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A State Issue <br />Background <br />Municipal electric utilities work very <br />closely with their rural electric coop- <br />erative colleagues on many fronts: we <br />help each other out in times of need; <br />we work together on large transmis- <br />sion and generation projects; and we <br />agree on most public policy issues, <br />including preservation of the Power <br />Marketing Administrations, captive <br />rail, tax credit bonds, and climate <br />change. Unfortunately, the one issue <br />on which we consistently disagree <br />is known as "service territory" or <br />"annexation" -the historic right of <br />municipal utilities to grow with their <br />cities. <br />Like most issues relating to retail elec- <br />tric distribution service, the designa- <br />tion of service territories has long been <br />governed by state law. Minnesota's <br />municipal electric utilities have had <br />the right to serve annexed azeas since <br />the inception of the industry more <br />than 100 years ago. This historic right <br />was preserved in the 1974 state law <br />that established the current regulatory <br />scheme. Our law, like that of many <br />states, provides that a municipal elec- <br />tric utility has the right to serve areas <br />annexed by the city. The law also pro- <br />vides that the utility previously serving <br />the annexed area - be it an investor- <br />owned utility or a rural co-op -- must <br />be provided with fair compensation. <br />Municipal Utilities' Right to Grow with Their Cities - <br />