6.3 ERMUSR 03-13-2018 - Laserfiche WebLink

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DM1MII/ priffrow,e Position Statement Municipal Utilities' Right to Grow With Their Cities-- A State Issue The designation of electric utility service Minnesota Municipal and Co-op Customers territory has historically been, is, and 1974-2016 needs to remain solely a state issue. Sac coo In recent years, the Farm Bill has become 809000 a target for attempts to preempt state 700,E regulation of service territories. Any such efforts should continue to be denied. 600,000 Background 509 ,000 Municipal electric utilities work t4 400 OW very closely with their rural electric cooperative and and investor-owned utility 300,000 (IOU) colleagues colleagues on many issues. 200,000 Unfortunately, one issue on which electric utilities sometimes disagree is the process 100,000 by which service territory boundaries are modified when property locatedet* e% r �, ge Q� gy ga b ti �o {y tip ti� within a co-op or IOU's service territory '` ,�' , �� R '� �% '� ,�' ��ti � tititib ti� tia tib is brought into, or is incorporated as part —PAu"icpa9 Total -C oop Taal of, a municipality, usually, as a result of annexation. growth, which has largely come from the expansion of cities that do not own their electric service, has Like most issues relating to retail electric made co-ops the fastest-growing segment of the distribution service, the designation of service electric industry in Minnesota. territories has long been governed by each respective state's statutes. Most state statutes have Over the years, some cooperatives have recognized the right of a municipal utility to grow unsuccessfully tried to secure federal legislation along with the growth of the city's boundaries. preempting the right of the states to determine the In Minnesota, municipal electric utilities have best way to handle service territory issues in their had the right to serve annexed areas since the communities which would also deny municipal inception of the industry more than 100 years ago. utilities their right to grow with their cities. More This right was preserved in the 1974 state law recently, such efforts have come in the form of that established the current regulatory scheme. requested amendments to the periodic Farm Minnesota law does provide that the utility Bill.As it is time to once again pass a Farm Bill, previously serving the annexed area—be it an there are concerns that the co-ops might try this investor-owned utility or a rural co-op—must be approach again. provided with fair compensation. MMUA Position This right of a municipal utility to grow with its We urge Congress to reject any attempt to preempt city has not had a significantly negative effect on states' rights to regulate service territory issues, or electric co-ops or IOUs. In Minnesota, the co-ops which would otherwise deny municipal utilities the have enjoyed tremendous growth in the years since ability to grow with their cities. the service territory law was enacted. In fact, their 2018 Federal Position Statements/14 246