Maquoketa Municipal Electric Utility will lose its fifth-largest energy user when the hospital moves to its new location, but it’s too early to say what impact — if any — that might have on residents’ bills.
Why the change in energy providers? It’s not a choice, it’s a mandate, according to MMEU Director Chris Krogman.
The Iowa Legislature formed the Iowa Utilities Board about 50 years ago in small part to define and govern electric service territories. Those territories delineate which electric company provides energy to a specific area. Think of it in farming terms — farmers must plant crops or graze animals within their property boundaries. The same is true with Iowa electric providers.
The site of the new Jackson County Regional Health Center sits within Maquoketa Valley Electric Cooperative territory, only hundreds of feet from the MMEU boundary. The hospital did not get to choose its energy provider.
“The general intent of the board was to maintain being an MMEU customer because their service has been good,” said Curt Coleman, hospital CEO. “But then we found the Iowa Utilities Board map put us clearly in MVEC territory. … It was pretty clear there wasn’t much wiggle room. We met with [MVEC] and they seemed like they really didn’t have much interest in conceding that service boundary.”
Krogman spoke to the hospital board about the issue before the board announced the possible new hospital location. If the hospital bought more land to put it within MMEU territory and built the electrical hookup spot in MMEU territory, then MMEU could remain the hospital’s energy provider, he explained.
That didn’t happen.
MMEU could have petitioned the IUB to change the boundary line, Krogman said, but “[boundaries] don’t change very easily, only if the two utilities agree on the change or you have to make a pretty strong case to the board to change it.”
Krogman consulted an attorney to evaluate if MMEU could present a strong enough case but was told it wouldn’t be worth the utility’s time or expense, he said.
The hospital came to the same conclusion, according to Coleman.
“We’ve been very happy MMEU. They’ve been very attentive to us for a long time,” Coleman said. “We’re happy with what we think we will get from [MVEC] and sad to be parting ways with MMEU.”
Unknow effect for customers
Jackson County Regional Health Center uses the fifth-most amount of energy of all MMEU’s customers, but losing such a large customer does not mean everyone’s bills will increase, Krogman said.
“I don’t anticipate any noticeable change,” he said. “It’s too early to tell what the monetary impact will be. There are too many unknowns.”
MMEU bases it fees on recouping fixed costs (staff salaries, equipment, etc.) and energy consumption. The utility passes on those costs to its customers.
The hospital’s expected completion date is December 2020. When JCRHC moves operations to the new site, the current site will demand less energy than the hospital historically used.
After the hospital switches to MVEC as a service provider, MMEU’s wholesale costs will decrease because it won’t have to buy as much energy from its provider, WPPI.
Also, the hospital board has not yet decided the future of the current property off West Grove Street, so there may still be some energy usage there. (Coleman said board members will hold a special public meeting Jan. 16 at 1 p.m. at Maquoketa City Hall to discuss future uses. Board members, city and county representatives, the Jackson County Economic Alliance, and Eastern Iowa Intergovernmental Association have been meeting to discuss possibilities for the current building’s future.)
Knowing it would lose a customer, MMEU removed JCRHC’s usage data from its most recent rate study, a professional analysis that helps the board know where to set its rates.
“It showed the need for a very small increase to customers, but we chose to
keep it neutral,” Krogman said. “We didn’t want to make any change because of all the unknowns.”
The hospital’s energy load would have decreased even if the new hospital had been built on the existing site, Krogman and Coleman said. The new facility will be about half the size and operate with new, more efficient equipment, saving about $200,000 annually in total energy consumption, Coleman said. He estimated that the hospital pays tens of thousands of dollars per month in energy charges.
MMEU losing JCRHC as a customer also may in a small way impact the city of Maquoketa’s budget. MMEU pays 2% of its gross revenue to the city each year in the form of a franchise fee, Krogman explained. In 2019, that amounted to $155,930 for the city.