Acquisition-specific Questions

Q: What’s happening?

A: Twelve electric distribution cooperatives, united under the interim acquisition and operating entity Southern Minnesota Energy Cooperative, reached an agreement to acquire the southern Minnesota electric distribution systems and related business assets from Alliant Energy. The transaction is subject to approval by state and federal regulators.

Q: Why is Alliant Energy selling and why are the 12 member electric cooperatives buying? 

A: Alliant Energy provides service to 43,000 electric customers over an area in Minnesota spanning 15,000 square miles, many in rural southern parts of the state.

These Alliant Energy electric distribution systems overlap with those of the long-established and well-respected 12 cooperatives, making the proposed acquisition a natural solution. The transaction will result in stronger, more efficient cooperatives and provide long-term, economies-of-scale benefit to both current and new member-owners.

Q: Will this affect my electric service?

A: It will be seamless to current cooperative member-owners and new member-owners will enjoy the high-quality service long provided by their local cooperative. 

Q: Is this going to cost me more money?

A: All rates for electric cooperatives are set on a cost-of-service basis to provide the highest quality service at the lowest practical cost. While the 12 participating cooperatives have slightly different rates, services, billing options and programs, each is committed to seeing that this transaction provides a long-term, economies-of-scale benefit to both current and new member-owners.

Q: How many Alliant Energy employees and customers does this involve?

A: There are more than 43,000 affected Alliant Energy electric customers and about 70 electric employees involved in the proposed acquisition.

Q: How many new member-owners and employees will my cooperative get?

A: That varies per cooperative and you should feel free to contact your local cooperative’s communications manager for that information.

Q: Will the sale require regulatory approval?

A: Yes. The transaction must be reviewed and approved by state and federal regulators.

Q: When will the transaction close?

A: That depends on the regulatory reviews; however, we anticipate that the transaction will close in mid-2015.

General Cooperative Questions

Q: What is an electric cooperative?

A: An electric cooperative is a not-for-profit utility that is owned by the members it serves. Cooperatives provide all of the same essential services as any other electric utility.

Q: What are the differences between cooperatives and other utilities?

A: Most Americans get their energy from investor-owned utilities, sometimes called IOUs. IOUs are for-profit private corporations owned by investors and typically operate in densely populated areas. Cooperatives were established by the U.S. Congress and President Roosevelt in the 1930s. The Rural Electrification Act helped bring electricity to rural parts of the country not served by IOUs. Cooperatives serve approximately 80 percent of America’s land mass and 12 percent of its population.

Q: What is the significance of being not-for-profit?

A: Electric cooperatives developed because many citizens who did not have access to electricity in the 1930s decided to band together and form their own companies to acquire power. Investor-owned power companies said they couldn’t make a profit in areas with a small number of consumers per mile of expensive power line. The cooperative business structure already was a well-established part of the American free enterprise system for providing services that were too big for individuals to do alone.  Not-for-profit cooperatives were a natural solution for distributing electricity in areas where making a profit would be difficult.

Q: What are capital credits?

A: Any revenue collected by the cooperative that is not needed to cover the cost of providing service is accounted for and allocated back to the member-owners based on the amount of energy they purchased during the year. Those credits are paid out to member-owners at a later date based on a retirement schedule adopted by the board of directors. The amount of time before a member-owner receives his or her first capital credit refund varies from cooperative to cooperative.

Q: Are consumer-owned cooperatives run by or owned by the government?

A: No. Cooperatives are owned by the members they serve. Cooperatives are run by policies established by a member-elected board of directors, who in turn hire a manager to hire additional staff to run the organization.

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