ERMUSR MISC. ITEMS 02-10-2004 - Laserfiche WebLink

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tC;) MIMILft MINNESOTA MUNICIPAL UTILITIES ASSOCIA LION 12805 Highway 55 • Suite 212 • Plymouth, MN 55441-3859 • 763.551.1230 • 800 422 0119(MN) • Fax 763.551.0459 Electric Utility Service Territories — A State Issue In 2002 a group of electric cooperatives attempted to add language to the Farm Bill that would have severely restricted the ability of municipal electric utilities to grow with their cities. They were unsuccessful, but similar attempts to add service territory language to federal legislation may be made in the future. There is simply no need for Congress to become involved in electric utility service territories. Like most issues relating to retail electric distribution service, service territories have long been governed under state law. Minnesota's system for regulating service territories has been in place since 1974. Our law, like that of many states, provides that a municipal electric utility may acquire the right to serve areas annexed by the city. The law also provides that the utility previously serving the annexed area must be provided with fair compensation. Here are some important facts to remember about Minnesota's service territory law: • The co-ops wanted the 1974 service territory law in order to obtain funding to build the Coal Creek plant. They agreed to and supported the municipal annexation provision in the law. • The co-ops have enjoyed tremendous growth in the years since the service territory law was enacted. Their growth has far outstripped that of the municipal utilities. They are the fastest-growing segment of the industry. • The co-ops are poised to capture much of the growth around communities served by investor-owned utilities, as well as those communities served by co- ops. This has been happening for some time in the Twin Cities Metro area, and is beginning to occur in other parts of the state as well. • In addition to enjoying their own rapid growth, the co-ops receive fair compensation under the law for both present and future customers when a city purchases service rights following annexation. • In most cases service territory transfers proceed relatively smoothly. The law on compensation is well understood and most cases settle without litigation. • Minnesota's service territory law is working exactly as it was intended, and there is no reason for Congress to become involved. Electric utility service territories are fundamentally a state issue, fully governed by the laws of Minnesota and other states. There is no justification for Congressional involvement in the service territory issue. Minnesota Municipal Utilities Association February 2004