6.2. ERMUSR 04-14-2009 - Laserfiche WebLink

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utilities to g;ow with their cities. The- cooperatives enthusiastically supported the passage of this legislation. The 19741aw has worked very well for the electric cooperatives. It not only preserved the co-ops' customer base in the 1980's when they were troubled with high rates, it allowed the co-ops to retained huge service territories from which they have received substantial growth, particularly in the Twin Cities metro area and around many non-public power cities in greater Minnesota. . The co-ops have benefited from new, incorporated urban area within their service temtories that is five times the size of the area absorbed by municipal. electric utilities after annexation. This has'resulted in kilowatt-hour sales and new customer acquisition growth rates for cooperatives. that are higher than those of other types of utilities- in the state. In fact, the co-ops' customer base has virtually doubled since the enactment of the service temtory law in 1974. PUC decisions concerning compensation paid for service territory purchased by a municipal utility have resulted in increasing awards to co-ops.. Today, cooperatives not only receive full reimbursement for facilities, payment for any reintegration costs, and payment for lost revenue from existing customers, they are even provided 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 $16 million. In-the past. few years, howeve% a growing number of co=ops have pursued increasingly extreme positions in negotiations, demanding. ever higher levels of compensation. Several cooperatives have even. forced municipals to resort to time consuming and expensive action before the Minnesota Fublic Utilities Commission or before the district courts. There is growing evidence that these actions represent a coordinated attempt to obstruct municipal growth as much as possible and to discourage municipal utilities from pursuing their rights. For example, 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 public power cities from growing with their cities. In the last several years, a number of attempts to work out a universal compensation agreement with the co-ops have ended in failure. The most recent effort .ended after several months of fruitful negotiation, when the MREA Board of Directors abruptly put a stop to_the meetings just as it seemed that a settlement was -about to be reached. The landmark service territory law of 1974 has allowed Minnesota's electric cooperatives to protect their power plant investments, to greatly expand their business, and to secure generous. compensation for. municipal acquisitions. This law was passed as a result of a compromise with the municipal utilities, whose only requirement was that they continued to be allowed to grow with their cities. It has become obvious that the co-ops have atterinpted to use compensation disputes as a way o derail the intent of the territory law by obstructing the rimunicipal electric: utilities right, to grow with their cities. It's time. the cooperatives honored the compromise they 4yanted in the first place. It's time they kept their word. Municipal.-utilities cannot forego the essential right tn`grow with our cities, which has been recognized since the inception of the industry more than one hundred years ago. Serving all citizens and businesses in our cities is what municipal utilities are all about. From along-term perspective denying municipal utilities this fundamental right is the same thing as denying their right to exist. We remain willing to work to resolve these problems to make the law easier to administer for all parties by defining municipal utilities rights and by adding a formula for reasonable compensation to state - law As custodians for our citizens' rights,, cities and municipal utilities insist that the right to grow with our cities be armed.