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<br />P®siti®n statement <br />Minnesota Municipa/ Uti/ities Association <br />Electric Utility Service Territories - <br />A State Issue <br />In recent years, electric cooperatives have attempted to secure the passage of federal <br />legislation that would have severely restricted the ability of municipal electric utilities to <br />grow with their cities. They were unsuccessful, but similar attempts to add service <br />territory language to federal legislation may be made in the future. <br />There is simply no need for Congress to become involved in electric utility service <br />territories. Like most issues relating to retail electric distribution service, service <br />territories have long been governed under state law. Minnesota's system for regulating <br />service territories has been in place since 1974. Our law, like that of many states, <br />provides that a municipal electric utility may acquire the right to serve areas annexed by <br />the city. The law also provides that the utility previously serving the annexed area must <br />be provided with fair compensation. <br />Here are some important facts to remember about Minnesota's service territory law: <br />w <br />0 <br />J <br />r <br />r <br />T <br />t11 <br />x <br />_, <br />0 <br />.~ <br />z <br />a <br /> <br />• The co-ops wanted the 1974 service territory law in order to obtain funding to <br />build the Coal Creek plant. They agreed to and supported the municipal <br />annexation provision in the law. <br />• The co-ops have enjoyed tremendous growth in the years since the service <br />territory law was enacted. Their growth has far outstripped that of the <br />municipal utilities. They are the fastest-growing segment of the industry. <br />• The co-ops are poised to capture much of the growth around communities <br />served by investor-owned utilities, as well as those communities served by co- <br />ops. This has been happening for some time in the Twin Cities Metro area, <br />and is beginning to occur in other parts of the state as well. <br />• In addition to enjoying their own rapid growth, the co-ops receive fair <br />compensation under the law when a city purchases service rights following <br />annexation. <br />• Minnesota's service territory law is working exactly as it was intended, and <br />there is no reason for Congress to become involved. <br />Electric utility service territories are fundamentally a state issue, fully governed by the <br />laws of Minnesota and other states. There is no justification for Congressional <br />involvement in the service territory issue. <br />Minnesota Municipal Utilities Association <br />February 2005 <br />