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DECORAH (AP) — Residents in Northeast Iowa are facing strong opposition from utility giant Alliant Energy as the community considers establishing a municipal utility in hopes of investing more in renewable energy.

Decorah residents hope to take millions of dollars built into the utility’s rates and use the money for community projects and initiatives instead. The city has about 8,000 residents.

The Decorah Power group is supporting a May 1 referendum that would encourage the city to explore the option. The group predicts that a municipal utility could save residents up to $5 million annually.

“We want to be better stewards, both of our economy and our environment, for our kids’ future,” said Andy Johnson, a member of Decorah Power.

Revenue bonds that are repaid with money from power sales would fund the creation of a municipal electric utility, Johnson said.

The group will need an estimated $7.1 million to become operational, according to NewGen Strategies and Solutions, Decorah Power’s main consultant.

The group is underestimating the cost of creating a city utility, Alliant said. A municipal electric group would increase customers’ rates by 30 percent, according to Concentric Energy Advisors, a consultant for the company. The consultant estimates a city utility would need $51 million to start operations.

“We think customers will be better off with us, and we don’t want to see the city and citizens of Decorah spending money ... that could be used on other wonderful activities,” said Terry Kouba, vice president of Alliant’s Iowa operations. Gary Rustad, a former Decorah City Council member, opposes the creation of a municipal utility because he believes the financial risks outweigh the potential benefits.

“Why ask for voters to take over Alliant’s Decorah operations, when Alliant is providing good quality energy at an affordable price?” Rustad said. “I don’t know why we would want to jeopardize that relationship.”

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