W I L L M A R
The Benefits of a Municipally Owned Utility
EXECUTIVE SUMMARY
The Willmar Municipal Utilities (WMU) Municipal Power Advantage® (MPA) report outlines the benefits of operating a municipally owned electric utility. The electric utility provides customer benefits and supports the community in ways beyond providing reliable electricity. Some benefits have positive financial impacts while others, less easily measured, still add value to the community.
The WMU business model exemplifies public power benefits that demonstrate the value of WMU as an outstanding asset to the community. These benefits include:
MORE AFFORDABLE: Customers of WMU enjoy electric rates up to 19% lower than the average rates of rural electric cooperatives (RECs) and investor-owned utilities (IOUs), depending on their customer class. This cost advantage is due to lower wholesale power costs, tax-exempt financing, and the utility’s not-for-profit status, which is reinvested into the local system.
In 2023, the WMU Electric Division transferred over $2.9 million, or 8.4% of electric revenues, to the City of Willmar’s general fund. This cash transfer helped pay for City services typically funded through sales and property taxes and other fees. In addition, WMU donates labor to other City departments and supports community festivals and events.
MORE RELIABLE: WMU consistently provides a high level of reliability to its customers. Based on nationally recognized measurements, WMU’s customers can expect power 99.995% of the time. In recognition of Willmar’s reliable electric service, the American Public Power Association (APPA) awarded WMU the Certificate of Excellence in Reliability in 2023 for its exceptional reliability from 2018-2022.
COMMUNITY AND ECONOMIC IMPACT: WMU offers economic development discounted rates for qualifying loads, provides energy efficiency rebates, and extends utility services for potential development. In addition, the dollar value of utility staff salaries and purchases from local businesses are recirculated multiple times throughout Willmar, which creates a healthy local economy.
LOCAL CONTROL AND SERVICE: WMU is a community-owned utility governed by a local utility commission, and the customers are its owners. Additionally, WMU employs local citizens to work at the utility and operate the system. The staff serve customers that are also family, friends and neighbors.
Willmar is part of a mutual-aid network of public power communities in Minnesota and nationwide. If a major storm causes widespread power outages, these communities work together to restore power quickly and efficiently.
DIVERSE POWER SUPPLY PORTFOLIO
MORE AFFORDABLE
MORE RELIABLE
COMMUNITY AND ECONOMIC IMPACT
LOCAL CONTROL AND SERVICE
1891
WMU ESTABLISHED
As a public power community, WMU supplies electricity to residents and businesses in Willmar. The utility prides itself on providing reliable electric service with affordable rates, local control and exceptional customer service. WMU also provides water to homes and businesses in the community.
Mission Statement: As a community-owned utility, WMU will provide safe, reliable and quality utility services at competitive rates for their customers.
WMU is one of approximately 2,000 community-owned electric utilities in the U.S. that serve more than 53 million Americans.
From small towns to large cities, one in seven customers across the nation are served by public power.
21,960
WILLMAR POPULATION
10,220
ELECTRIC CUSTOMERS
$ 27 M ELECTRIC REVENUE
269 M
kWh SOLD IN 2023
1 in 7
CUSTOMERS IN THE U.S. ARE SERVED BY PUBLIC POWER
In a community served by a municipally owned utility, customers are the owners who have local representation. WMU is locally governed by a seven-member board of WMU customers known as the Willmar Municipal Utilities Commission. These members are appointed by the Mayor. The Commission has full control of operation and management of the utilities subject to veto powers by the City Council.
WMU’S POWER SUPPLY
WMU’s power supply is provided by Western Area Power Administration (WAPA) and supplemental electric providers: Missouri River Energy Services (MRES), Wisconsin Public Power Inc. (WPPI) and Great River Energy (GRE). WMU has a power supply contract with WAPA that extends until the end of 2050. The utility also has a long-term, supplemental power supply contract with MRES that is secured through 2056.
WAPA supplied WMU with about 12% of the utility’s energy requirements in 2023.
A DIVERSE POWER SUPPLY
The electricity WMU purchases from WAPA is almost exclusively clean, renewable hydropower from dams on the Missouri River. The supplemental power supplied by MRES helps reduce risk through diversity in fuel source and geographic location and focuses on environmental stewardship by developing renewable and carbon-free resources.
WMU goes above and beyond the standard MRES wholesale power mix by purchasing Renewable Energy Certificates (RECs) procured by MRES on its behalf. RECs are proof that the electricity was generated by qualifying clean and renewable facilities such as wind and solar farms and hydropower, which is then fed into the electric grid.
These REC purchases offset the carbon emissions of electricity that comes from fossil fuels — providing clean, carbon-free electricity at affordable prices.
Our diverse mix of power supply resources results in reliable, affordable and environmentally friendly electric service for Willmar’s citizens and businesses.
WMU actively participates in the Bright Energy Solutions® (BES) energyefficiency program offered by MRES, which offers cash rebates for residential and commercial customers when they purchase new, energy-efficient equipment. When this equipment is installed, WMU reduces the wholesale demand and energy purchases from MRES, saving customers money.
From 2019 through 2023, WMU saved 5.9 million kilowatt-hours (kWh), which includes 5% distribution line losses, and more than 1,231 kilowatts (kW) in cumulative on-peak demand savings.
Based on the Environmental Protection Agency’s greenhouse gas calculator, this is the equivalent of the electricity used in about 800 homes per year.
WMU CUSTOMERS RECEIVED ABOUT $ 372,000 * THROUGH REBATES OFFERED BY BES.
*2019 -2023
MORE AFFORDABLE
WHOLESALE POWER SAVINGS
WMU and its customers pay lower wholesale power supply and transmission costs compared to the average cost per kWh of other regional wholesale suppliers.
As shown below, WMU’s blended power supply and transmission cost in 2023 was 6.2 cents per kWh (blue bar). The average wholesale composite rate of 20 area power suppliers was 7.6 cents per kWh (red bar), which is about 23% higher than WMU’s cost, or a difference of 1.4 cents per kWh.
WHOLESALE POWER SAVINGS
WMU purchased over 275 million kWh in 2023 from WAPA and supplemental electric providers: MRES, WPPI and GRE. The utility saved about $3.9 million in wholesale power costs. This cost savings reflects the WAPA allocation and their supplemental power contracts, which is calculated by multiplying the total purchased kWh (275,657,000) by the savings rate of 1.4 cents per kWh.
Because WMU is a not-for-profit utility, it passes these wholesale savings on to residential and business customers.
ADDITIONAL ONE-TIME BENEFIT
In 2020, the MRES Board of Directors approved a one-time refund on 10% of its members’ power supply bills for the period from August 2019 to July 2020, with WMU receiving nearly $317,000 from the refund. Additionally, MRES secured a settlement from the Federal Energy Regulatory Commission (FERC), which gave WMU over $141,000 as part of a transmission refund. The combined refunds of over $458,000 benefitted all customers in the community.
CUSTOMER SAVINGS
A WMU residential customer using 700 kWh per month will save an average of $21 monthly on their electric bill. Depending on usage, business savings can range from $30 monthly to hundreds of dollars for large manufacturers.
TRANSFER TO THE CITY’S GENERAL FUND
WMU transferred an average of nearly 8% of its electric operating revenue to the City from 2020-2023 as a pass-through franchise fee known as payment in lieu of taxes. This average transfer totaled around $2.6 million annually. APPA’s national transfer average is about 6%, and the national average for IOU’s ranges from 3% to 5% (via franchise fees). This additional 3% to 5% transfer difference is money that stays in the Willmar community.
The cost of replacing the transfer from the electric utility to the City would likely result in an increase of other local taxes such as sales and property taxes, or an increase in service fees.
ACCESS TO TAX-EXEMPT FINANCING
WMU can access tax-exempt financing, which typically carries reduced interest rates. This results in lower borrowing costs, depending on the credit quality of the borrowing utility. Tax-exempt bonds issued by utilities usually finance large infrastructure or generation projects that increase reliability and safety, among other benefits.
WMU AWARDED APPA’S 2023 CERTIFICATE OF EXCELLENCE IN RELIABILITY
MORE RELIABLE
A utility customer’s number one priority is reliability, and WMU has a strong record of maintaining an electric system that operates continuously and efficiently. Based on nationally recognized measurements, WMU’s customers can expect power 99.995% of the time. In recognition of Willmar’s reliable electric service, APPA awarded WMU the 2023 Excellence in Reliability Certificate for its exceptional outage metrics from 2018-2022.
What does this mean for customers? It means less than half an hour of outages annually.
AVERAGE OUTAGE TIME FOR ELECTRICITY CUSTOMERS PER YEAR*
*WITHOUT MAJOR EVENTS 2022
U.S. Energy Information Administration Annual Electric Power Industry Report
WMU crews maintain the utility’s distribution system to improve efficiency, enhance safety, and increase the lifespan of WMU equipment. Some of the annual maintenance tasks include:
u Annual oil sampling and thermal imaging
u Monthly substation inspections
u Underground cable replacement
u 24/7 alarm monitoring
u Vegetation management
u Transformer loading analysis
UTILITY NOTEWORTHY DISTINCTIONS
WMU is designated a Reliable Public Power Provider (RP showcase the operational excellence of the utility.
APPA’s RP3 program is based on industry-recognized leading practices in four critical disciplines:
u Reliability
u Safety
u Workforce Development
u System Improvement
An RP3 designation signifies a utility’s dedication to operating an efficient, safe and reliable distribution system. Receiving an RP demonstrates to community leaders, governing board members, suppliers and service providers a utility’s commitment to its employees, customers and community. Currently, 271 of the nation’s more than 2,000 public power utilities hold an RP3 designation.
In the unlikely event of an outage, WMU is prepared to communicate with its customers through:
COMMUNITY AND ECONOMIC IMPACT
WMU welcomes new customers to the community and helps existing customers grow or expand their businesses. WMU works hard to contribute to the vital community amenities and services that make Willmar a great place to live or own a business.
For example, WMU staff compensation supports the local economy by driving local spending and investment. On average, the electric utility salaries total about $2.8 million annually, and WMU spends over $1 million on local supplies, marketing items, equipment and maintenance. These salaries and purchases from local businesses are recirculated multiple times throughout the community.
WMU plays a vital role in Willmar’s economy by attracting, retaining and supporting businesses. Here are some examples of WMU community and economic development efforts:
u Established the Renaissance Zone Economic Discount – WMU partners with the City through the Planning and Development Commission to provide incentives for purchasing, leasing, or making improvements to real property in downtown Willmar and along the US HWY 12 Corridor. Incentives may include free or reduced fees, forgivable loans, TIF or Tax Abatement and more.
u Participates in the MRES Economic Development Rate Discount Program.
LOCAL CONTROL AND SERVICE
As a public power electric utility, WMU is committed to serving the local community. When citizens have concerns, they can communicate with WMU’s Board Commissioners or WMU’s staff who live in the community and have Willmar’s best interests at heart. Citizens are welcome and encouraged to attend public meetings. In addition, WMU offers local customer service with a payment office in Willmar. WMU employs local people who know and listen to the customers. They take pride in their work and know the customers as family, friends and neighbors. Nationally, WMU’s policymakers and staff represent Willmar by attending APPA’s annual Legislative Rally in Washington, D.C.
Here are some ways that WMU provides help to the community:
CUSTOMERS
MORE SAY IN POLICIES & PRACTICES
u Partnered with United Community Action Partnership in distributing $10,000 through the Weatherization Program
u Contributed to the local United Community Action Partnership for emergency energy assistance
u Donated to the local Salvation Army’s HeatShare program to assist low-income seniors, those with disabilities and those facing financial emergencies
u Cost-shared Smart Energy Squad® education kits to fifth-grade students and teachers over the last five years
u Provided labor for Celebrate the Light of the World
u Participated in the ECO Fair Healthy Kids Day
u Contributed labor to the Kandiyohi County Fair Association to assist with fairground updates
u Hosted local high school field trip on water conservation and the drinking water system
u Presented utility career opportunities at Zero Hour, a local high school event
u Participated in the Willmar Fest city celebration block party and parade
u Took part in the Holidaze Parade city celebration
EFFICIENT OPERATIONS AND MUTUAL AID
WMU’s headquarters and operations are located right in the community. WMU staff is familiar with the utility service territory and can identify and quickly correct any problems. Crews can get to the outage site faster because they do not have to drive long distances to start restoring power.
More than 1,100 utilities, including WMU, are linked through a national mutual-aid agreement. Mutual aid means utilities help each other in the event of a major storm or disaster. Knowing that WMU has access to aid in the event of a major incident is one more benefit to the Willmar community.
WMU line crews have assisted disaster-stricken areas in the aftermath of hurricanes, including Sandy (2012) and Ian (2022). When Granite Falls, Minnesota, was hit with devastating winds in 2020, WMU was there to help restore power. When impacted utilities are reimbursed through the Federal Emergency Management Agency (FEMA), they, inturn, reimburse the responding utility. Public power communities work together to benefit the collective good.
PARTNERING WITH MISSOURI RIVER ENERGY SERVICES
BUILDING SOMETHING GOOD TOGETHER
Along with 60 other public power communities, WMU can access the resources and savings of MRES, including a more diverse power supply, transmission, and many other services by being a member of the organization. Shared costs and mutual support make the effort more manageable and cost effective for all MRES members. Other benefits include:
u Economies of scale
u Aligned values and viewpoints to meet future challenges together
u Mutually beneficial services and opt-in services
u Reduced risks
Key services offered by MRES include:
u Power supply and transmission planning
u State and federal legislative advocacy and regulatory compliance
u Communications and marketing
u Energy efficiency and electrification programs
u Load control and metering services
u Rate studies
u Scholarships and school education programs
u Community event sponsorships
u Cybersecurity assessments
u Education and training
u Proactive maintenance services
u Strategic planning and leadership development
DAKOTA
CONCLUSION
This report reinforces the dependability of the local electric system, while outlining additional financial and community benefits gained by the community. As a part of a public power community, WMU’s customers can count on:
u Reliable electric service
u A diverse power supply portfolio
u Affordable prices
u Governance that includes appointed local citizens, who are also customers of WMU
u Local decisions that reflect the community’s values
u Financial contributions and in-kind benefits that support the City and its residents
u Economic development support
u Quick emergency response because crews live in the Willmar community
u Municipal utilities working with local groups for shared success
WMU adds value to the community in ways that can be measured and experienced, and contributes to the health and vitality of Willmar.
