Iowa Utility Association

	Unfounded Claims

	Cost, Reliability and Service

	Defining Municipalization

: Unfounded Claims

Municipal Utility Unfounded Claims - and Our Response

		Claim: A city-run utility will save residents money. In fact, the rates of municipal utilities are lower than Iowa's investor-owned utilities.

		Claim: A city utility will take the pressure off our cash-strapped local budget. On average, city utilities in Iowa transfer 6 percent of operating revenues to other city funds, reducing property taxes or paying for swimming pools, community centers and other projects. Response:A city taking over an established utility system and operating it would likely have the opposite effect. When you take into account the large startup costs, the millions in long-term debt, ongoing operating and maintenance costs, future capital expenses, and the legal requirement to replace property taxes; it is unlikely any money would be left over. It is very possible that a city may have to divert funds from other activities to cover these costs and debt.

		Claim: Service will be better and more responsive when we have local control.

		Claim: The city will have no problem finding experienced workers because it can just hire the employees of the incumbent private utility.

		Claim: After a storm, the city will be able to get mutual aid from other cities with their own utilities.

		Claim: After mergers and consolidation, private utilities have closed many small-town service centers. To get good service, cities need local offices and utility employees living in town.

		Claim: MidAmerican is pushing legislation that would prevent the formation of new municipal utilities.

		Claim: Investor-owned utilities are fighting the establishment of more city utilities because of all the profits they are taking out of our community and sending out of state.

		Claim: Long-term electricity contracts are available that will allow a new city utility to lock in low prices. As an example, Indianola has a long-term contract with MidAmerican and residential rates there are lower than the private utility's.

		Claim: Municipal utilities in California, including those in such cities as Anaheim, Los Angeles, Pasadena and Sacramento, escaped most of the rate increases and service outages that hit customers of the state's private utilities in 2000 and 2001.

		Claim: A city utility would be more able to provide renewable energy.

		Claim: A municipal utility provides local control over rates, policies and generation resources.

		Claim: Public power would encourage economic development by keeping money in town.

		Claim: Even though MidAmerican recently raised its contract price to the Carlisle municipal utility by 47 percent, the city still provides electricity to residents at rates 11.9 percent lower than MidAmerican and to businesses at rates 4.3 percent lower than MidAmerican.


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