CITY OF SLAYTON

By Jenny Kirk The potential creation of a municipal electric utility and what that would mean for the local residents was discussed at the City of Slayton’s first information meeting on Thursday, Nov. 30 at the Murray County Central High School auditorium.

More than 65 people attended in person and nearly 100 others livestreamed the informational meeting as well. Creating the municipal electric utility (MEU), authorizing the purchase of utility assets from Xcel Energy and authorizing the issuance of revenue bonds to pay for the purchase requires approval from Slayton voters at a special election. The city council tentatively plans to have Tuesday, May 14, 2024 serve as the special election date for residents to consider a ballot question regarding the authorizations. “Right now, all of the city of Slayton is served by Xcel Energy,” City Administrator Josh Malchow said. “We are proposing to purchase that territory and assets from them and start our own municipal electric utility. We would then contract out the maintenance and operations of the system.”

The reason the city council and staff are looking to make the bold move is because they sincerely believe they can provide better service than their current provider in addition to providing the same or lower rates for residential, commercial and industrial users within the city of Slayton. “Municipal electrics are not 501c3s but (are still) not-for-profit, so that’s important,” Malchow said. “Our current provider is a for-profit company. Co-ops, municipal electrics are not. So any excess revenue that is created by the system is put either back into the system or reinvested in some other way within the community.”

Two of the biggest complaints city employees have heard from local Xcel customers are reliability and customer service. “With the right partnership, we believe we can provide faster outage response, better communication, faster construction/ renovation response times, faster public safety incident response times, and overall more attentive customer service than our current provider,” Malchow said.

Accountability would also look different. A Slayton MEU would answer to the people in the community regarding overall operation, rather than to shareholders or investors like in a privately-owned utility. The formation of a utility commission would also take place. Oftentimes, members of the commission are appointed by the council but they are independent of the council in their powers, Malchow said, adding that one or two members of the council would also sit on that commission.

Municipal electric utility discussions were sparked roughly two years ago, when the city’s franchise agreement with Xcel Energy expired on Oct. 13, 2021. Malchow explained that a franchise agreement is basically the legal document for a city that allows a utility to operate within a city and that sometimes, there are franchise fees, such as your cable and internet bills, attached to those. “That is not the case with Xcel Energy,” he said. “The city gets no cut of that bill through franchise fees. We let that expire and that really started a conversation of ‘Are we satisfied with the level of service that Xcel Energy is providing us?’ What the council and I had heard is perhaps not. There were some concerns about rates, reliability, emergency response times, builder’s hotline response times, so when you’re building a house or building an addition and you need to connect or reconnect power, that type of thing.”

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HOLDS INFORMATIONAL MEETING REGARDING POTENTIAL MUNICIPAL ELECTRIC OPTION

In November 2021, Dave Berg Consulting was contacted to begin a municipalization feasibility report for the city. Basically, the 50-page document lays out whether or not the MEU is a good idea and will work in a fiscally responsible way. A year later, the report was presented to the city council and more discussions took place. From January 2023 to October 2023, additional information was gathered. “There were what our consultant called assumptions in the report,” Malchow said. “To serve the community in the best way and make an educated decision to move forward, the council wanted to eliminate as many assumptions as possible. We started talking to other parties around the area, gathering data on our own, to kind of fill in those blanks that the report had.”

On Oct. 16, the updated feasibility report with the final information was then presented to the city council, which then moved in the direction of calling the first meeting and re-introducing the topic to the community.

Malchow and the city council members present on Thursday — Dean Ackerman, Blake Heronimus and Kate Harmsen — let it be known that the Slayton residents who vote will be making the final decision, not any of them. “If the vote fails, we don’t move forward,” said Malchow, who added that they also wouldn’t move forward if taxpayers would see higher rates than what they’re paying now. “With what we’re seeing with our current projections is that there will be enough revenue to more than cover the debt service of what we estimate the value of the system to be on a possible purchase. The nuts and bolts of that, your tax bill would not go up due to the purchase of the system.” There have been extensive conversations with multiple electrical utilities operators in the region the past two years. In all likelihood, the city will partner with Nobles Cooperative Electric. “They’re in town already with staff and facility and shops,” Malchow said. “Right now, we have chosen to move forward and list their services for purchasing the power through them, most likely, and having them do our maintenance and operations of the system.”

The city representatives also addressed the recent letter sent to residents by Xcel. Malchow recapped that Xcel said they were rebuilding a key transmission line that serves Slayton — the $17 million project includes rebuilding 46 miles of transmission line and about 900 wood poles along with upgrading existing powerlines — to improve reliability. “When you talk about the provision of the electrical service., there’s two different things to think about: transmission and distribution,” he said. “Transmission is what they’re talking about here. That’s what gets the power into the community, into the substation. We’re not buying the transmission lines.”

Near the end of the meeting, a handful of community members went up to the mic and asked good questions. Feedback from community members is not only welcome but encouraged as the city council and staff vow to be completely transparent about the process. Additional informational meetings will be scheduled in the future. “Our goal is to have every single voter that steps in the booth on May 14 or whenever the special election would be to feel like they have enough information to make an educated choice to move forward,” Malchow said. “This isn’t just the five council members making the decision. It’s 2,000 of you folks.”