Alliant Energy Corp. said Tuesday it will sell its electric and natural gas operations in southern Minnesota to a group of electric cooperatives and the state's third largest natural-gas company.
The utility, based in Madison, Wis., valued the deal at $128 million, but closing costs will likely make it higher, officials said. The transactions require state and federal regulatory approvals, and probably will not close until at least 2014.
In the larger of the two transactions, Alliant sold its electric business serving 43,000 customers to 12 electric cooperatives that will divide up the service territory, absorbing customers into adjacent co-ops. The largest piece of Alliant's territory — 15,000 electric customers in Albert Lea — will become part of the adjacent Freeborn-Mower Co-op, tripling its size.
Alliant's natural-gas business serving 10,600 customers in Albert Lea and other areas will be sold to Rosemount-based Minnesota Energy Resources Corp., a unit of Chicago-based Integrys Energy Group.
Brian Krambeer, CEO of Tri-County Electric Co-op based in Rushford, said 12 local co-ops formed the Southern Minnesota Energy Cooperative a year ago and approached Alliant about acquiring its electric business serving about 60 small communities in the region.
"It seemed to be a natural fit," said Krambeer, who is president of the 12-member cooperative group. "Our footprint matched their footprint."
The co-ops also agreed to purchase wholesale power from Alliant for 10 years.
They valued their share of the deal at $125 million, including closing costs. Krambeer said it will be financed by the Cooperative Financial Corp., a cooperative-owned lender, with each co-op responsible for a share of the debt.
Electric customers would become co-op members, eligible to vote in and run for election to co-op boards and to receive capital credits, or earnings. Rates no longer would be regulated by the state Public Utilities Commission. Minnesota law assumes that co-ops can fairly set their rates because their boards are elected by members.
Gas customers' rates still would be set by the PUC because the new owner is an investor-owned utility subject to regulation.