5.7. ERMUSR 03-13-2013 - Laserfiche WebLink

Home Browse Search

ISNSILQ .11111174020 Position Statement • Minnesota Municipal Utilities Association Municipal Utilities' Right to Grow With Their Cities — A State Issue Background Municipal electric utilities work very closely with their rural electric cooperative colleagues on many fronts: we help each other out in times of need; we work together on large transmission and generation projects; and we agree on most public policy issues, including preservation of the Power Marketing Administrations, captive rail, tax credit bonds, and climate change. Unfortunately, the one issue on which we consistently disagree is known . as"service territory" or"annexation"—the historic right of municipal utilities to grow with their cities. Like most issues relating to retail electric municipal utilities. In fact, co-ops represent the distribution service, the designation of service fastest-growing segment of the electric industry in territories has long been governed by state law. Minnesota. Minnesota's municipal electric utilities have had the right to serve annexed areas since the inception • The co-ops, who by their own estimates serve of the industry more than 100 years ago. This 85% of Minnesota's land mass, are poised to historic right was preserved in the 1974 state law capture much of the growth around communities that established the current regulatory scheme. served by investor-owned utilities, as well as Our law, like that of many states, provides that around those communities already served by co- a municipal electric utility has the right to serve ops. This has been happening for some time in the areas annexed by the city. The law also provides Twin Cities Metro area, and is occurring in other that the utility previously serving the annexed parts of the state as well. area—be it an investor-owned utility or a rural co- op—must be provided with fair compensation. • In addition to their own rapid growth, the co-ops receive fair compensation under the law when a The history of the 1974 Minnesota agreement was city purchases service rights following annexation. based on consensus, fairness, and understanding: In past years some cooperatives have • The co-ops needed the 1974 service territory unsuccessfully tried to secure federal legislation law in order to obtain funding to build the Coal denying municipal utilities their right to grow Creek project, which still serves today as one with their cities. There are concerns that the co- of their primary sources of wholesale power. To ops might attempt such an effort again as they secure passage, they agreed to and supported the unsuccessfully attempted to do during conference municipal annexation provision in the law. committee deliberations on the 2002 Farm The co-ops have enjoyed tremendous growth Bill. This is disconcerting, particularly because in the years since the service territory law was Minnesota municipal electric utilities have made enacted. Their growth, which has largely come such significant efforts to work out a solution from the expansion of cities that do not own their to service territory disagreements on several electric service, has far outstripped that of the occasions. 16/ 2013 Federal Position Statements