2025 Special Election

Why is this question up to voters?

In recent years, the Mayor and City Council have heard concerns about the cost of natural gas in Waukee compared to neighboring communities. The City Council made some changes that helped a little, but gas rates are still higher than in neighboring cities. The council has also looked at the risks associated with managing a municipal utility, like how fast Waukee is growing, increasingly unpredictable winter weather and changes in the gas market here in the U.S. and around the world.

After extensive review of the long-term viability of the utility and its costs to the City, the Waukee City Council decided to bring the possibility of selling the gas utility to voters.

If more than 50% of voters in the special election vote in favor, the City Council can move forward with selling the gas utility to another utility company. The Council has evaluated proposals to find the best deal for Waukee. If they can’t negotiate a deal that is in the best interest of gas customers, the council can decide not to sell the gas utility. If the voters approve the referendum and City Council approves the terms of a sale, the Iowa Utilities Commission would also need to approve the sale.

What is a gas utility?

A gas utility is a company or agency that sells and delivers natural gas to homes and businesses. Today, the City of Waukee owns the municipal gas utility, so City staff take care of installing and maintaining all the gas lines in Waukee. The City also handles the billing for the natural gas used by local customers. If you have a problem with the natural gas coming to your home or think you have a gas leak, you call the gas utility for help.

What would selling the gas utility mean for my natural gas rates?

If the gas utility is sold, the new utility provider would set the rates that customers pay for natural gas. A larger utility company may offer lower rates because they have a larger customer base. See the sales proposals from potential buyers for more details. Gas rates are subject to approval by the Iowa Utilities Commission which regulates non-governmental utilities and their rates.

If voters pass the measure and authorize Waukee City Council to sell the gas utility, the council intends to move forward with the offer from MidAmerican Energy. Here is a comparison of monthly gas bills for customers based on projections for the City-owned utility and MidAmerican Energy. These charts are based on average natural gas use for a resident in July to represent summer demand and February to represent winter demand. Note that future gas rates may vary based on market prices, which are largely influenced by weather and market production volumes.

What information has the City gathered to prepare for the vote?

The State Code of Iowa outlines these steps for the City to take when considering a sale of the gas utility:

1. Determine fair market value with two separate appraisals.
   Two independent companies assessed the Waukee Municipal gas utility system to estimate the utility’s fair market value. Following the requirements in the State Code, the assigned value is $19,377,500, which is the average of the two appraisal estimates. The sale price may be different than this estimated value. Read the appraisal summaries from HDH Advisors and BCC Advisers. View the associated City Council resolution here.

2. Prepare a list of the utility's property and a statement of financial position.
   The utility has $15.9 million in assets, including approximately 175.26 miles of distribution mains, 14.36 miles of high-pressure distribution mains, 8,366 service lines, 10 district regulator stations and 2 town border stations. It also owns vehicles and equipment to build and maintain service lines. Review the inventory list here.
   
   The Waukee Municipal Gas Utility has a stable financial position. It does not have any debt. As of June 2024, the net position of the gas utility was $24,491,690. Net position is the difference between assets (fixed, cash and receivables) and liabilities. Find more detail in the City’s audit reports for fiscal year 2023 and fiscal year 2024.
   
   
3. Assemble current and projected rate schedules as well as recent and projected revenue statements.
   Rate Schedule:
   This chart shows the last five years of rates for the gas utility and projections for the next five years. The Waukee Municipal Gas Utility has projected an increase to the base service charge and commodity charge for small volume and large volume customers for fiscal year 2025-2026. For the following fiscal years, there are no additional increases projected for those rates. The sales volume adjustment rate is set each month based on the amount of gas the utility buys and the average gas market rate. It factors in the cost of contracted gas, which the utility buys before the winter season, and spot gas, which the utility buys when customers are using more gas than expected for that month. 
   Revenue Statements:
   These tables show the last five years of revenues and expenses for the gas utility as well as estimates for the next five fiscal years. The utility does not have a large profit because it is managed to bring in only enough revenue to cover costs, save for improvements and expand services as the city grows. See the full rate and financial projections here.
   
   
   

4. Consider alternatives to selling the utility. 
   The City considered several options. The City could continue operating the natural gas utility, but customers would likely continue to pay higher rates than a utility with a much larger customer base could offer. The City could hire a third-party company to run the City gas utility, but no companies were interested in operating the utility without ownership, and this arrangement would not lower gas rates for customers. No better alternatives to selling were identified. Read the City Council Resolution here.

5. Post all the information listed in previous steps to this website.
6. Post any offers from prospective purchasers.
   • Alliant Energy/Interstate Power and Light Company: $16 million subject to an adjustment based on the working capital of the Waukee utility
   • Black Hills/Iowa Gas Utility Company, LLC: $17.5 million
   • MidAmerican Energy Company: $18.75 million subject to adjustment for actual net book value plus a 10% premium. If voters in the Special Election approve the measure, Waukee City Council will move forward with this offer.
7. Mail a notice to property owners and utility customers that summarizes all this information.
   View and download a PDF of this mailer here. In addition, notice of the election has been and/or will be shared in the City bulletin within Waukee Living Magazine, the newsletter in utility bills, a dedicated email to gas customers, City of Waukee social media pages and a release to local media outlets. 

Other Common Questions

How does a gas utility determine the cost of gas for residents and businesses?

The Waukee Municipal Gas Utility buys most of its gas on contract. That means it buys a set amount of gas ahead of time based on how much it thinks customers will use. If customers use more gas than planned, the gas utility buys extra gas from the daily market, which is called “spot gas.” The amount of spot gas the utility has to buy changes from day to day and month to month, mostly because of weather.

Weather is a major and unpredictable factor for a gas utility. In warmer winters, people don’t use as much gas, so spot gas is usually cheaper. In years with many days of very low temperatures, people use more gas to keep their homes warm. That higher demand can mean spot gas costs more on daily markets.

What has the City Council done so far to reduce costs for gas customers?

In 2022, the City changed the gas rate structure and changed some policies to make the Waukee Municipal Gas Utility more competitive with rates in nearby cities. These changes helped a little, but Waukee's natural gas rates were still higher on average. The City also looked at hiring a company to run the gas utility while keeping ownership, but no companies were interested in that arrangement.

What happens if voters approve the measure? 

If more than 50% of voters in the special election vote “yes”, the referendum passes. This would give City Council the authority to move forward with selling the Waukee Municipal Gas Utility. Council has said they would move forward with offer from MidAmerican Energy. If City Council cannot get a deal that they feel is good for gas customers, the council can decide not to sell the gas utility.

The sale of a city-owned utility follows specific guidelines from the State of Iowa in code section 388.2A. If the voters approve the referendum and City Council approves the terms of a sale, the Iowa Utilities Commission will review the deal. If the commission approves, the utility’s new owner would likely take over by the end of 2025. Current natural gas customers would get instructions on setting up their account and payments with the new company.

What would the City do with the money from selling the gas utility?

If voters approve selling the utility and the sale is approved by the Iowa Utilities Commission, the Mayor and City Council will decide how to invest the proceeds back into Waukee. They work on strategic planning each year to look carefully at the needs and opportunities for Waukee and would look at where these funds can bring the most benefit to our community. 

What happens if the referendum does not pass?

If the measure is not approved by a simple majority of more than 50%, the City will keep running the Waukee Municipal Gas Utility. The soonest this issue could go back to voters is four years after the March 4, 2025, election.

How will we know the results? 

Dallas County will post unofficial results shortly after the polls close on March 4 on their website. Results will also be posted to the top of this page on March 5 and shared on City social media pages on Facebook, X, Nextdoor, Instagram and LinkedIn. 

What would keeping ownership of the gas utility with the City mean?

City staff would continue building and maintaining gas lines, meters and other infrastructure. Customer service and billing would remain with City Hall and Public Works. City staff are on call to respond to suspected gas leaks at any time. Dollars paid to the utility stay in Waukee, paying for the gas used as well as gas infrastructure rather than going to a larger organization. City staff working on the gas utility would continue to support other departments and city needs.

However, the scale of a City-owned utility is smaller, so it does not have as strong of a buying position as a larger utility. While the City would continue rebate programs for energy efficient gas appliances, the types and amounts of rebates may differ than a larger utility.

History of the Waukee Municipal Gas Utility

The Waukee Municipal Gas Utility was started in 1955 and has been part of the city’s infrastructure for more than 50 years. It is one of 51 municipal gas utilities across the State of Iowa. Waukee is the only municipality in the Des Moines metro area that operates its own gas utility.

Supporting Documents as required by State Code of Iowa

Iowa law requires the City to gather, consider and post certain information prior to submitting a proposal to discontinue a utility and dispose of such utility by sale to the voters of the City. The City has gathered and considered the information required by law as well as public input received over the years.

• Two independent appraisals of fair market value: HDH Advisors and BCC Advisers. 
• Waukee City Council resolution establishing the city utility's fair market value using the average of the two appraisals obtained pursuant to paragraph "a".
• Inventory of the city utility's real and personal property, and a statement of net position or balance sheet of the city utility, including all assets, liabilities, outstanding revenue and general obligations used to finance the city utility system. Net position can be found in fiscal year 2023 and fiscal year 2024.
• Financial information statement of the city utility that includes current and projected rate schedules for the next five fiscal years, as well as the five most recent fiscal year revenue statements, and a projection of the city utility's revenue statements for the next five fiscal years.
• Waukee City Council resolution showing considered alternatives to disposing of the city utility system by sale.
• Offers from prospective purchasers of the city utility system in connection with a proposal to discontinue the city utility and dispose of such utility by sale: MidAmerican Energy Company, Alliant Energy/Interstate Power and Light Company and Black Hills/Iowa Gas Utility Company, LLC, doing business as Black Hills Energy.
• Mailed notice to rate payers of the proposal to dispose of the city utility by sale, a summary of the proposal, a summary of the information described in subparagraphs (1) and (2), and instructions for locating the information described in subparagraphs (1) and (2) on the governing body's internet site. View and download a PDF of this mailer here.