Posted at: 09/03/2013 11:35 PM
By: John Doetkott
(ABC 6 News) -- On Tuesday Alliant Energy announced it will be selling off all of its electric and natural gas distribution systems in Minnesota as part of a $128 million deal.
Alliant Energy currently serves more than 45,000 customers across Southern Minnesota, but officials say those customers are too few and far between, making it too costly to provide effective service.
“The geography is over 15,000 square miles,” said Tom Aller, a senior vice president with Alliant Energy. “We don't have very high density so it's hard to scale up."
The sale of the company's power lines and other infrastructure to the Southern Minnesota Energy Cooperative will literally give power back to 12 local energy co-ops.
Alliant's gas distribution system will be sold to the Minnesota Energy Resources Corporation.
Current Alliant employees will be offered jobs at the local utilities, and both businesses say they're ready for the influx of new customers.
“We're looking at gaining 15,000 customers to an existing base of about 6,000 now,” said Jim Krueger, president and CEO of Freeborn-Mower Cooperative Services. “So it's quite a growth for us.”
“As I look at our service territory, there's a lot going on in this corridor,” said Barbara Nick, president of the Minnesota Energy Resources Corporation. “This is a great business opportunity and it's great for our customers."
But as for those customers' bills, some will likely see a change, but because of how rates are set by the state, officials say the specifics are still unclear.
“I suspect that before we're all done with this those conversations will go on, but I think it's just simply too early to tell,” Aller said.
Back in 2010, Alliant Energy angered many in the area by requesting a 22 percent rate hike from the state.
That hike was ultimately cut back, and experts say that because of regulations, more local control could keep rates more stable in the long run.
“It’s because they just don't have the biggest service territory where Freeborn-Mower are pretty darn compact,” said Dan Dorman of the Albert Lea Economic Development Agency. “They're going to be able to be much more efficient, which will keep rates lower in the future.”
However, the deal isn't final just yet.
The companies still need regulatory approval, which could take between 6 months and a year, but officials said they did not anticipate any problems and do expect the deal to go through.
Alliant Energy will still maintain its electric generation facilities in Minnesota, which will sell electricity to the local co-ops.