5.5. ERMUSR 03-19-2013C
E1kRiver
Municipal Utilities
UTILITIES COMMISSION MEETING
TO:
FROM:
Elk River Municipal Utilities Commission
Troy Adams, P.E. — General Manager
John Dietz — Chair
Theresa Slominski — Finance & Office Manager
Daryl Thompson — Vice Chair
Al Nadeau — Trustee
MEETING DATE:
AGENDA ITEM NUMBER:
March 19, 2013
5.5
SUBJECT:
2013 Minnesota Municipal Utilities Association Legislative Conference
BACKGROUND:
Formed in 1931, Minnesota Municipal Utilities Association (MMUA) has a mission to "unite
and serve as a common voice for municipal utilities and to provide them with the support they
need to be able to improve service to their customers and community." MMUA represents 125
municipal electric utilities and 31 municipal gas utilities in Minnesota. And although MMUA
provides a "common voice" as a joint action agency representing our concerns and advocating
for our needs on the legislative front, they cannot do it alone. As legislative issues become more
complex and affect the municipal utilities differently, it has become increasingly more important
to provide local support to MMUA's efforts.
One of the more critical times for this local support is during the legislative sessions when there
is still an opportunity to provide comments and /or provide direction for the draft legislation. As
a way to increase municipal utility awareness during session, MMUA organizes a Legislative
Rally at our State Capitol. Packaged with this rally, MMUA also provides a conference with
timely and appropriate training sessions targeted at the municipal leadership demographic in
attendance.
DISCUSSION:
The 2013 Winter Legislative Conference was held this past February 13 -15. The conference
seminars included: a panel discussion on the drought and the potential impact to municipal
utilities water rates, a video documentary "Liquid Assets Minnesota" on the importance of
budgeting for scheduled maintenance on municipal water distribution systems, a MN
Conservation Improvement Program update, MN Electric Service Territory Boundary and
Website update, and Electric Service Territory Legal Update.
The Legislative Rally was held at the State Capitol on February 14. MMUA organized for the
rally presentations to approximately ten elected officials. Typically municipal utility constituents
Reliable Public
Power Provider
Page 1 of 2
rIIIaEI I
NATURE
P o w r a r o T o S r N v r
v 1�.
O
V /�
of the elected officials would
make presentations. The range of
topics was focused to three high
impact issues for municipal
utilities: Climate Change and
Renewable Energy Standard
legislation, MN State Tax
Exemption for Municipal Tex -
Exempt Bonds, and Net Metering
/ "The Value of Solar."
An update will be provided at the
time of the commission meeting
by staff on highlights and priority
issues addressed during the
conference and rally.
ACTION REQUESTED:
No action is required.
ATTACHMENTS:
• Minnesota Municipal Utilities Association 2013 State Position Statements
• Minnesota Municipal Utilities Association 2013 Winter Legislative Conference Program
• Minnesota Municipal Utilities Association Informational Handouts
mR"Io-
Reliable Public '
Power Provider
Page 2 of 2
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•
Innovative services
for municipal utilities
Energy Services
MMUA provides expertise that
the typical municipal utility
cannot provide on its own. For
example, MMUA's Director of
Engineering and Policy Analysis
advocates for municipal utili-
ties with state government on
conservation, renewable energy,
and related issues. This MMUA
staff person also coordinates de-
velopment of new CIP programs
and educates MMUA members
on new conservation and low -
income spending requirements
and the types of programs and
activities that will be necessary
to comply.
•MMUA Finance Program
The Finance Program provides a
simple, flexible, low -cost financ-
ing option for municipal projects.
•
Utility Management/ Operations
This service enables smaller
systems to have access to qual-
ity management services at an
affordable price. An experienced
municipal utility manager, em-
ployed by MMUA, will spend the
amount of time your city desires
in your community, helping lo-
cal staff with a wide variety of
tasks and issues, from hands -on
line work to filling out and filing
reports. Full line -crew services
will also be made available upon
demand.
The Minnesota Municipal Utilities Associa-
tion is a nonprofit corporation representing the
interests of the state's municipal electric and
natural gas utilities. There are 125 municipal
electric and 31 municipal gas utilities in Min-
nesota. (MMUA also has a number of Minnesota
municipal water utilities as members, and North
and South Dakota municipal electric utilities as
associate members.) MMUA was formed in 1931
and provides a wide variety of services to its
members.
Government Relations
MMUA's legislative team, including staff lobbyists along with contract lob-
byists from the McGrann Shea firm, actively represents members' interests
on a wide variety of state legislative and regulatory issues in St. Paul. The
MMUA Government Relations Commit-
tee takes the lead in developing posi-
tions. We work closely with the League
of Minnesota Cities and other local
government organizations on state is-
sues. Our two major legislative events
of the year include the MMUA Winter
Legislative Conference and our trek to
the American Public Power Associa-
tion Rally in Washington, D.C. MMUA
retains a Washington firm to monitor
Congressional activity and represent
member interests on federal issues. MMUA works closely with the American
Public Power Association (APPA) and the American Public Gas Association
(APGA) on federal issues.
We've got a place for you!
MMUA membership classes include: Regular, Affiliate and Associate.
Regular Members: Any city in the State of
Minnesota owning and operating a municipal
electric, district heating, gas or water util- '
ity is eligible for membership as a Regular
Member. Only the Regular Members have
voting rights.
Affiliate Members: Any municipal power 2 4
agency or municipal gas agency orga-
nized under certain state statutes is
eligible for membership as an Affiliate Member.
Associate Members: Any natural or legal person not eligible as a Regular or
Affiliate Member may apply for admission as an Associate Member.
I j V�� Instilling a safety culture among all municipal workers
MMUA provides a wide range of
job training, safety and OSHA
compliance services, including:
Safety Management Service
The MMUA team of Regional
Safety Coordinators provides
safety management services to
cities and municipal utilities in
Minnesota and the Dakotas. Co-
ordinators ensure employees re-
ceive required training, manuals
and records are up -to -date, and
workplace regulations are met.
Coordinators work with crews
on job sites, perform safety
audits, accident investigations,
OSHA inspection support, and
monthly safety meetings. The
MMUA team works to instill a
"safety culture" among all mu-
nicipal workers.
LMCIT OSHA Compliance/
Safety Assistance Program
MMUA and the League of Min-
nesota Insurance Trust have
established a partnership to
provide safety services to an ex-
panding group of cities through
the LMCIT OSHA/Safety As-
sistance program.
Lineworker Career Development Program
MMUA's on -site, on- demand
training program allows
municipal utilities to `grow
their own' lineworkers.
Electric Job Training and Safety
We travel the state providing
high - quality on -site technical
training for electric utility work-
ers and other city employees.
Natural Gas Circuit Rider
The MMUA Natural Gas Cir-
cuit Rider provides specialized
support for gas utilities. Safety,
regulatory compliance, Opera-
tor Qualification, record keep-
ing, and performance training
both on -site and at the MMUA
Training Center are among the
services provided by the MMUA
Gas Circuit Rider.
The MMUA
Training Center
in Marshall
MMUA has developed a state
of the art training center in
Marshall, on a 20 -acre campus
provided by the City of Marshall.
The training center affords the
opportunity for high quality,
hands -on technical training in a
variety of disciplines, including
many aspects of electric and gas
utility operations, confined space
and excavation. MMUA regu-
larly partners with the American
Public Power Association and the
Minnesota Rural Electric As-
sociation in presenting training
programs. Utility workers from
across the nation and around
the world have received quality
technical training at the MMUA
Training Center.
All this, and so much more!
MMUA offers various programs to
help members conduct their busi-
ness. We offer a wide range of
training and educational programs
throughout the year, including our
Annual Summer Conference. Our
publications are avidly read and
offer advertising opportunities. For
more, call or visit us on the web!
RAVATAl/t.(PI
/ // / /1VIRA
MMUA • 3025 Harbor Lane N., Suite 400
Plymouth MN 55447
763.551.1230 or 1.800.422.0119 (MN)
www.mmua.org
•
is
•
Meet Minnesota's municipal electric and natural gas utilities
i �A 1
Big and small (but mostly small)
By far the largest municipal
electric utility is Rochester, which
serves 49,269 customers. Moor-
head, Austin, Anoka, Owatonna
and Shakopee are the only other
municipal electric utilities with
more than 10,000 customers.
Most municipal electric utilities
serve smaller cities in Greater
Minnesota:
• 95 percent have fewer than
10,000 customers;
• • 82 percent have fewer than
5,000 customers;
• 73 percent have fewer than
2,500 customers;
• 38 percent have fewer than
1,000 customers;
'Public power'
How much do you know
about Minnesota's
municipal utilities?
Here are some facts you
might find interesting.
• There are 125 mu-
nicipal electric and 31
municipal natural gas
utilities in the state,
and they serve approxi-
mately 360,750 electric
and 80,000 natural gas
customers.
• Municipal utilities
are created through a
majority vote in a local
referendum.
• Regulation is largely
through the city council
or local utilities com-
mission.
• Open, accessible, gov-
ernance is one reason
municipals are also
known as 'public power'
utilities.
• Municipals are non-
profit. Rates are cost -
based.
Our business philosophy
The trend in the electric utility
industry these days is consolida-
tion. Utility mergers are wide- —
spread. As these companies ,r...�
get bigger, they tend to get
farther and farther away from
their customers.
• Most return some
funds to the city gener-
al fund, usually in the
form of in- lieu -of -tax
payments. Municipal
utilities often help with
'in -kind' services, and
may also make addi-
tional contributions.
Being locally -owned and operated organizations, municipal utility poli-
• 19 percent have fewer than 500 cymakers and staff not only have a career interest in their community's
customers. success, they have a personal stake in the city in which they have chosen
to raise their families and build life -long relationships. Because of this, the
• The average municipal electric utility's interest in the well -being of its community and devotion toward
utility has 2,941 customers. The maintaining a high quality of life is more than corporate slogan —it's the
median has 1,268 customers. foundation of our business philosophy.
• The smallest municipal electric
is tiny Whalan, population 63. Century of service
Over half of our municipal electric
The largest Minnesota municipal utilities have successfully
gas system is Duluth, with 25,871 operated for 100 years or more.
customers. Austin, Owatonna,
New Ulm, and
_, pS,:GA Wq Tt
Hutchinson i
also have more AND 4R
than 5,000 gas • I
customers.
ELECTRIC LIGHT
�
• Two - thirds have fewer than 1,000 :, - WORKS.
8
customers. More than half have x' t ' g
fewer than 500 customers.
Did you know?
Municipal utilities are on track to meet
the Minnesota renewable energy sup-
ply target of 25% by 2025. Municipals
own or have under contract 120 MW of
renewable energy sources. Nationally,
the Northern Municipal Power Agency
is No. 1 in percentage of retail sales
from wind; the Southern Minnesota
Municipal Power Agency was rated
fourth for estimated percentage of
retail sales expected from wind power.
In Minnesota, Missouri River Energy
Services is first in percentage of power
purchased from Community -Based En-
ergy Development (C -BED) projects.
Founded in 1931, Minnesota Municipal
Utilities Association (MMUA) is the
statewide association representing mu-
nicipal electric and gas utilities across
the state of Minnesota.
OFFICIAL ORGAN
Mu kip.l Utilitis A.,J.ti..
Municipal utilities are lo-
cated throughout the state.
Of the 87 county seat cities
in Minnesota, 50 operate
municipal electric and /or
natural gas utilities.
There are approximately 50 local
municipal power plants in
Minnesota. These plants`
are generally used in
times of emergency and
also act as a hedge against
high wholesale market prices.
Power supply facts and figures
Municipal utilities do not generate
all of their own power locally. Some •
generate a portion of their local
needs, usually as part of a combined
heat - and -power system or at times of
peak demand.
Most municipal utilities purchase
power wholesale, either from a mu-
nicipal joint action agency that they
are a member of, or through some
other contractual arrangement.
Minnesota electric sales in kilowatt -hours
Co -op
21%
IOU
Municipal 65%
14%
Power suppliers to municipal electric utilities •
WAPA Co -op
13% 13%
IOU
16%
Public Power
58%
Average municipal generation fuel mix
Hydro
11.81%
Nuclear -6.91%
Wind -4.15%
Coal Natural Gas -4.11%
70.58% Other -2.44%
Note: numbers from 2008 DOE and MMUA surveys.
•
Where does municipal utiility power come from?
Many of our municipal electric utilities rely on municipal joint action agencies for their power supply. A recent study
•by the Minnesota Municipal Utilities Association (MMUA) shows that 58 percent of the power sold by municipal
electric utilities in Minnesota came from municipal joint action agencies. Sixteen percent of the power sold by mu-
nicipals was purchased from investor -owned utilities, 13 percent from electric cooperatives and 13 percent from the
federal Western Area Power Administration. These joint action agencies serve Minnesota municipal utilities:
Missouri River Energy Services,
headquartered in Sioux Falls, S.D., serves these Minne-
sota communities:
Adrian, Alexan- MISSOURI
dria, Barnesville, RIVER
Benson, Breck-
enridge,Detroit
ENERGY SERVICES'
Lakes, Elbow
Lake, Henning, Hutchinson, Jackson, Lakefield, Lake
Park, Luverne, Madison, Marshall, Melrose, Moorhead,
Ortonville, St. James, Sauk Centre, Staples, Wadena,
Westbrook, Worthington.
Southern Minnesota Municipal Power Agency,
headquartered in Rochester, serves these Minnesota
communi-
ties: Austin, Scout here Minnesota
Blooming
Prairie, A Municipal Power Agency
Fairmont,
Grand Marais, Lake City, Litchfield, Mora, New Prague,
North Branch, Owatonna, Preston, Princeton, Redwood
Falls, Rochester, Saint Peter, Spring Valley, Waseca,
Wells.
Central Minnesota Municipal Power Agency,
headquartered in Blue Earth, serves these
Minnesota communities:
Blue Earth, Delano,
Fairfax, Glencoe, Granite
Falls, Janesville, Kasson,
Kenyon, Mountain Lake,
Sleepy Eye, Springfield,
Windom.
Minnesota Municipal Power Agency,
MMPA's principal place
of business is Chaska.
The agency serves these
Minnesota communities: 4v"PA
Minnesota Municipn! Power Agency
Anoka, Arlington, Brown -
ton, Buffalo, Chaska, East
Grand Forks, Le Sueur, North St, Paul, Olivia,
• Shakopee, Winthrop.
Northern Municipal Power Agency,
headquartered in Thief River Falls, serves these
Minnesota communi-
ties: Bagley, Baudette,
Fosston, Halstad, Northern Municipal
Hawley, Roseau,
Stephen, Thief River Power Agency
Falls, Warren,
Warroad. '
Heartland Consumers Power District,
headquartered in Madison, SD, serves these Minnesota
communities: Grove
City, Lake Crystal,
Marshall, Madelia, HEARTLAND
New Ulm, Truman, CONSUMERS POWER DISTRICT
Tyler.
The federal Western Area Power Administration (WAPA) supplies
hydropower to 47 municipal electric utilities in the western part of
the state. These utilities supplement this resource with additional
generating resources.
Stephen
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*East Grand Forks
8Sha+ly Fose o,
Ha1aWd *46'
N�wlry Lake Park
• • •[?e1nNi L:rka;
Maomzed
•
Barnasa, @a N':�dan5
• •
&a<kanadga • Stn I
• Nammn p "^
Sauk C—Ire
Melrose
• Onorrofla j ens
Kandyon,
Yllllrnar• • •
•t+lsd�n L,icHield
G'snite Falls•
Rgdw --i Fills
•
•1tar9h311 New Urn,
r;Igr
•
• Sp•in 9h. • •
Steep,• E
4Ve�t6rwk 51 Jame3
kiountam Lake* •
UndorU•
Lir 4= a WofmAg" Lakakdd Fa„
•
Ir wl' as Y, Y)
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n,nwwntnt<t.rv+
0
•
•
Municipal and Co -op Size Comparisons
15 Largest Consumer -Owned Electric Utilities in Minnesota
by Number of Customers, 2011
Connexus
Dakota
East Central
Rochester
Lake Country
Wright- Hennepin
Crow Wing
MN Valley
Lake Region
Stearns
Beltrami
Moorhead
Shakopee
Mille Lacs
People's
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
0 14000 28000 42000 56000 70000 84000 98000 112000 126000
Average Utility Size
by Number of Customers, 2011
15,816
2,940
Co -ops Municipals
Source: US Dept. of Energy, year 2011 data
Prepared by Minnesota Municipal Utilities Association
800,000
750,000
700,000
650,000
600,000
550,000
500,000
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
Municipal and Co -op Growth
1974-2011
TOTAL MINNESOTA CUSTOMERS
15,000,000,000
14,000,000,000
13,000,000,000
12,000,000,000
11,000,000,000
10,000,000,000
9,000,000,000
8,000,000,000
7,000,000,000
6,000,000,000
5,000,000,000
4,000,000,000
3,000,000,000
2,000,000,000
1,000,000,000
0
Municipal Total Co -op Total
[:�::::_MunicipalTotal Co -op Total
TOTAL MINNESOTA SALES IN KILOWATT HOURS
Sources:
US Dept. of Energy, US Dept. of Agriculture
(Rural Services), Edison Electric Institute
Municipal Financial Statements
•
•
2013 Meeting/Training Center Calendar
FirstLine Supervision
January 30 - February 1,
MMUA Office, Plymouth
February 6 -8, Central Lakes
College, Brainerd
Winter Legislative
A • f Conference
February 13 -15
Crowne Plaza Hotel &
Suites, Bloomington
Cross Training School
February 19 -21
MMUA Training Center, Marshall
MMUA /APPA /MREA Meter School
March 5 -8
Basic Metering —March 5 -6
Meter School —March 6 -8
t MMUA Training Center, Marshall
f The week's activities include the
popular Vendor Show.
APPA Legislative Rally
March 11 -13
Washington, D.C.
MMUA /APPA /MREA
Lo Underground School
May 14 -17
MMUA
Training Center,
Marshall
Generation School
April 9 -11
Glencoe Light & Power,
Hutchinson Utilities
Substation School
April 23 -25
Elk River
may.. • i
Annual Summer
Conference
August 19 -21
Madden's Resort,
Brainerd
MMUA /APPA/
MREA Overhead
School
September 17 -20
MMUA Training
Center, Marshall
own
Technical &
Operations
Conference
December 10 -12
Holiday Inn,
St. Cloud
Q
MMUA /APPA /MREA Transformer School
Dec. 17 -20
MMUA Training Center,
Marshall
Basic Transformer
Connections —
December 17 -18
Three Phase
Connections —
December 18 -20
A&NNAISSIANI
% / /iNI1
Minnesota Municipal
Utilities Association
FirstLine Supervision
October 9 -11,
Central Lakes College,
Fri `
Brainerd
October 23 -25,
MMUA Office, Plymouth
Q
MMUA /APPA /MREA Transformer School
Dec. 17 -20
MMUA Training Center,
Marshall
Basic Transformer
Connections —
December 17 -18
Three Phase
Connections —
December 18 -20
A&NNAISSIANI
% / /iNI1
Minnesota Municipal
Utilities Association
r*,VFr, r5" FW, WF,
Position Statement
Proposed Expansion of Net Metering Requirements
The Minnesota Department of Commerce is propos-
ing major changes to the law governing mandated
utility purchases of electricity generated by renew-
able energy facilities owned by retail customers. We
believe that DER's proposal might be appropriate
in some cases for large utilities, but is completely
inappropriate and unworkable for Minnesota's
small municipal electric utilities.
DER Proposal
The DER proposal would require that Minnesota
electric utilities choose one of two options for
compensating customers for electric power
generated from their own renewable energy
facilities and put into the local distribution system.
The first option would increase the threshold size
•of the customer -owned renewable facilities from
which utilities would be obligated to purchase
excess power. The present "net metering" law
requires retail electric utilities to pay retail rates
•
for energy produced by renewable facilities of up
to 40 kilowatts (KW) in size. DER's proposal would
increase the size of customer -owned generators
from which utilities would be compelled to purchase
power from 40 KW to 1 Megawatt (MW) in size.
The new proposal would also change the amount
distribution utilities pay for renewable energy from
the current retail rate to the utility's avoided cost.
We believe that the 2,500% increase in the size of
the generator that the utility would have to accept
is completely unacceptable for Minnesota's small
municipal electric utilities.
The second option would establish a new net meter-
ing program patterned after the "Value of Solar"
net metering program initiated by the municipal
utility of the City of Austin, Texas. Under this op-
tion the distribution utility would continue to sell
all power to supply the customer load at their exist-
ing retail rate, and the distribution utility would
be required to purchase electric power generated
from solar photovoltaic devices
Photovoltaic Solar Resource
e United States
°• --� -- mnoymuf ,ti,:ta .104?, f.Nei!t
m,6^IMmu:er'SV4r fAE� h,0i
a /i kuW %AH "Gob
kwhfmIIDay
een.n ::,': -, , -.�:,- a.: nurv.. nr+ at.. �.- auv,• o. m:. v., r,r,w�+•,a..;y,a,�.vn,vnl�.•;.. r.��..+�x :.rv.,.r
This map was created by the National Renewable Energy Laboratory for the U.S. Department
of Energy.
4 / 2013 State Position Statements
owned by the customer. The
reimbursement rate would be
based upon a number of fac-
tors including: loss savings,
energy savings, generation
capacity savings, fuel price
hedge value, transmission and
distribution capacity savings,
and environmental benefits.
Taken together, these savings
are intended to reflect the val-
ue of distributed solar energy
to the utility —a "break- even"
value for a specific kind of dis-
tributed generation resource,
and a value at which the util-
ity is economically neutral to
whether it supplies such a unit
of energy or obtains it from the
customer.
Austin Energy's program
has been in place only since
October 2012 and must be
IFIAFri&kof
considered at this point to be experimental. The
reimbursement rate calculation is quite complex
and was not designed to be administered by a small
utility with a skeleton staff. The mix of factors in-
cluded in the calculation may be appropriate for
a large, standalone utility with responsibility for
generation and transmission as well as distribution
of electricity, but those factors may not translate
well to a small system with a long -term contract for
power supply and transmission. We believe that it
is very premature to build a state mandate around
an unproven, voluntary program that has been ad-
opted by a single, very large utility in a distant part
of the country with a much different climate and
solar resource potential than we have here in Min-
nesota.
Concerns about Expansion of Net Metering
The impact of net metering is much more problem-
atic for a small municipal system than it would
be for a larger utility. Ninety of Minnesota's 125
municipal electric utilities have fewer than 2,500
customers. Forty -eight have fewer than 1,000. In
these communities, costs associated with net meter-
ing would be distributed over a much smaller group
of net - payers, meaning each utility customer would
pay more to carry the same number of customer -
generators than customers of larger utilities.
The relatively small number of customers served
by a municipal utility also results in lower system
size. The median annual peak load of our systems
is only about 6 MW. Nearly a third of our systems
have total demand of 3 MW or less. A 2,000 MW
utility could accommodate a 1 MW net - metered
load with little administrative, financial, or opera-
tional impact. Forcing a 2 or 3 MW municipal util-
ity to accommodate a 1 MW net metered load could
cause enormous problems, both financially and
operationally. A utility with a relatively predictable
load curve could become subject to large swings as
it is forced to respond to the unpredictable output
of a large and variable net - metered generator on its
system. Increased variability of load could result
in higher cost of power from the utility's wholesale
power supplier. Forcing a small municipal utility
Position Statement •
to accommodate a 1 MW net - metered load would be
completely inappropriate for the size of the system.
Forcing small municipal utilities to accommodate
large net - metered loads could also have a negative
impact on our municipal power agencies, which
are established under Minn. Stat. Chapter 453 and
play an important role in our industry. Most of our
municipal electric utilities have long -term contracts
with a municipal power agency for power supply
and transmission service. These contracts provide
necessary security for repayment of tax - exempt
bonds that have been issued by the agencies to fund
large investments in generation and transmission
facilities. If municipal electric utilities are forced
to accommodate large, net - metered loads in sig-
nificant numbers, the resultant loss of sales could
impair the security underlying hundreds of millions
of dollars of tax - exempt bonds. We urge the legisla-
ture to tread very carefully in this area.
2013 State Position Statements / 5
•
•
•
There is another factor that should be taken
into account when considering any expansion of
net metering. Of the 125 Minnesota cities with
municipal electric utilities, 114 have median
household incomes below the state median income
level. If we are to make changes in Minnesota's
net metering requirements, we will want to make
sure that lower income families, who constitute a
significant portion of the population of Minnesota's
public power communities, will not be subsidizing
wealthier customers who choose to install
renewable generating resources.
Austin Energy and Its Value of Solar Program
Since the Value of Solar net metering concept is
based on a program instituted by Austin Energy,
the municipal utility of Austin, Texas, it seems ap-
propriate to make some comparisons between the
circumstances of Austin Energy and Minnesota's
municipal electric utilities.
- The Austin Value of Solar program is volun-
tary. Texas does not require Austin or any other
Texas municipal electric utility to establish any
net metering program. The Minnesota program
would be mandatory. Under the DER proposal,
Minnesota municipal utilities would be required
to adopt either a net metering program or a
Value of Solar program.
• The effectiveness of solar power is much
greater in Austin, Texas than anywhere in
400,000
300,000
a,
E
200,000
3
• U
100,000
6 / 2013 State Position Statements
Customer Comparison
417,191
Position Statement
Minnesota. According to a map of "Photovoltaic
Solar Resources of the United States" produced
by the National Renewable Energy Laboratory
for the U.S. Department of Energy, Texas and
the neighboring Southwest States have some of
the greatest opportunities for solar power devel-
opment in the country. (See page 4.) Minnesota
does not.
- Austin Energy is one of the largest munici-
pal electric utilities in the United States with
415,000 customers, more than all of our Minne-
sota municipal electric utilities combined. Aus-
tin Energy also has more kilowatt -hour sales
and more revenue than all Minnesota municipal
electric utilities combined, and Austin Energy
has 1,700 electric employees. A utility such as
Austin Energy is in a far better position to deal
with the costs, uncertainties and administra-
tive burden of operating an aggressive, complex,
experimental program to promote solar power.
• Another good indicator of Austin Energy's
ability to accommodate an aggressive net meter-
ing program involving solar energy is its system
peak load of 2,714 MW, more than 400 times
greater than the 6 MW median peak load of
Minnesota municipal utilities. Rochester Public
Utilities, Minnesota's largest municipal electric
utility by a wide margin, has a peak load of only
288 MW. Every other municipal electric utility
in Minnesota has a system peak of less than 100
MW. Half are at or below the 6
MW median.
■ Austin Energy
■ All Minnesota
Municipal Electric
Utilities Combined
Net Metering in Other States
Policymakers would do well to
review the actions of other states
before imposing new renewable
energy buy back proposals in
Minnesota. Of the 43 states that
have mandated net metering, 26
do not require the participation
of municipal utilities. Of the 17
remaining net metering states,
14 have threshold requirements
that are relatively low.
swsir.�;
The net metering requirements applicable to mu-
nicipal electric utilities in our neighboring states
are as follows:
Municipal Utility Net
State Metering Requirement
Illinois
None
Iowa
None
Kansas
None
Michigan
None
Missouri
100 KW
Nebraska
25 KW
North Dakota
None
South Dakota
None
Wisconsin
20 KW
In our view these neighboring states have correctly
concluded that municipal electric utilities in the
Upper Midwest are simply too small to be able to
accommodate large net - metered loads. We submit
that Minnesota's legislature should recognize this
reality as well and choose not to impose an unre-
alistic and impracticable requirement that they
accommodate large net - metered loads that are
completely out of scale to their small size.
MMUA Position
Municipal electric utilities are already making
a significant effort to support the development
V
3
ef0o
d
2
3,000
2,500
2,000
1,500
1,000
500
Peak Load Comparison
Position Statement*
of renewable energy generation at the wholesale
level and to comply with the energy conservation
mandate and net metering standards at the retail
level under present state law. Municipal utilities
are simply too small to be able to accommodate a
significant increase in mandated renewable de-
velopment, both operationally and financially. We
believe that municipal electric utilities should be
excluded from any new legislation that further
expands net metering requirements or institutes a
mandated value of solar program.
If the State of Minnesota does consider expanding
the net metering mandate as it applies to munici-
pal electric utilities, the following principles should
apply:
• Municipal utility governing bodies should re-
tain the right to establish the calculation meth-
od for setting the rate to be paid for electricity
from customer -owned renewable generation and
that rate should be based on the value of the •
generation to their specific systems.
• There should be limits on the amount of
renewable energy that any municipal utility
should be mandated to purchase in order to pro-
tect the reliability and viability of the utility.
• Municipal utilities should not be required to
accept net - metered generators that are too large
for them to accommodate op-
erationally and financially.
• Municipal utilities should
not be required to pay solar
rebates.
• Austin Energy
- No additional Renewable
Energy Standards or "carve
outs" should be required from
■All Minnesota
joint action agencies.
Municipal Electric
• Net - metered customers
Utilities Combined
should be required to pay for
all the services that they use.
2013 State Position Statements / 7
•
MNBAFIIA414P
OfFiffriapno
Climate Change
Background
The issue of global climate change has
created growing concern. This concern
has given rise to a discussion of new
proposed state requirements that
would either further reduce electric
usage or would impose new renewable
mandates on Minnesota's electric
utility industry. These proposals
include:
• Increasing the required energy
savings from the Conservation
Improvement Program (CIP).
• Increasing the State's Renewable
Energy Standard (RES).
• Requiring a similar RES
exclusively for solar energy.
Position Statement
• Increasing the Net Metering threshold
requirements.
If adopted, these new proposals would be added
to significant existing state requirements imposed
over the years for the purpose of dealing with
climate change. These include:
• Prohibiting new base load coal generation
after August 2009.
• Requiring electric utilities to meet an annual
energy conservation goal of 1.5 %.
• Establishing a state renewable energy
standard (RES) that requires power producers
to secure 25% of their sales from renewable
energy sources by 2025.
These combined measures have resulted in an
aggressive approach for reducing greenhouse
gas emissions that is as strong as or stronger
,than that of any state in the country. However,
municipal utilities in Minnesota are now strained
to the limit in meeting the present standards
8 / 2013 State Position Statements
and requirements. We are concerned that further
requirements beyond the present level of effort on
the state level will produce diminishing returns
while possibly leading to decreased reliability and
make Minnesota businesses leave the state because
of sharply increased costs. The most effective
approach in dealing with climate change could very
well come from the federal, rather than the state
government.
The federal government, through the
Environmental Protection Agency (EPA), has
developed a comprehensive, national regulatory
strategy (see graphic on facing page) to deal with
greenhouse gas reduction that mirrors the agency's
traditional approach in regulating pollution for
the past 40 years. This far - reaching strategy is
now being implemented on a national scale and
is represented by a number of actions that have
occurred in the past 6 years.
• In 2007, the Supreme Court held that carbon
dioxide and other greenhouse gases are covered
by the Clean Air Act's broad definition of air
pollutants, and as such, EPA must decide
whether these gases endanger public health or
welfare
• In 2009, EPA arrived at a "finding" that six
key greenhouse gases constitute a threat to
public health and welfare.
• In 2010, EPA set greenhouse gas emissions
thresholds to define when permits under the
New Source Review Prevention of Significant
Deterioration and Title V Operating Permit
programs are required for new and existing
industrial facilities.
• In 2012, EPA proposed a Carbon Pollution
Standard for New Power Plants that would, for
the first time, set national limits on the amount
of carbon pollution that power plants can emit.
Position Statement
MMUA Position
State efforts to deal with climate change have been
aggressive, but these efforts have gone as far as
they can reasonably go. We believe that any climate
change policy going forward should be national in
scope. Over the past few years, the Environmental
Protection Agency has started the process of
limiting carbon dioxide and other greenhouse gases
in accordance its authority under the Clean Air
Act. Despite the considerable cost and difficulty
associated with even a national approach, it offers
a more reasonable path than does the idea of each
state seeking its own, piecemeal solution. We
recommend that the legislature conduct a serious
review of the federal strategy before considering
modifications to the renewable energy standard
or the CIP requirements or pursuing other state
efforts to address this global issue.
Environmental Regulatory Timeline for Coal Units
PM-2 5 l Began
SIPS due Begin CAIR
('97) CAIR Phase
Phase Annual
CAMR R Annual S02 Cap
Delisting NOx Cap
Rule vacated Propt> ed
Rule for CCBs
Management
PM2s
4 Next PM-
Fin,aJ 2.5
P,r.Ae ftx NAAQS
GCB- Rent'::
Mgtfk
HAPs MAGI
props' '
rult. Final EPA
Nonattainment
316(ty propped Designations
rule expected
[Esh]
SO2/NO2
Secondary
NAAQS
CAIR
Effluent Gui 6ein6S
Final rule expected
1 Next Ozone
NAAQS Revision
316(b) Anal ruin•
expected
Cl ater
3-4 yrs Riser fln : ( i Lia
------ I - - -_ - - --
Effluent Guidelines
fximpliance 3-5 yrs
after finat rule
PM2.5 --- - -- ----- - -- -- - -- � ------------
SIPs due ___.._ __ __.. -' Beginning CAIR �^
(06) New PM -2.5 N.AAQ" Phase II Annual Beginning
Destanatlons S02 & NOx Caps CAIR Phase
II Seasonal
Begin Compliance NAPS MALT NOx Cap
Rquimmonts under Compliance win C,empliande 3 yrr,
Final CCB Ruia CAIR aftci final rule
(groundwater Replacement Rule
monitoring, double
monitors, closure,
dry ash conversion)
Hg /HAPP� [ CU21 i
— adapted from Wegnan (EPA 2003)
2013 State Position Statements / 9
•
•
Ozone S02lNU2
cseginning
Prmrary
Revised CAIR Phase
I Reconsidered ''IAAQS
Ozone Seasonal
Ozone Proposed CAIR
NAAQS NOx Cap
NAAQS Replacement
Final CAIR
;AIR
Rule Expected
Replacement
acaled
Rule Expected
Effluent
CAIR
Guidelines
Remanded
.Mary proposed rule
1
NAAQS >t expected,'
PM-2 5 l Began
SIPS due Begin CAIR
('97) CAIR Phase
Phase Annual
CAMR R Annual S02 Cap
Delisting NOx Cap
Rule vacated Propt> ed
Rule for CCBs
Management
PM2s
4 Next PM-
Fin,aJ 2.5
P,r.Ae ftx NAAQS
GCB- Rent'::
Mgtfk
HAPs MAGI
props' '
rult. Final EPA
Nonattainment
316(ty propped Designations
rule expected
[Esh]
SO2/NO2
Secondary
NAAQS
CAIR
Effluent Gui 6ein6S
Final rule expected
1 Next Ozone
NAAQS Revision
316(b) Anal ruin•
expected
Cl ater
3-4 yrs Riser fln : ( i Lia
------ I - - -_ - - --
Effluent Guidelines
fximpliance 3-5 yrs
after finat rule
PM2.5 --- - -- ----- - -- -- - -- � ------------
SIPs due ___.._ __ __.. -' Beginning CAIR �^
(06) New PM -2.5 N.AAQ" Phase II Annual Beginning
Destanatlons S02 & NOx Caps CAIR Phase
II Seasonal
Begin Compliance NAPS MALT NOx Cap
Rquimmonts under Compliance win C,empliande 3 yrr,
Final CCB Ruia CAIR aftci final rule
(groundwater Replacement Rule
monitoring, double
monitors, closure,
dry ash conversion)
Hg /HAPP� [ CU21 i
— adapted from Wegnan (EPA 2003)
2013 State Position Statements / 9
•
•
Conservation
Background
Minnesota's municipal utilities support energy
conservation. The wise use of energy is in keeping
with the main goal of our electric and gas services
— to provide good service at a reasonable price.
Helping customers improve their efficiency helps
the environment, helps the utility defer the
need to invest in generating facilities, and helps
consumers manage their energy bills. Toward that
end, Minnesota's municipal utilities currently
spend about $18 million per year on Conservation
Improvement Programs (CIP).
Municipal utilities were early leaders in developing
programs to manage and control customers' peak
usage. Municipal utilities have become increasingly
engaged in developing and implementing
conservation programs. Many have been operating
energy efficiency programs for well over 20 years.
AMunicipal utilities' support for energy conservation
as been demonstrated by their continuing efforts
to meet state energy conservation mandates, which
have been evolving over the course of the last 20
years.
The state mandate for CIP began in 1993, when
Minnesota law required municipal electric utilities
to spend 1% of their gross revenues on CIP
programs. In 2001 the Minnesota State Legislature
expanded municipal involvement in these programs
by increasing CIP spending by electric operations
to 1.5% of gross revenues, gradually reducing the
amount of spending on load management that
could be used to meet municipal CIP spending
requirements.
In 2007, the Minnesota Legislature expanded
the statewide CIP mandate by adding an annual
energy savings goal of 1.5% of total energy sales
to the spending requirement of 1.5% of revenues.
The new added requirement is very difficult to
meet and perhaps impossible to meet for some
small systems with little load growth. In order
0 o meet or even approach the goal, a utility must
pend substantially more than the 1.5% of revenue
required prior to 2007. Some utilities have picked
10/ 2013 State Position Statements
1
Position Statement
much of the low- hanging fruit and are finding it
more and more difficult to maintain cost - effective
conservation programs.
MMUA Position
Minnesota's municipal utilities are serious about
conservation, but we are also serious about
spending our ratepayers' dollars wisely. With that
in mind, we have a number of concerns regarding
the CIP program as it is currently constituted.
Not Sustainable. The Conservation Improvement
Program in its current form is not sustainable over
the long term. The legislative intent was to compel
cost - effective measures, but the cost - effectiveness of
measures going into the future will decline quickly.
• The legislature should consider ways to clarify
the cost - effectiveness provisions of the statute.
- Before any new expansion of CIP is imposed, a
detailed study should be made of the costs that
will be incurred by rate payers to meet changing
goals.
ANORANIIA419
Legitimate Savings. The current
program does not recognize much of
the legitimate energy savings that do
or could occur from utility efforts.
Life -of- measure savings.
Energy savings from adopting
most energy efficiency technologies
continue to accrue over the useful
life of the measure. But the CIP law
recognizes the energy savings of a
given measure only in the year in
which it is installed or adopted. For
measures with useful lives of more
than one year, the energy savings
accruing during those years should
be counted towards savings goals.
System improvements.
Current law provides a greater incentive for
utilities to create energy savings from measures
affecting the amount of energy consumed by
the customer than from measures that could be
taken to prevent energy loss from generation,
transmission and distribution required to serve
the customer. These savings have the same
environmental value and should be credited on
an equal basis with behind - the -meter energy
savings.
Educational Efforts.
Much of the potential energy savings from
utility efforts could come from the changing
behaviors of customers. Utilities cannot make
those changes happen without communicating
the benefits of making energy- conscious
Position Statement
0
decisions to customers. These educational •
efforts are among the most effective means of
creating energy savings, but they are hard to
quantify and are not recognized under the CIP
program. If the program could recognize these
savings, utilities would have an incentive to
place a higher emphasis on consumer education,
which is critical to achieving long -term changes
in energy usage patterns. The energy education
efforts of public power communities should
be given credit for energy savings deemed to
have occurred as result of consumer education
efforts. If savings credits are not acceptable, the
Department of Commerce should be required
to run a state -wide education program from the
proceeds already assessed to utilities.
2013 State Position Statements / 11
0
0
i
Position Statement
Telecommunications and Broadband Law
The Minnesota Governor's Task Force on
Broadband recently released its Annual Report
and Broadband Plan, including recommendations
for the 2013 legislative session. The Report noted
that Minnesota is lagging in meeting its goals.
Unfortunately, the recommendations made in this
report are unlikely to lead to the meeting of those
goals.
The idea of re- writing state telecom law was a
priority of the Ventura administration but, even
with agreement among various parties that state
law was antiquated, the discussion never gained
much steam, largely because the telecom companies
decided the law was just fine after all. Efforts have
been made over the years to remove or reduce the
super- majority referendum requirement to build a
municipal telephone exchange, but have withered
in the face of vociferous opposition.
Municipal involvement in the telecommunications
field has been a hot - button topic over the years.
The recent report mentioned "public- private
broadband projects" but makes no specific mention
of how to foster such projects. The state needs to
12/ 2013 State Position Statements
be more open to helping local government develop
partnerships, if it is ever to reach its broadband
goals.
Cities have proven capable of providing a full
range of telecommunications services over
the years. Counties are providing cutting -
edge communications services. The Southwest
Minnesota Broadband Services project (a
consortium of eight cities) shows how ordinary
people, working through their local governments,
can provide high - quality voice, video and data
service at reasonable prices.
After much work, a similar project in Renville
and Sibley counties has recently been stymied
due to concerns over the ability of city- county
partnerships to issue bonds. The project itself has
been enthusiastically supported by rural and city
interests and was well on its way to construction
before last- minute legal concerns were voiced.
This is just the type of project the state should be
fostering.
A perfect example of public - private partnerships
exists in the electric utility industry. Despite
animosities, largely in the formative years,
municipal, investor -owned and cooperative
utilities jointly invest in capital- intensive projects
on a regular basis. Utilities do this because they
recognize the level of capital needed to improve
service to their customers, and realize an effective
way to raise the needed capital is to partner with
others willing to invest, regardless of philosophical
differences.
MMUA Position
The Legislature should expand the ability of
local governments to partner with others in
providing telecommunications services. Enacting
guidelines to allow public - private investment in our
broadband infrastructure would similarly benefit
citizens of Minnesota.
IF
Position Statement•
Addressing the Costs of Clean Water
Background
Despite the tremendous investment by local
government, the U.S. Environmental Protection
Agency estimates that there still is a $500 billion
"needs gap" to meet water and wastewater
infrastructure needs and to comply with current
environmental mandates.
MMUA members, who have made very heavy
investments in sewer and water facilities over the
years, are experiencing first -hand the need for
much greater investment, particularly regarding
the construction, operation and maintenance of
water and wastewater treatment facilities. One of
the greatest sources of these cost increases comes
from the expanding number of regulations and the
growing list of contaminants that must be dealt
with under state and federal law.
There is an economic component to the discussion
of this issue as well. Expanded investment in water
and wastewater facilities is not only important
for public health, but has become an essential
ingredient for economic development. The heavy
cost increases for water and wastewater facility
investment, if not addressed, are sure to adversely
impact the economic viability of our Minnesota
cities. Despite these increases, there have been
serious proposals on the state and federal level to
eliminate the income- fax exemption on municipal
bonds, the most important financial tool we have in
funding necessary infrastructure improvements to
water and wastewater facilities.
At present, there seems to be a lack of appreciation
at both the state and federal levels of government
regarding the tremendous problem that this
situation has created for Minnesota communities,
which must bear most of the burden from the
increased costs of new water and wastewater
treatment facilities. We believe that public policy
makers at all levels should be in a position to
review and understand the increased costs brought
about by this increased regulation.
MMUA Position
MMUA favors a state study that would chart
historic costs of construction, operation and
maintenance of water and wastewater treatment
facilities. We envision a study that would also
establish a standard for comparing costs based on
plant output. MMUA also supports a requirement
that a specific agency in state government be
charged with keeping track of these costs going
forward and report the results of these studies at
the beginning of each biennial session.
It is not the intent of MMUA or its members to
argue for or against the inclusion of particular
substances in the list of contaminants established
by State or Federal authorities that must be
removed from drinking water or from wastewater.
It is, rather, our intent that elected and appointed
policy makers be provided information that will •
help focus attention on the dramatically increasing
costs of clean water. Access to accurate cost data
will be a great help in the development of policies
to address this quiet crisis in local government
services.
Also, we call upon the State Legislature and
Congress preserve the state and federal income
tax exemption on municipal bonds, our most
important financial vehicle for raising the capital
to fund the increasingly expensive infrastructural
improvements that must be made to protect
Minnesota's water resources.
2013 State Position Statements / 13
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Position Statement
The Right of Municipals to Grow With Their Cities
Background
Minnesota municipal electric utilities
have had the right to serve their entire
communities since they were formed,
many more than 100 years ago. Municipal
utilities grow with their cities for a
number of reasons, including:
• To treat all electric ratepayers and
taxpayers in the city equally.
• To preserve the financial stability
and fiscal integrity of the city's overall
financial structure and credit ratings.
• To provide for greater efficiency of
the city and municipal utility through
economies of scale.
0. To facilitate intermediate and long range
planning for electric generation, transmission,
and distribution facilities — for the municipal
utility and neighboring utilities.
• To provide electric service to residents and
users in the city at terms and conditions subject
to the control and regulation of the city.
City services, particularly sewer and water
facilities, drive development. Recent studies have
shown that the costs of sewer and water treatment
have been increasing dramatically in the past
25 years, while, at the same time, grant money
from the federal and state government has been
reduced to almost nothing. Therefore, it is proper
that the cities that bear the burden of providing
these services be given every opportunity to provide
electricity to the new loads that settled in our cities
as a result of our efforts. It is our electric customers
— not those of co -ops or investor -owned utilities —
that should benefit from the economies of scale that
result from our development efforts.
rior to 1974, there was no state regulation of
tilities in Minnesota. The regulation that did exist
was through the granting or withholding of city
14 / 2013 State Position Statements
franchises. Investor -owned utilities wanted state
regulation so they could deal with one state entity
rather than each individual city. The cooperatives
wanted service territories to prove to their banker
— the federal Rural Electrification Administration
— that they would have customers to pay for new
power plants and transmission lines. Municipal
utilities wanted only to preserve their existing right
to grow with the cities they serve. The cooperatives
testified in support of preserving this well -
established right and practice.
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 from municipal acquisitions. The
co -ops have attempted to use disputes to derail
the intent of the territory law by obstructing the
municipal electric utilities' right to grow with their
cities.
The 1974 law has worked very well for the electric
cooperatives. Co -ops are growing faster than other
utilities. In fact, the co -ops' customer base has
virtually doubled since the enactment of the service
territory law in 1974.
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Minnesota Public Utilities Commission decisions
concerning compensation for service territory
acquired by a municipal utility have resulted in
financial windfalls to co -ops. Cooperatives receive
reimbursement for facilities, payment for any
reintegration costs, and payment for lost revenue
from existing customers, along with 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 $25 million.
A number of co -ops have pursued increasingly
extreme positions in negotiations, demanding ever
higher levels of compensation. Several cooperatives
have forced municipals to `freeze' service territories,
or resort to lengthy, expensive action before the
Minnesota Public Utilities Commission or before
the district courts. There is growing evidence that
this is a coordinated attempt not only to obstruct
municipal growth, but to enable cooperative
acquisition of municipal utilities. 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 municipal
utilities from growing with their cities.
Efforts to Negotiate
Municipal electric utilities have made three
Position Statement
recent efforts to find a compromise with electric
cooperatives on the service territory issue — as part
of discussions concerning industry restructuring
in 1998, an effort at mediation in 2001 and a joint
task force that met in the spring and summer of
2008.
The most recent attempt nearly bore fruit. The
two sides reached agreement on 18 of 20 issues
identified by MMUA, with only two minor issues
remaining. Unfortunately, the cooperatives
suspended the negotiations before complete
agreement was reached. Since the negotiations
concluded, a number of municipals and co -ops have
entered into service territory agreements that
follow the "template" that was developed through
the negotiation process.
MMUA Position
Municipal utilities cannot forego the essential right •
to grow with our cities, which has been recognized
since the inception of the industry more than one
hundred years ago. We remain willing to work
with otherindustry groups to make the law easier
to administer for all parties, by adding a formula,
based on the 2008 negotiations, to state law.
As custodians for our citizens' rights, cities and
municipal utilities will defend the right to grow
with our cities.
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2013 State Position Statements / 15