The Benefits of a Municipally Owned Utility
EXECUTIVE SUMMARY
The Municipal Power Advantage® report outlines the many benefits of operating a municipally owned electric utility. These benefits go well beyond keeping the lights on — some deliver measurable financial impacts, while others provide community value that’s harder to quantify but equally important.
For the City of Vermillion (city), its electric utility is more than just an energy provider — it’s a vital community asset. In fact, thanks to its public power business model, Vermillion Light & Power (VLP) can deliver numerous and meaningful benefits to the customers it serves, including:
AFFORDABILITY: Residential electric customers served by VLP enjoy rates up to 30% lower than the average rates of other regional rural electric cooperatives (RECs) and investor-owned utilities (IOUs). Additionally, VLP’s commercial customers benefit from electric rates up to 23% lower than the regional average, depending on their customer class. These rate advantages are due to lower wholesale power costs, tax-exempt financing and the utility’s not-for-profit status, which empowers VLP to reinvest in the local electric system and the community.
RELIABILITY: VLP consistently provides reliable power to its customers by proactively maintaining its operating and distribution systems and through continually investing in local infrastructure and advanced technology solutions. Based on nationally recognized measurements and VLP’s outage data from the past few years, VLP customers can expect power 99.99% of the time.
LOCAL CONTROL AND SERVICE: VLP is community-owned and governed by the City Council. In other words, the customers are its owners and have a direct say in utility decision-making through city elections and open public meetings. Additionally, the city employs a local workforce who care deeply about their community and serve family, friends and neighbors every day.
ECONOMIC AND COMMUNITY IMPACT: The city offers discounted rates for qualifying loads, provides energy efficiency rebates, and extends utility services to attract and retain business. From 2021 to 2025, VLP contributed an average of $865,000 per year as transfer payments to the city’s general fund. Additionally, a separate transfer of $425,000 in 2021 was advanced to the city for street lighting to support the Downtown Vermillion Streetscape Project.
Over these five years, VLP transferred a total of more than $4.75 million to the city, which amounts to about 11.5% of its annual operating revenues for the same period. These transfers reflect the utility’s ongoing investment in the community, helping avoid higher sales and property taxes, service fees or additional bonding efforts — costs that would likely increase if even a portion of these payments were replaced.
In addition, the city’s spending — through employee salaries and purchases from local businesses — helps keep money recirculating in Vermillion. Each dollar spent at local businesses supports jobs, strengthens the community and multiplies in value as it moves through the local economy.
LOCAL CONTROL AND SERVICE
ECONOMIC AND COMMUNITY IMPACT
INTRODUCTION
The city supplies power to residents and businesses in Vermillion through its municipal electric utility, VLP. As a public power utility, VLP prides itself on providing reliable electric service with affordable rates, local control and exceptional customer service. In addition to electricity, the city also provides water, wastewater and recycling services to homes and businesses in the community.
VERMILLION ESTABLISHED
1859 ELECTRIC METERS
VLP is one of approximately 2,000 community-owned electric utilities in the U.S. Together, they serve more than 55 million Americans.
11,695 kWh SOLD IN 2025 77.7 M 1915
UTILITY ESTABLISHED
VERMILLION POPULATION
5,203
From SMALL TOWNS to LARGE CITIES
1 in 7
CUSTOMERS IN THE U.S. ARE SERVED BY PUBLIC POWER
In a community served by a municipal utility, customers are the owners and have a voice in how the utility is operated. VLP is governed by the Vermillion City Council, which is comprised of local elected officials — eight council members and the mayor. Acting together, the City Council enacts policy and governs issues relating to the city and its departments, including VLP.
POWER SUPPLY
The city is committed to using renewable and carbon-free resources while maintaining reliable, cost-effective electricity for the community. VLP’s power supply is provided by Western Area Power Administration (WAPA) and Missouri River Energy Services (MRES). To that end, VLP has a power supply contract with WAPA through 2050 and a supplemental power supply contract with MRES that is secured through 2056.
A DIVERSE POWER SUPPLY
In 2025, WAPA supplied 54% of Vermillion’s energy needs with clean, reliable and renewable hydropower from dams on the Missouri River. The remaining 46% of the city’s energy needs were provided by MRES, which has intentionally and strategically developed a generation portfolio that reduces risk through diversity — both in fuel sources and geographic locations. MRES also focuses on environmental stewardship by developing renewable and carbon-free generation resources.
The diverse mix of power supply resources results in reliable, affordable and environmentally sensitive electric service for Vermillion’s residents and businesses.
WAPA Federal Hydroelectric
Red Rock Hydroelectric Project
Wind
Diesel (Excludes Municipal Generation)
Solar Nuclear Coal Natural Gas
Solar (Under Development)
This chart does not represent environmental attributes associated with the power supply mix, and no environmental claim is made by this chart.
*Western Area Power Administration (WAPA) **Red Rock Hydroelectric Project (RRHP)
VERMILLION′S POWER SUPPLY MIX
VLP actively participates in the Bright Energy Solutions® (BES) energyefficiency program offered by MRES, which provides cash rebates to residential and commercial customers who purchase new energy-efficient equipment. When this equipment is installed, it helps VLP reduce the wholesale demand and energy purchases from MRES, ultimately saving customers money.
From 2008 through 2025, VLP saved nearly 10.94 million kWh, including 3.2% distribution line losses, and over 2,544 kilowatts (kW) in cumulative on-peak demand savings.
Based on the Environmental Protection Agency’s greenhouse gas calculator, this is the equivalent of 9,386 metric tons of carbon dioxide (CO2) or the electricity used in more than 1,719 homes per year.
Data source: https://www.epa.gov/energy/ greenhouse-gas-equivalencies-calculator
VERMILLION CUSTOMERS HAVE RECEIVED
$ 952,470 IN BES REBATES
AFFORDABILITY
WHOLESALE POWER SAVINGS
VLP pays lower wholesale power supply and transmission costs compared to the average price per kilowatt-hour (kWh) of other regional wholesale suppliers.
As shown in the chart below, VLP’s blended power supply and transmission cost in 2025 was the lowest in the region at just 5.2 cents per kWh (red bar). In comparison, the average wholesale composite rate for 20 area power suppliers was 7.7 cents per kWh (yellow bar), which is 2.5 cents higher or about 48% more than VLP’s blended wholesale rate.
In 2025, VLP purchased nearly 77.7 million kWh from WAPA and MRES. As a result, the utility saved more than $1.94 million in power costs compared to the area’s wholesale average. This cost savings reflects the WAPA allocation and purchases from MRES, calculated by multiplying the total purchased kWh (77.7 million) by the 2.5-cent savings rate.
These significant savings reflect the direct financial benefits VLP receives from its WAPA allocation, which accounts for more than half of Vermillion’s power, and low-cost supplemental power purchases from MRES. Because Vermillion operates its own not-for-profit electric utility, lower wholesale electric costs enable VLP to maintain low customer rates and, in turn, help fund necessary community projects and initiatives.
ADDITIONAL ONE-TIME BENEFITS
In 2020, the MRES board of directors approved a one-time refund of 10% of its members’ power supply bills from August 2019 to July 2020. Vermillion received about $165,000 from the refund. In 2021, MRES secured a settlement from the Federal Energy Regulatory Commission, which gave VLP more than $296,000 as part of a transmission refund. Combined, the refunds totaled upwards of $461,000 that benefited all utility customers in the community.
CUSTOMER SAVINGS
In 2026, residential customers using an average of 650 kWh per month will save an estimated $31.45 per month on their electric bills compared to regional REC and IOU customers. Small commercial customers using an average of 1,200 kWh per month will save over $40 monthly, and larger commercial or industrial users, such as Polaris, will save almost $4,000 a month on their electric bills. When combined with high reliability stats, these cost savings are also key economic development tools that Vermillion has used to not only retain but also attract new business customers.
TRANSFER TO THE CITY’S GENERAL FUND
On average, VLP contributed more than $865,000 per year of its electric operating revenue as transfer payments to the city’s general fund from 2021 to 2025. These dollars helped fund essential municipal services, including the city’s police, fire and street departments, as well as the Edith B. Siegrist Vermillion Public Library. Additionally, a separate transfer of $425,000 in 2021 was advanced to the city for street lighting to support the Downtown Vermillion Streetscape Project.
When combined, the total value of VLP’s transfer payments during this five-year period was more than $4.75 million, an annual average of about 11.5% of VLP’s annual electric operating revenue.
These transfers reflect the utility’s ongoing investment in the community, helping avoid higher sales and property taxes, service fees or additional bonding efforts — costs that would likely increase if even a portion of these payments were replaced.
ACCESS TO TAX-EXEMPT FINANCING
As a public power utility, VLP can access tax-exempt financing, which typically carries lower interest rates that lead to reduced borrowing costs. Utilities often issue tax-exempt bonds to finance generation or large infrastructure projects — investments that improve local reliability, safety and other community benefits.
RELIABILITY
VLP has a strong record of maintaining an electric system that operates continuously and efficiently. In fact, VLP is among the most reliable in the industry, providing customers with shorter power outages compared to those served by RECs and IOUs. Based on nationally recognized reliability data, VLP customers can expect power more than 99.99% of the time, translating to less than 29 minutes of total outages per year, excluding major events such as storms or floods.
Simply stated, local crews mean faster response times and shorter outages, and city crews are committed to high safety standards for themselves and their family, friends and neighbors. Plus, VLP crews routinely maintain the distribution system to improve efficiency, enhance safety and increase the lifespan of equipment.
Examples of Vermillion’s recent infrastructure upgrades and routine maintenance tasks that enhance the local electric system’s reliability:
u Weekly and monthly substation maintenance and readings through the MRES proactive maintenance program, which includes thermal imaging, vibration analysis and oil testing
u Additional proactive maintenance includes annual battery testing, as well as test of the local distribution system’s three-phase transformers and switches
29 MINUTES
133 MINUTES
221 MINUTES
https://www.publicpower.org/reliability-data Energy Information Administration, Form-861
u Commercial meter installation testing and annual visual checks of transformers, junction boxes and pedestals
u Maintenance of the city-owned 25.57 miles of 115-kilovolt (kV) dual-transmission line
u Routine testing of 115-kV breakers, substation distribution breakers and relays
u Replacement of main substation battery bank in 2024
u Conversion of overhead circuits to underground in 2013, resulting in 100% city-owned underground distribution system
u Continuous infrastructure monitoring through SCADA and mapping, replacing aging infrastructure as needed
u SPI Utility Solutions’ cold-jet dry-ice cleaning machine efficiently and safely cleans dirty switches, transformers, breakers and additional equipment — all while lines stay energized — to maintain efficiency and increase reliability
u New VLP building under construction to enhance operations and ensure future customer needs are met
Vermillion invests in advanced technology solutions, and has successfully deployed two city-owned grid-modernization programs that help reduce risk, protect revenue and increase reliability and security in the rapidly changing electric industry:
u Advanced Metering Infrastructure (AMI):
w Greater meter reading accuracy and efficiency
w Faster outage notification and restoration times
w Advanced power quality monitoring
u Coordinated Demand Response (CDR):
w Reduced demand charges, keeping customer rates low
w Managed load control as a cost-effective alternative to building new generation resources
The city also utilizes two additional technology solutions supported by MRES:
u Customer information/billing system (CIS):
w Preferred pricing for enterprise resource planning software with beneficial implementation
w Streamlines billing, service orders and customer data in one efficient system
w Real-time access to customer accounts helps utility staff respond faster and more accurately
u Meter Data Management (MDM):
w Integrated with other technology, MDM accelerates outage detection and restoration
w Enables proactive grid management and maintenance
LOCAL CONTROL AND SERVICE
As a public power electric utility, VLP’s top priority is serving the local community. When citizens are concerned, they can communicate directly with City Council members who live in the community and have Vermillion’s best interests in mind. Citizens are also welcomed and encouraged to attend public meetings and City Council meetings.
LOCAL SER VICE TERRITORY
Additionally, the utility employs local people who are part of the community and listen to customers, and the city offers convenient, local customer service with its payment office located in Vermillion. City staff also take pride in their work and know customers like family, friends and neighbors.
Beyond providing utility services, the city consistently gives back to the community by donating time, resources and volunteer support for local projects and events.
Some key examples of how the city’s local service truly shines includes:
u Hosting an annual customer appreciation open house
u Providing setup for annual festivals and fairs, including Shakespeare Festival, Ribs Rods & Rock’n Roll, Thursdays on the Platz, Stand Still Holiday Parade and Clay County Fair
u Providing electrical needs — upgrades, equipment replacement, new installations — for all city departments
u Assisting other city departments with equipment, such as bucket trucks, digger derrick, boring machine, vac, trenchers and cold-jet dry-ice machine
u Providing EnerConnect energy management app and web portal, allowing customers to track usage, set alerts, stay on budget, conserve energy and easily communicate with VLP
u Boring water mains and street taps for water department
u Assisting with multiple parks and recreation projects
u Working with the street and parks & recreation departments to trim trees as needed and following storm events
EFFICIENT OPERATIONS AND MUTUAL AID
The city’s headquarters and operations are conveniently located in the heart of the community. Plus, having a local workforce means the utility’s employees are extremely familiar with the utility’s service territory and can quickly identify and correct problems. For example, in the rare event of an outage, VLP’s local crews can arrive at the site quickly because they do not have to travel long distances to restore power.
More than 1,100 utilities, including VLP, are linked through a national mutual aid agreement. Mutual aid means utilities help each other in the event of a major storm or disaster. VLP also has mutual aid agreements with the South Dakota Municipal Electric Association and the Minnesota Municipal Utilities Association, as well as an agreement with Elk Point Municipal Electric Department in times of need. Knowing that Vermillion has access to a network of aid in the event of a major incident, such as a tornado or flood, is one more benefit to the community.
MUTUAL AID
In the unlikely event of an outage, the City of Vermillion is prepared to communicate with customers through:
ECONOMIC AND COMMUNITY IMPACT
Vermillion welcomes new customers to the community and supports the growth and expansion of existing businesses. VLP also works hard to showcase the value of public power and contribute to vital community amenities and services that make Vermillion a great place to
For example, the wages and benefits the city pays its staff help support the local economy through local spending and investment. In 2025, salaries tied directly to the electric utility totaled about $860,000, excluding benefits. Plus, VLP regularly spends money on local supplies and services. As a result, these dollars are recirculated multiple times throughout the community and contribute to Vermillion’s vibrant economy.
Other examples of VLP’s economic impact on the community include:
Participation in the MRES Economic Development Rate Discount Program
Providing energy efficiency rebates for homes and businesses
Extending utility services for potential economic development
Providing a $1,030,000 loan for the city’s Jack Powell Addition to help develop infrastructure on nearly 50 acres that will include single- and multi-family housing, a new park and the city-county law enforcement center
Transfer of $425,000 to the city for the Downtown Vermillion Streetscape Project
Installing infrastructure for all new residential and commercial lots at no cost to the customers, excluding service fees
u Supporting local businesses by buying local and servicing vehicles and equipment at local repair shops
COMMUNITY INVOLVEMENT
VLP is actively involved in community development, sponsoring local events, programs, projects and services that make a positive impact and showcase the value of the local public power utility.
In addition to providing reliable, affordable energy, following are additional examples of how VLP has engaged the community in recent years:
u Annually hangs holiday banners and assists with setup of community Christmas tree
u Hangs Cherry Street banners and flags for patriotic holidays
u Helps set up and staff the high school homecoming parade and assists with street closures
u Cost-shares Smart Energy Squad educational kits to fifth-grade students and teachers, a program that has reached more than 970 local students over the last few years
u Promotes MRES scholarship program at Vermillion High School
u Helped install new generator at city hall and generator transfer switch at the city’s water plant
u Installed energy efficient LED lighting in all city buildings
u Troubleshoots electrical issues in all city buildings
u Participates in and assists with multiple interdepartmental projects, including parks & recreation, fire and EMS departments
PARTNERING WITH MISSOURI RIVER ENERGY SERVICES
BUILDING SOMETHING GOOD TOGETHER
Along with 60 other public power utilities, VLP can reap the benefits of being an MRES member. This includes a more diverse power supply, transmission planning and many other energy-related services.
Shared costs and mutual support make the effort more manageable and cost-effective for all MRES members. Other MRES member benefits include:
u Economies of scale
u Aligned values and viewpoints to meet future challenges together
u Mutually beneficial programs 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 Customer information/billing system (CIS) support
u Load control and advanced metering services support
u Energy-efficiency and electrification programs
u Cybersecurity assessments
u Rate studies
u Scholarship and school education programs
u Community co-sponsorship program
u Proactive maintenance services
u Education and training
u Leadership and supervisor development
u Strategic planning
u Workforce development and succession planning
NORTH DAKOTA
MINNESOTA
CONCLUSION
This report reinforces the advantages of a municipally owned electric system and outlines the tremendous value of the financial and community benefits provided by the utility. As part of the public power community, Vermillion Light & Power customers can count on:
u Affordable rates
u Reliable electric service
u A diverse power supply portfolio
u Governance that includes elected local citizens who are also customers
u Local decisions that reflect community values
u Financial contributions and in-kind benefits that support Vermillion, as well as its residents and businesses
u Economic development support
u Quick emergency response because crews live in the Vermillion area
u Municipal utilities working together for shared success
From delivering affordable, reliable power to investing in the community in measurable ways, the locally owned, locally controlled utility plays a valuable role in making Vermillion a place where families thrive and businesses grow — a community that people are proud to call home.
