6.2. ERMUSR 07-11-2006 - Laserfiche WebLink

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It seems clear that, for the foreseeable future, the PUC is not a good venue for us on service territory issues. The current chair, Leroy Koppendrayer, is a lifelong farmer whose bias in favor of the co-ops is palpable in the hearing room. PUC and DOC staff also seem to be entirely behind the co-ops on this issue, which likely sways the other commissioners, none of whom actually understands the compensation formula.t Another set of cases is proceeding down a different track that has not been utilitized before. Minn. Stat. section 216B.47 provides: Nothing in this chapter may be construed to preclude a municipality from acquiring the property of a public utility by eminent domain proceedings; provided that damages to be paid in eminent domain proceedings must include the original cost of the property less depreciation, loss of revenue to the utility, expenses resulting from integration of facilities, and other appropriate factors... . For purposes of this section, a public utility includes a cooperative electric association. Moorhead is preparing to go to trial in June on a large annexation that will be decided by the condemnation court in Clay County, rather than by the PUC in St. Paul. The Moorhead case is a very good one to litigate from the municipal perspective. It is a large annexation that is virtually all empty. The area is zoned by the county for one house every 40 acres, so it would never have undergone extensive development absent the annexation. The initial trial will be to a panel of three commissioners with some background in business valuation. Assuming one side or the other appeals the initial decision, the appeal is to the local district court and may be a jury trial. An appeal from that decision goes to the Court of Appeals. Several other cities, including Two Harbors and Staples, are lining up to do condemnation proceedings following Moorhead. Redwood Falls is proceeding through the PUC because it needed to get interim service rights, which are not readily available through the eminent domain process. The Redwood Falls case does present an interesting new angle in that the city is developing the property. It appears that for the next several years at least, there will be a flurry of service territory cases making their way through various levels of hearing, trial, and appeal. It remains to be seen whether any clarity will emerge from all this effort, but it's going to take a lot of time and expense to find out. One of the impacts of this lengthy and costly struggle is that a number of cities have simply decided not to serve newly annexed areas, due to the cost and the hassle. Others have been coerced into signing a freeze agreement to reach a settlement on a single ` Dave Berg of R. W. Beck tells me that there are only four people who understand the formula - he and Kevin Favero of R. W. Beck, Walt Lorber of Rochester, and Dennis Eicher of PSE, the co-ops' expert witness. 6