliant Energy and the Southern Minnesota Energy Cooperative request a decision from the MPUC in the fourth quarter of this year. The deal also needs approval from the Iowa Utilities Board and the Federal Energy Regulatory Commission.

The filing this week includes information on SMEC’s transition rate plan for the next five years. It proposes:

• No changes on base rates for three years after SMEC assumes operation. Base rates pay for the fixed cost of providing the operation and maintenance. Present Alliant customers are expected to see a monthly credit of about $2 per thousand kilowatt-hours for three years to reflect savings from the sale.

• Changes in the costs of power supply and transmission service on bills. This reflects the true cost of power, according to the filing, and includes the long-distance distribution of transmission service. Customer bills would increase about 6 to 7 percent the first year, 3 to 4 percent the second year and 7 to 8 percent the third.

“These increases are lower than what Alliant Energy expects it would have to implement over this period of time if it were to continue ownership of the electric system,” a press release states.

• Merge rates of Alliant and local cooperative customers in the fourth and fifth years after SMEC assumes operation — if the differences in base rates are within 5 percent.

The MPUC, of course, would have authority to verify compliance with the plan.

“Freeborn-Mower Cooperative Services, in conjunction with the Minnesota Rural Electric Association and National Rural Electric Cooperative Association, continue to advocate for competitively prices and reliable electric energy supply to meet the needs of rural residential, commercial, industrial and agricultural members,” Krueger said.

Alliant customers can expect to receive letters from their future cooperatives with additional details once the sale is completed, according to the press release. Alliant will continue to handle customer service needs, including emergencies, until then.

 


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