5.5. ERMUSR 03-19-2013 - Laserfiche WebLink

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ANSWRAFff Jlf Arriirit4ho Minnesota Public Utilities Commission decisions concerning compensation for service territory acquired by a municipal utility have resulted in financial windfalls to co -ops. Cooperatives receive reimbursement for facilities, payment for any reintegration costs, and payment for lost revenue from existing customers, along with compensation for future customers not in existence at the time that the municipal utility begins serving the area. Compensation paid to cooperatives now amounts to more than $25 million. A number of co -ops have pursued increasingly extreme positions in negotiations, demanding ever higher levels of compensation. Several cooperatives have forced municipals to `freeze' service territories, or resort to lengthy, expensive action before the Minnesota Public Utilities Commission or before the district courts. There is growing evidence that this is a coordinated attempt not only to obstruct municipal growth, but to enable cooperative acquisition of municipal utilities. We estimate that, over the past few years, Minnesota cooperatives received at least $2 million from the "service territory integrity fund" of the National Rural Cooperative Finance Corporation (CFC), a national fund expressly created to prevent municipal utilities from growing with their cities. Efforts to Negotiate Municipal electric utilities have made three Position Statement recent efforts to find a compromise with electric cooperatives on the service territory issue — as part of discussions concerning industry restructuring in 1998, an effort at mediation in 2001 and a joint task force that met in the spring and summer of 2008. The most recent attempt nearly bore fruit. The two sides reached agreement on 18 of 20 issues identified by MMUA, with only two minor issues remaining. Unfortunately, the cooperatives suspended the negotiations before complete agreement was reached. Since the negotiations concluded, a number of municipals and co -ops have entered into service territory agreements that follow the "template" that was developed through the negotiation process. MMUA Position Municipal utilities cannot forego the essential right • to grow with our cities, which has been recognized since the inception of the industry more than one hundred years ago. We remain willing to work with otherindustry groups to make the law easier to administer for all parties, by adding a formula, based on the 2008 negotiations, to state law. As custodians for our citizens' rights, cities and municipal utilities will defend the right to grow with our cities. Ar 2013 State Position Statements / 15