5.5. ERMUSR 03-19-2013 - Laserfiche WebLink

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NAFffk4Vd FIGAPiki Position Statement The Right of Municipals to Grow With Their Cities Background Minnesota municipal electric utilities have had the right to serve their entire communities since they were formed, many more than 100 years ago. Municipal utilities grow with their cities for a number of reasons, including: • To treat all electric ratepayers and taxpayers in the city equally. • To preserve the financial stability and fiscal integrity of the city's overall financial structure and credit ratings. • To provide for greater efficiency of the city and municipal utility through economies of scale. 0. To facilitate intermediate and long range planning for electric generation, transmission, and distribution facilities — for the municipal utility and neighboring utilities. • To provide electric service to residents and users in the city at terms and conditions subject to the control and regulation of the city. City services, particularly sewer and water facilities, drive development. Recent studies have shown that the costs of sewer and water treatment have been increasing dramatically in the past 25 years, while, at the same time, grant money from the federal and state government has been reduced to almost nothing. Therefore, it is proper that the cities that bear the burden of providing these services be given every opportunity to provide electricity to the new loads that settled in our cities as a result of our efforts. It is our electric customers — not those of co -ops or investor -owned utilities — that should benefit from the economies of scale that result from our development efforts. rior to 1974, there was no state regulation of tilities in Minnesota. The regulation that did exist was through the granting or withholding of city 14 / 2013 State Position Statements franchises. Investor -owned utilities wanted state regulation so they could deal with one state entity rather than each individual city. The cooperatives wanted service territories to prove to their banker — the federal Rural Electrification Administration — that they would have customers to pay for new power plants and transmission lines. Municipal utilities wanted only to preserve their existing right to grow with the cities they serve. The cooperatives testified in support of preserving this well - established right and practice. The landmark service territory law of 1974 has allowed Minnesota's electric cooperatives to protect their power plant investments, to greatly expand their business, and to secure generous compensation from municipal acquisitions. The co -ops have attempted to use disputes to derail the intent of the territory law by obstructing the municipal electric utilities' right to grow with their cities. The 1974 law has worked very well for the electric cooperatives. Co -ops are growing faster than other utilities. In fact, the co -ops' customer base has virtually doubled since the enactment of the service territory law in 1974.