What about selling IPL?

Is selling Independence Power and Light an option? It is a question being more frequently asked, but rarely happens.

The electrical industry is undergoing massive changes - consolidation, changes in generation and other disruptions.

On rare occasions, some public power utilities has been acquired by investor-owned utilities.

There are over 2,000 public power utilities in the U.S. which provide power to over 46 million customers. Independence Power and Light is the 97th largest public power utility based on 2016 revenues.

The transactions are few and complicated. Communities take pride in their public utility, may enjoy lower rates and the deals are inherently complicated. Considerations include debt, power contracts, labor agreements and the sale price.

Here’s a list of publicly-owned utilities which were sold between 1980 and 2012 - 76 public utilities were sold; 45 to investor-owned utilities and 31 to rural electric cooperatives.

One high-profile example were the 2018 public discussions about the potential sale of JEA (Jacksonville (FL) Electric Authority) - the 9th largest public power company which serves approximately 464,000 electric, 346,000 water and 269,000 sewer customers. JEA operates as an independent authority of the City of Jacksonville.

Public reports say the utility could sell for $6 billion and net $2.9 billion once bonds and other obligations satisfied. The city auditor produced an extensive report on considerations involved in potentially selling the utility. Here’s the overview of a separate study was commissioned from the Public Utility Research Center at the University of Florida Warrington College of Business.

The proposal faced community and political opposition and was halted but recently explorations efforts were revived.

Sometimes the issue plays out the other way - a community is interested in taking over the electrical service from an investor-owned utility. One good example is in Decorah, Ia. where Decorah Power, a small community group, wanted lower rates and greener energy. The measure failed by four votes.

A feasibility study by the community group found that public ownership of electrical power in Decorah could be provided a lower average, with greater reliability and more renewable energy.

And here’s a story from San Francisco.

The issue

The issue is a perennial topic at major industry meetings. There was a presentation on the topic at the American Public Power Association meeting (June 2018) titled "Standing Up To a Sellout Threat."

One of the speakers was from Mt. Pleasant (UT) City Power - a small public power utility with 2,300 customers. A potential sale to Rocky Mountain Power was considered by city officials. The sale did not occur.

The community considerations of selling a public power company are generally long, difficult and very contentious. Larger utilities which do not own generating assets are generally more attractive.