March 2, 2015

Municipal utilities in Indianola, Independence, Montezuma, Waverly invest in transmission line

The Superintendent of Montezuma Municipal Light and Power, Kevin Kudart, receives a check.

Kevin Kudart, superintendent of Montezuma Municipal Light and Power receives a check.

Four municipal power utilities in Iowa are seeing the first benefits from a partnership that allows them to have a stake in transmission lines.

The utilities in Indianola, Independence, Montezuma and Waverly recently received payments from the Central Minnesota Municipal Power Agency (CMMPA) for their share of the 250-mile transmission line from Brookings, South Dakota to Hampton, Minnesota. Waverly Light & Power general manager Darrel Wenzel explains how it works.

“Our utility backs the debt issued by the Central Minnesota Municipal Power Agency. We pledge to have any shortfall in revenues that are possible, but not likely to occur… if for some reason that there is a shortfall, we have pledged to cover proportionate share of that,” Wenzel explains. The line is known as the CAPX Brookings transmission project, and customers using the transmission line pay tariffs for its use. line. “As you use capacity on that line as a community or as I suppose some large users –factories things like that that have special contracts — they pay the actual cost based on that rate, based on their use for any given month,” Wenzel says.

He says it makes sense for Waverly and the other municipal utilities to invest in the transmission line and then get paid when the revenue exceeds its cost. “That’s the theory is that you are going to have expenses regardless, and if you can have ownership equal to that then your local ratepayers are not just being renters of somebody else’s system, you are collecting rent also,” Wenzel says. Indianola recently received a check for more than $12,800 dollars, Independence $9,000, and Montezuma and Waverly each got $3,000.

Wenzel says it took this type of project to allow the smaller cities to get involved in transmission ownership. “The CMPA’s project was groundbreaking at the federal level I believe for the cost recoveries needed for municipalities to affordable do that together,” Wenzel says. “Your larger municipalities have been transmission owners, but for those the size of those in the CMPA’s project, it was just not feasible.”

He says it was not easy for the smaller utilities to break into ownership. “We just weren’t invited to the table, because it’s a lucrative business that for-profit transmission owners would like to have on their own in most cases,” Wenzel explains. The Superintendent of Montezuma Municipal Light and Power, Kevin Kudart, says it has been a good investment for his community.

“We’re always looking for investments in transmission to offset our transmission costs,” Kudart says. Kudart agrees with Wenzel that it has not been easy to find such opportunities. “It’s hard for small municipal to get invested in this, the larger investors don’t like to share real well sometimes,” Kudart says. The recent payments were for the utilities’ return for the year 2014 and will continue for the 40 year life of the CAP-X Brookings line.

Minnesota municipal utilities in Blue Earth, Elk River, Fairfax, Granite Falls, Janesville, Kenyon, Mountain Lake, Sleepy Eye, Springfield, Windom, and Willmar are also investors in the project.


AAA Iowa urges motorists to resist urge to fill up before gas tax increase

Gas-pumpThere’s fear of potential “panic buying” of gasoline in Iowa over the next few days as pump prices will rise a dime a gallon on Sunday, thanks to legislators and the governor passing an increase in the state fuel tax.

Rose White, with AAA-Iowa, says there may be a boost in sales at gas stations and convenience stores through Saturday, especially in metro areas along state borders like Sioux City, Omaha/Council Bluffs and the Quad Cities.

“Certainly with the change, there may be some impacted, specifically along the Missouri border as that difference will be almost 15 cents a gallon,” White says. “The other states however, the variances will be minimal.” With the higher tax, Iowa’s gas prices will be about three cents higher than Minnesota, a penny higher than Illinois, six cents higher than Nebraska, and a dime a gallon higher than South Dakota. Wisconsin is the only border state where gas prices will remain higher that Iowa, by about a penny.

The increase of ten cents a gallon may not seem like much, but it can add up. Still, White says to resist the urge to dash out and fill your tank. “We do encourage motorists not to participate in any panic buying just to save ten cents a gallon,” White says. “Instead, we just encourage you to not deviate from your normal fuel purchasing. If a lot of people do go out and buy fuel this weekend, that could actually create some shortages and we certainly do not want that to happen.”

Some gas station owners in Iowa border cities may face a financial squeeze due to the new pricing structure. “Many of them may have to lower their profit margins just to stay competitive, especially along that Missouri route,” White says.

The 15-cent difference between Iowa and Missouri is nothing compared to disparities elsewhere. The gas in New Jersey, for example, is 36-cents lower than neighboring Pennsylvania. This is the first hike in Iowa’s gas tax since 1989, a move that’s expected to generate 215-million dollars a year to benefit road and bridge construction and repairs.


Judge orders Moulton contractor to pay restitution to customers

A Polk County judge ordered an Appanoose County contractor Wednesday to pay more than $100,000 in restitution following complaints from customers. Geoff Greenwood, a spokesman with the Iowa Attorney General’s office, says Thirty-nine-year-old Jeremey Lawson of Moulton operated Moulton and Bloomfield-based businesses.

“A lot of these complaints have been the same types of complaints — they say Mr. Lawson took money from them, whether it was a substantial payment, or a small payment, and then didn’t complete the work. That’s the majority of the complaints that we’ve heard,” Greenwood says. The Consumer Protection Division investigated some 40 complaints against Lawson.

Greenwood says others reported their project was only partially finished.”Or, he finished a project and it was not a suitable project, the work was substandard, it was not acceptable,” Greenwood says. “So the complaints have been piling up and have risen to the top of our Consumer Protection Division in terms of contractor enforcement.” The restitution was just part of the judgment reached with Lawson.

“It also sets forth some fairly stringent conditions if he continues with contracting or repair work,” according to Greenwood.

Lawson use business names that include Sturdy Buildings, Strong Structures, Lawson Building Components and J&C Buildings. Lawson denied the allegations but agreed to the consent judgment to settle the matter with the Consumer Protection Division.

Greenwood says you can save yourself some hassle by doing some background work before hiring a contractor. “Really important is to check up front on that contractor….do some web searching. You can check with the state Workforce Development labor division to see if they are registered — and they need to be registered,” according to Greenwood. “You can also check court records at Iowa Courts Online to see if there are civil judgments or any kind of criminal convictions against someone.”

He says one good way to find a contractor is to get a recommendation from somebody you know. “Someone you know and trust, someone who has had a good experience with someone. You can also check the references the contractor provides and ask that person ‘where you really satisfied, what did they do, how long did it take, what were the financial arrangements.'”

He says you should ask for a copy of the contractor’s liability insurance certificate, and be wary of a person or company not listed in the local telephone directory.


Charles City company cleared to use drones for ag projects

The HexCopter unmanned aerial vehicle. or drone.

The HexCopter unmanned aerial vehicle. or drone.

A north-central Iowa company is the first in the Midwest and one of only three nationwide to be granted a federal exemption to use drones for precision agriculture projects.

Charles City-based Viafield will fly mapping drones, also known as UAVs or unmanned aerial vehicles. Viafield spokesman Chris Menke says the drones can make photographic measurements of fields, determine the health of crops and look for pests during the growing season.

“Right now you have to walk through the field to see how the plants are growing or they could use satellite imagery, which could take up to a week to get,” Menke says. He says using these drones, they can fly a field in 20 minutes and immediately download images and piece together a map in minutes or a day depending on the size of the field. Menke says the use of a drone can help a farmer make quicker decisions on what needs to be done in the field.

He says they can see if a section of a field needs more fertilizer or is too wet. He says speed is the key to pinpoint problems for farmers to correct. Menke says other companies may tout they can use drones to scout fields but he says Viafield is the first in the Midwest that’s authorized.

“We’re the first agricultural company that I know of that has this type of service and is able to provide these services legally, so we’re making sure we do everything right,” according to Menke.

Viafield is currently cleared to use the fixed-wing style UAV but has also petitioned the FAA to use a quadcopter style of drone.

(Reporting by Jesse Stewart, KGLO, Mason City)


State approves funds for businesses in Clear Lake and 5 other cities

IEDA-signThe San Francisco based company that’s building a massive warehouse and distribution center in north-central Iowa will be getting $4.2 million in tax credits and a $170,000 forgivable loan from the State of Iowa.

The identity of the company had been kept a secret until Thursday and this morning, the Iowa Economic Development Authority board awarded McKesson Corporation the state incentives. McKesson is a pharmaceutical drug distributor and the company’s $65 million project in Clear Lake is expected to create 164 jobs.

Chad Schreck, with the North Iowa Corridor Economic Development Corporation, says closing the deal is “huge” for Cerro Gordo County – which has experienced a decline in population.

“Anytime you can bring 160 new jobs to an area, that is definitely a strong encouragement to bring new people into a community. That’s the number one thing, but obviously the investment and fiscal impact is huge,” Schreck said. “Ideally, it will bring in new people. We have a low unemployment rate of about 4.4-percent, so there are definitely some people there (to fill the jobs), but we’ll need to bring new people in as well.”

McKesson is ranked 15th on the Fortune 100 list. For over a year, the firm had remained anonymous – even though the company was seeking millions of dollars in loans and rebates from the state, Cerro Gordo County and the City of Clear Lake. Schreck believes, despite the secrecy, most residents supported those officials who were working to lure the company to the area.

“The leadership asked them to trust them and said ‘this is the only way this is going to get done and if we don’t live up to this end of the agreement, they’re gone.’ It’s pretty hard to look people in the eye and say we just lost 164 jobs and $65 million in investment in our community over ultimately what I think was a pretty small matter if you look at the information they did know,” Schreck said.

For the past year, about the only information released about the project was that it involved a Fortune 100 company. The 340,000-square-foot warehouse under construction in Clear Lake should be operational by May 2016. In addition to the project in Clear Lake, the IEDA board today awarded financial assistance and tax benefits to seven other companies around the state planning expansion projects. Those projects — in Dubuque, Burlington, Ankeny, Sioux City, Ottumwa — are expected to create 553 new jobs.

Here’s more information:


John Deere reports drop in first quarter earnings

Deere logoIowa’s largest manufacturing employer is reporting first quarter earnings today that reflect a significant drop from a year ago. Quad Cities-based Deere and Company shows net income for the quarter at nearly $387 million, compared to $681 million in the first quarter last year. That’s a slide of $294 million.

Deere spokesman Ken Golden says the news is not a surprise. “We had projected the global farm economy was going to be sluggish this year, but we’re also coming off of some really high, record years, so you have to put that in perspective,” Golden says. “The report we put out today is all about the sluggish farm economy but also our diverse lineup, because construction and forestry and financial services had higher profits.” Worldwide net sales and revenues for the first quarter fell 17 percent, to around $6.4 billion, down from $7.6 billion last year.

The report also shows net sales of the equipment operations were down $1.3 million. “Yes, we’re down from a year ago but this is about where we thought we would be,” Golden says. “We had projected going into the year that it was going to be a soft year, especially in large agricultural machinery which is really sort of a sweet spot for John Deere.”

Last month, Deere announced indefinite layoffs at five locations that build ag equipment. That includes roughly 565 workers at three locations in Waterloo, 300 at the Des Moines Works in Ankeny and 45 at the Harvester Works in East Moline, Illinois. About 500 employees at Deere’s Seeding and Cylinder facility in Moline, Illinois, also will go on an extended shutdown to adjust inventory.

Golden was asked if more job cuts loom. “We have taken the action that we needed to take based on what we knew,” Golden says. “We knew that industry sales were going to be softer, especially in agriculture. We have taken those job actions and we are hopeful that more are not going to be needed.” Besides Iowa and the Midwest, farmers in many parts of the world have struggled with drought and other severe weather issues in recent years, while last year, prices for many key U.S. commodities took a nose-dive.

Golden says it was expected that the sale of ag equipment, like big tractors and combines, would take a hit. “If you compare large ag sales from just two years ago, we’re down 50%,” Golden says. “The good news is, we’re a much better company and net income is higher than it would have been in those types of decreases in the past.” Looking ahead, Deere equipment sales are projected to drop 17-percent for fiscal 2015 and be down about 19-percent for the second quarter compared with year-ago periods.

A Deere news release says, “…even with a continued pullback in the agricultural sector, John Deere expects to remain solidly profitable in 2015. Our forecast reflects a level of results much better than we’ve experienced in previous downturns. This illustrates our success establishing a wider range of revenue sources and a more durable business model.”


Pharmaceutical company to build distribution center in Clear Lake

mckesson-logoAfter months of secrecy, the name of the Fortune 100 company that’s building a huge distribution center in north-central Iowa is finally being unveiled.

The announcement was made earlier today during a news conference by Clear Lake Mayor Nelson Crabb. “One of the top companies in the United States has taken notice and is poised to put down roots right here,” Mayor Crabb says.

Pharmaceutical giant McKesson Corporation will locate in Clear Lake. The $65 million project includes hiring 164 workers to run the giant warehouse of 340,000 square feet. Scott Flory, Clear Lake’s city administrator, says the California-based company will be making a solid investment in Iowa. “McKesson is headquartered in San Francisco and has about 85,000 employees,” Flory says. “It’s one of the oldest companies in the United States, founded in 1883. As of 2014, it ranks as #15 on the Fortune 500 list.”

He says McKesson is one of the world’s largest pharmaceutical companies. “McKesson is a leader in pharmaceutical distribution in the United States and Canada,” Flory says. “One third of all pharmaceuticals used in North America are delivered by McKesson Corporation.” He says state leaders were also a big part of the process.

“The city does want to express its appreciation for the support that we have received from the State of Iowa for the project up to this point,” Flory says. “We’re hopeful that the state will consider the application by McKesson for our project favorably at tomorrow’s board meeting.” He’s referring to the Iowa Economic Development Authority which meets at 10 A.M. Friday in Des Moines. McKesson Corporation is on the agenda for a financial assistance award.

According to the McKesson website, the company has more than $137.6 billion in annual revenue, specializing in vital medicines, medical supplies and health care information technology solutions.

(Reporting by Jesse Stewart, KGLO, Mason City)