Dive Brief:
- Southern Minnesota Energy Cooperative (SMEC), a newly formed group of 12 coops, announced it has filed an application with the state's Public Utilities Commission (PUC) to buy Alliant Energy's service territory.
- The deal would add 42,600 new members to the state's 12 electricity coops, as Alliant Energy's customers would automatically become full coop members and enjoy the same rights as existing members.
- As a result of the merger, Alliant Energy's customers will likely see an increase in their utility bills by 6-7% in the first year, 3-4% in the second, and 7-8% in the third, before merging with existing customers' rates. These rate increases are still below Alliant's expected increases.
Dive Insight:
SMEC can benefit from the economies of scale, said SMEC President Brian Krambeer. This will cover the cooperatives' operating costs and investments in transferring the electric distribution system to cooperative ownership and administration. The cooperatives say that the higher bills will only last for 4-5 years following the sale, although Alliant predicts a longer time frame. Both predictions rest on whether or not base rates, the cost of generation and distribution lower over time.
The deal is dependent on approval from the Minnesota PUC, the Federal Energy Regulation Commission and Iowa state regulators, as it will affect inter-state distribution.