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2015 STATE POSITION STATEMENTS
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Table of Contents
Clean Power Plan 3-5
Renewable Energy Standard 6-7
Conservation Improvement Program 8-9
Local Regulation 10
Refundable City Sales Tax Exemption 11
Clean Water Costs 12
Broadband 13
Why Public Power? 14
Map - Municipal Electric and Gas Utilities of Minnesota15
The following position statements are a work product of various
MMUA staff members, in conjunction with the MMUA Government
Relations Committee.
Photo/graphic credits:
page 3:Steve Downer, MMUA
page4:table by Jack Kegel, MMUA
page 4: photos both by Steve Downer, MMUA
page 5:Xcel Energy
page 6:Steve Downer, MMUA
page 7: both by Steve Downer, MMUA
page 8:courtesy of Grand Rapids Public Utilities(bottom)and Austin Utilities
page 9:(top)courtesy of Delano Municipal Utilities
page 9:(bottom left)courtesy of SMMPA/Preston Public Utilities
page 9: bottom right,Steve Downer MMUA
page 10: both Steve Downer, MMUA
page 11:Steve Downer, MMUA,and Grand Rapids Public Utilities(bottom right)
page 12:Steve Downer, MMUA
page 13:Steve Downer, MMUA
page 14:Owatonna People's Press
page 15:graphic by Steve Downer
Front and back covers: legislative Public Information Services
11armarsevie
1111,11114111 Position Statement
Clean Power Plan
Background
On June 18, 2014, the U.S.
Environmental Protection
Agency(EPA)published
a proposed rule intended
to address climate change
concerns, known as the Clean
Power Plan(CPP).The CPP
would establish emission
guidelines for existing
electric generating units �-
(EGUs)under section 111(d)
of the Clean Air Act(CAA).
EPA is expected to issue
the final version of the CPP
in mid-summer 2015. It is
likely that the final rule will
contain significant changes
and clarifications.
1, IMP
Legal Issues
The CPP is very different °
from clean air regulations
developed by EPA in The new CapX2020 transmission lines were built, in large part,to carry wind power.Will the
the past. It is subject to carbon dioxide emission reductions enabled by this more than $2 billion project count toward
numerous legal challenges the state's Clean Power Plan emissions reduction targets?
and is probably more
susceptible to being overturned than most new the amount of renewable power to be built, and(iii)
regulations. Section 111(d) of the CAA is intended to the electricity consumption of customers. This is an
regulate stationary sources of air pollution,but the enormous and transformative expansion in EPA's
CPP doesn't regulate individual sources, such as power regulatory authority without clear congressional
plants. It regulates states. The law intends that states authorization, which is precisely what the Supreme
develop plans which establish standards of performance Court invalidated in UARG v. EPA, 573 U.S. at 2431
for power plants. But the CPP turns this process on its (2014).
head and makes states the regulated entities rather
than the regulators that the law intends them to be. CPP treatment of early action.
Under EPA's methodology, states are assumed to
Of the nearly 100 New Source Performance Standards achieve minimal reductions in CO2 emissions from the
(NSPS) and emission guidelines EPA has developed electric utility industry during the 15-year period from
since 1970, every one has been based on a"system of 2005 to 2020. States are then required to achieve their
emission reduction" that is incorporated into the design entire assigned reduction(41 percent for Minnesota)
or operation of individual sources. The CPP instead during the 10-year period from 2020 to 2030.This
uses a series of"building blocks"that go well beyond the construct not only flies in the face of reality in early
operational characteristics of the power plant that is adopter states such as Minnesota, it also ignores the
the source of the CO2 emissions that the EPA wants to incremental pace of change that occurs in the highly
reduce. regulated and capital-intensive electric utility industry.
The EPA would replace the Federal Energy Regulatory Although the goal of the CPP is to achieve a 30 percent
Agency and the states to become the primary regulator reduction in 2005 carbon dioxide emissions, the actual
of electric power within the United States, including base year for the plan is 2012. Reductions in CO2
regulating(i)the dispatch of electric generation, (ii) emissions achieved during the seven-year period from
2015 State Position Statements/3
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Figure 1
Annual Minnesota Generation from Selected Sectors,Sales, and Electric Industry CO2 Emissions 2005-2012
Electricity Net Electricity Net
Electricity Net Generation Generation Electricity Net Minnesota Electric Power
Generation From From Nuclear Generation Total Retail Industry Carbon
From Coal Natural Gas Electric Power From Wind Sales Dioxide
Emissions (1,000
Year mWh mWh mWh mWh mWh Metric Tons)
2005 32,949,845 2,707,267 12,835,219 1,582,477 66,019,053 39,516
2006 33,070,451 2,560,797 13,183,418 2,054,947 66,769,931 38,183
2007 32,190,373 3,842,477 13,103,000 2,638,812 68,231,182 38,321
2008 31,755,253 2,865,846 12,996,838 4,354,620 68,791,615 36,821
2009 29,327,226 2,846,483 12,393,425 5,053,022 64,004,463 33,689
2010 28,082,550 4,340,847 13,478,046 4,791,723 67,799,706 32,946
2011 28,258,626 3,350,773 11,958,525 6,725,695 68,532,708 32,618
2012 22,722,774 7.088.205 11.943.790 7,615.408 67,988.535 28.494
Change -31% 162% -7% 381% 3% -28%
Source: NA State Electricity Profiles
2005 to 2012 are completely ignored by EPA's formula. other than Xcel to achieve 25 percent renewable energy
Further, any CO2 reductions during the eight-year by 2025.Xcel, which accounts for about 46 percent of
period from 2013 through 2020 beyond EPA's modest total sales, is required to achieve 30 percent renewable
assumptions don't count toward achieving the state's energy by 2020. Minnesota has banned the construction
goal; they actually make the goal harder to achieve. of or purchase from large new coal-fired power plants
and imposed one of the most stringent energy efficiency
Minnesota Greenhouse Gas Reduction Efforts requirements in the country.
Minnesota has been a leader in the Upper Midwest in
developing state energy policy to reduce greenhouse The Sustainable Building 2030 program requires
gas emissions. Minnesota has established a goal of performance standards for new and substantially
reducing greenhouse gas emissions from 2005 levels by reconstructed buildings to reduce their CO2 emissions
15 percent by 2015, 30 percent by 2025 and 80 percent by 60 percent in 2010; 70 percent in 2015;80 percent in
by 2050. Our RES requires power suppliers in the state 2020; and 90 percent in 2025. It is an energy goal of the
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Many smaller fossil fuel-fired power plants,like the gas-fired Willmar Municipal Utilities diversified its energy portfolio in
32-megawatt Northeast plant owned by Austin Utilities,are in 2009 with the$10 million addition of two,two-megawatt wind
the process of being retired from service. turbines,which feed directly into the local electric system.
4/2015 State Position Statements
11111111/1
IVIIVIWt
state that by 2030, 10 percent of the retail electric sales to 2020. EPA's treatment of early adopter states in the
in Minnesota be generated by solar energy. By 2020, at final rule will have huge implications for Minnesota.
least 1.5 percent of retail electric sales made by investor-
owned utilities must come from solar energy. Choice of
� � �
baseline period
Greenhouse Gas Reduction Program Results Sherco 3,
A review of Minnesota data clearly shows both how Minnesota's
effective Minnesota's efforts have been and how severe newest and
the penalty can be for an early adopter state. most efficient I: -
coal plant
2005—2012 (jointly owned •y`
Figure 1 (facing page) shows a 28 percent reduction by Xcel Energy
in Minnesota's annual power sector CO2 emissions and Southern
from 2005 to 2012.As we point out later, Minnesota's Minnesota The Southern Minnesota Municipal Power
newest and most efficient coal plant was off line during Municipal Agency owns 41 percent of Sherco 3.The
all of 2012, which makes Minnesota's CO2 emissions Power Agency plant is co-owned and operated by Xcel
for that year abnormally low. If we assume that half (SMMPA))was Energy.
of the reduction from 2011 to 2012 is due to the Sherco off-line during
3 outage and half due to the impact of Minnesota all of 2012,
energy policy, the reduction is still 21 percent. The the year used by EPA as the baseline in the CPP.As a
Great Recession had an impact on electricity sales, result, Minnesota's mandated CO2 reduction in the plan
but total retail sales have returned to pre-recession is substantially larger than it would be if EPA had used
levels, so any recession impact on CO2 reduction in the typical Minnesota annual coal generation in the plan.
2012 data is minimal. To be conservative, we can state EPA needs to allow Minnesota to select a baseline period
with confidence that Minnesota achieved a genuine that provides an accurate picture of our coal generation
greenhouse gas reduction of 15 percent to 20 percent in a typical year. EPA's decision on the baseline issue
from 2005 to 2012. will have a major impact on Minnesota's mandated CO2
reduction in the final version of the CPP.
2013—2020
Minnesota will continue its aggressive greenhouse • Cross-state ownership of renewables. The CPP treats all
gas reduction policy during the eight-year period from renewables located in a state as essentially"belonging"
2013 through 2020. In 2020 Xcel will be at 30 percent to that state. But ownership of renewable energy
renewable and all other power suppliers will be at 20 projects isn't that simple. Minnesota power suppliers
percent renewable, for a statewide renewable portfolio have developed or contracted with renewable projects
of 24.6 percent. Minnesota's aggressive energy efficiency in other states in order to meet the requirements of
requirements and energy efficiency performance our renewable energy standard. Conversely, utilities
standards for buildings will provide increasing levels from other states have developed renewable projects
of greenhouse gas reductions with each passing year. in Minnesota. EPA will have to clarify how renewable
Minnesota energy policy will provide additional energy projects are to be allocated among states that
greenhouse gas reductions from 2013 through 2020 of 10 have legitimate reasons to claim the output under
percent to 15 percent. the CPP.Any decision the EPA makes will produce
winners and losers, and will have a significant impact on
Unfair treatment of early adopter states Minnesota's ultimate obligations under the CPP.
Minnesota is on track to achieve reductions in CO2
emissions from electric generation of perhaps 30 percent MMUA Position
during the fifteen year period from 2005 to 2020.And As proposed, EPA's Clean Power Plan presents very
none of these reductions will count toward achieving our serious problems for Minnesota.We can only hope that
goal under the CPP.This result completely disregards EPA will address these issues in the final version of the
substantial reductions in CO2 that are being achieved rule, which is expected in mid-summer 2015. Only when
in Minnesota and other early adopter states. Minnesota the rule is final can Minnesota begin in earnest on the
would be forced to achieve a 41 percent reduction in development of its CPP plan. It would be premature and
CO2 emissions between 2020 and 2030 after reducing unwise to make any changes in state laws that would be
emissions by perhaps 30 percent in the years leading up affected by the rule until then.
2015 State Position Statements/5
ittnytifin Position Statement
Renewable Energy Standard -
Minnesota's municipal
utilities have a long history of
involvement with renewable
energy. In the early part of the
20th Century, communities like
�;
Redwood Falls, Lanesboro, Thief It `; s.
River Falls and Rochester put
their local renewable resources '-11
to work toward their citizens'
electric service needs. Then in
the 1940s and`50s, the federal
government established a system «
of dams along the Missouri River
and its tributaries and created
the Preference Power program •
that allowed consumer-owned
municipal and cooperative • .
utilities in western Minnesota to .5 a
secure allocations of hydropower
from the Western Area Power
Administration under long-term You would be hard-pressed to find a Minnesota city with a more diverse power supply
contracts.These allocations have mix than Redwood Falls.This mix includes federal hydropower,coal-fired electricity from
been renewed over the years, SMMPA and Sherco 3,output from the local hydroelectric plant and these two wind
allowing irrigation, electricity turbines,which feed directly into the local distribution system.The utility also has local
production, navigation and flood reciprocating engine electric generators,for emergencies.
control as well as recreational
use of the Missouri to continue— on the timelines in the draft rule, states are expected
all funded by Preference Power customers. to have a year or more to develop their plans to comply
with the rule. The rule is discussed in more detail
Today Minnesota's renewable energy standard, based previously at pages 3-5.
in significant part on a proposal developed by MMUA,
is adding more renewable energy to our state's power EPA will have to make judgment calls on a huge array
supply system every year.We will continue to see of outstanding issues as it develops the final version
additional renewable development under the RES of the rule. Some of those decisions will have major
through 2025. implications for determining Minnesota's obligations
under the plan and how our state will go about meeting
Some advocates are calling for an increase in the RES those obligations. Will early adopter states like
this year to 40 percent by 2030. We believe, for the Minnesota receive credit for greenhouse gas emission
reasons set out below, that increasing the RES at this reductions achieved prior to 2020?Will Minnesota be
point in time would be premature. There is no urgency allowed to select a baseline period that reflects typical
to act now, and there are good reasons to bide our time annual coal generation for our state?Will renewable
until we have the information in hand that will enable energy facilities have to be located within Minnesota in
us to make informed and confident decisions regarding order to be included in Minnesota's CPP plan?
future renewable development.
We will know the answers to these and other important
The Clean Power Plan—A Work In Progress questions sometime this summer. Our state will then
The federal Environmental Protection Agency issued have at least a year to develop its plan, and renewable
its draft Clean Power Plan(CPP)on June 18, 2014. The energy will be one of the four major building blocks
agency has received literally millions of comments on of the plan.We will have plenty of time to make any
the plan and is expected to issue the final version of the necessary changes to our renewable energy standard
CPP in mid-summer 2015. It is likely that the final rule after we know what the renewable energy component
will contain significant changes and clarifications. Based of Minnesota's CPP plan looks like.There is no reason
6/2015 State Position Statements
A
to rush to judgment now and risk having to make These and other unanswered questions lead us to
adjustments to the RES to conform to the state's CPP conclude that MRITS is useful but not conclusive.
plan at a later date. We would be better advised to conduct a study that
incorporates Minnesota's actual CPP compliance plan in
The Minnesota Renewable Energy Integration and combination with the plans of other states in our region
Transmission Study— to determine how the transmission system would be
Some Questions Answered, Others Remain impacted by a 40 percent RES and what modifications
The recently completed MRITS study concluded that would be necessary to accommodate it.
Minnesota's renewable energy standard could be
modified to require 40 percent renewable energy by And we have time to address these issues. Under the
2030, with the addition of 54 transmission mitigations to existing RES Xcel will be at 30 percent renewable by
accommodate the increased wind and solar generation at 2020 and the other power suppliers in the state will
a projected cost of$373 million. be at 20 percent by 2020, and on track to be at 25
percent by 2025. We can amend the RES as necessary
While it might seem at first glance that this is all the to accommodate our CPP state plan once we have a
information we need, the issues become cloudier when clear idea of what the plan contemplates.And under the
we examine the assumptions underlying the study. draft version of the CPP, there is absolutely no reason to
MRITS did not take into account changes to the utility accelerate development of renewables prior to 2020.
system that could result from the EPA Clean Power
Plan. The study assumed that Minnesota's renewable MMUA Position
energy increased to 40 percent, while the rest of MISO The Clean Power Plan will not be finalized until mid-
North/Central would be at 15 percent. Given that summer 2015. Then the states, including Minnesota, will
renewable energy is one of the four building blocks in have a year or longer to devise their plans for complying
the CPP, it seems likely that some of our surrounding with it.The MRITS study is useful information,but
states will choose to develop renewable energy at a level a number of unanswered questions remain. There is
significantly higher than 15 percent.And MRITS looked no need to act now on increasing the RES.The time
only at transmission upgrade costs within Minnesota, to consider revising the RES will come when our state
and did not consider cost impacts elsewhere in the CPP plan is in place and we have had the opportunity
region. to model the full impact of our plan in combination with
the plans of other states in the region.And at least
The study assumes that many coal units in the region under the draft version of the CPP there is absolutely
would act as"must-run"units, or that all coal units were no reason to accelerate renewable development prior
economically committed and that nine additional coal to 2020.This is not the time to consider increasing
units were available. These assumptions don't match Minnesota's renewable energy standard.
the expected outcome under the CPP. Further, the study
did not examine the economic or wear and tear impact of
increased cycling of coal plants.
40w4k :u
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The two,two-megawatt wind turbines owned by Willmar
A project to burn corn cobs in Willmar's power plant has been Municipal Utilities were projected to supply approximately three
permitted but awaits favorable market conditions to implement. percent of the utility's annual energy needs.
2015 State Position Statements/7
I Position Statement
Conservation Improvement Program
Background t, ; „ ,. , «. .- I
Minnesota's municipal utilities support energy ,, ,_ .
conservation. The wise use of energy is in keeping t ..
with the main goal of our electric and gas services ',
4
—to provide good service at a reasonable price. } I '
s a $
Helping customers improve their efficiency helps the 6 ,-
environment, helps the utility defer the need to invest in ,.., V' , ,
generating facilities, and helps consumers manage their t "4`
energy bills. Toward that end, Minnesota's municipal t
utilities currently spend about $18 million per year on t _
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 i
for well over 20 years.Municipal utilities'support for Austin Utilities General Manager Mark Nibaur visited with
energy conservation has been demonstrated by their customers about the utility's energy efficiency offerings.
continuing efforts to meet state energy conservation
mandates, which have been evolving over the course of In 2007, the Minnesota Legislature expanded the
the last 20 years. statewide CIP mandate by adding an annual energy
savings goal of 1.5 percent of total energy sales to the
The state mandate for CIP began in 1993, when spending requirement of 1.5 percent of revenues.The
Minnesota law required municipal electric utilities added requirement is very difficult to meet and perhaps
to spend 1 percent of their gross revenues on CIP impossible to meet for some small systems with little
programs. In 2001 the Minnesota State Legislature load growth. In order to meet or even approach the goal,
expanded municipal involvement in these programs some utilities must spend substantially more than the
by increasing CIP spending by electric operations to 1.5 percent of revenue required prior to 2007. Some
1.5 percent of gross revenues, gradually reducing the utilities have picked much of the low-hanging fruit and
amount of spending on load management that could be are finding it more and more difficult to maintain cost-
used to meet municipal CIP spending requirements. effective conservation programs.
'''' MMUA Position
Minnesota's municipal utilities are serious about
'§ ;, ,. conservation, but we are also serious about spending our
s_
ratepayers'dollars wisely.With that in mind, we have a
number of concerns regarding the CIP program as it is
,. currently constituted.
Not Sustainable
"°" 1 The Conservation Improvement Program in its current
form is not sustainable over the long term. Legislative
`' intent was to compel cost-effective measures, but the
- iiik L cost-effectiveness of measures going into the future will
decline quickly. The legislature should consider ways to
Y clarify the cost-effectiveness provisions of the statute.
4 *- Before any new expansion of CIP is imposed, a detailed
study should be made of the costs that will be incurred
Grand Rapids Public Utilities is among the municipal utilities by rate payers to meet changing goals.
deploying smart grid technology.
8/2015 State Position Statements
DMDML(
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Legitimate Savings
The current program does not recognize much of the is i
legitimate energy savings that do or could occur from s,
utility efforts.
Life-of-measure savings : a* .`° .
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 !! "t" i .it _ , ,^�
savings of a given measure only in the year in which it A _„
is installed or adopted. For measures with useful lives of '' No 1
more than one year, the energy savings accruing during ! �''
those years should be counted towards savings goals. i - E
The proposed federal Clean Power Plan would count ..,,...�-
energy savings from the first ten years of the life of an , • -_ , r- z-
improvement measure. It may make sense for Minnesota
to plan for a state approach that conforms with the r
federal standard. Delano Municipal Utilities went door-to-door with its
conservation improvement program,and enlisted high school
System improvements students in the effort.
Current law credits utilities for doing utility system
efficiency improvements only after they meet a 1 percent conscious decisions to customers.These educational
savings goal based strictly on efficiency measures taken efforts are among the most effective means of creating
by customers. System efficiency improvements are just energy savings, but they are hard to quantify and are
as important and effective as customer programs, and not recognized under the CIP program. If the program
are often a more cost effective means of saving energy. could recognize these savings, utilities would have
The provision that precludes utilities from receiving an incentive to place a higher emphasis on consumer
credit for system improvements unless they have education, which is critical to achieving long-term
achieved 1 percent savings through customer efficiency changes in energy usage patterns.The energy education
measures should be eliminated. efforts of public power communities should be given
credit for energy savings deemed to have occurred as
Educational Efforts result of consumer education efforts. If savings credits
Much of the potential energy savings from utility efforts are not acceptable, the Department of Commerce should
could come from the changing behaviors of customers. be required to run a state-wide education program from
Utilities cannot make those changes happen without the proceeds already assessed to utilities
communicating the benefits of making energy-
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Preston Public Utilities wanted to replace every
incandescent bulb in the city with a compact Municipal utilities are both energy suppliers,and customers. Efforts to cut
fluorescent.So it,along with SMMPA staff,delivered their own use,through initiatives like efficient municipal street lighting,need
the bulbs personally to each home and business. to be acknowledged in a well-rounded conservation program.
2015 State Position Statements/9
DMD2L(�
IVIIVIWW Position Statement
Local Regulation
Background a _,. _ M,.
Like many states, Minnesota has two parallel I `" 7 a
regulatory structures for electric and gas
,� ..�
utilities. Rates and service practices of `
investor owned utilities are regulated at the T „A __ 7., i-"
state level by the Minnesota Public Utilities
Commission. Consumer-owned utilities— e+ ' on, . -44...
municipal utilities and cooperatives—are . _ =„ '"
regulated at the local level. Municipal utilities z
on 4MAN, - LL -.,a, g,
are regulated by the city council or by an "" i , ,,;.
appointed or elected local public utilities 1 i —'__
it—
commission. Cooperatives are regulated by _ ` �..
their boards of directors. ;*tw
4
In recent years some investor-owned utility iii. - � "
customers have been calling for changes to the
traditional rate base—rate of return regulation .rr — r �` r i
employed by the MPUC to enable IOUs to it
be more responsive to customer concerns
and desires. The current e-21 Initiative is ' - ,
examining potential modifications to the ., . .
regulatory model for investor-owned utilities.
i
Utility employees including General Manager Connie Wangen,center,
MMUA takes no position on how investor- welcomed customers to the October 2014 Princeton Public Utilities open
owned utilities should be regulated,but we house.
note that the move to revise the regulatory
model to enable IOUs to be more responsive to legislature should respect and preserve our tradition
their customers would align our statewide regulatory of effective local regulation as it considers potential
model more closely with municipal utilities, which are modifications to the statewide regulatory model for
both owned and governed by their customers. investor-owned utilities.
The city councils and commissions that govern municipal MMUA Position
utilities are close to the customer. City councilors or Our legislature should respect and maintain Minnesota's
commissioners live in the community and are customers longstanding tradition of effective local regulation for
of the utility they govern. They are fully attuned to municipal electric and gas utilities.
public opinion and understand the role that the
utility can play in helping the community progress
and prosper. i __ -4.
We respect the efforts of those who seek to reform .
the statewide regulatory model that governs our * '"", - 1
colleagues in the investor-owned segment of the
industry.And we hope that they will respect the _;-",'!' ;
integrity of our local regulatory model, which has =.
been in place for more than a hundred years and
has stood the test of time. /
We believe that local regulation is the most r *
effective and responsive form there is, and that
important decisions that affect utility customers are Blooming Prairie city and municipal utility policymakers and staff
best made as close to the customer as possible. Our gathered at a community open house.
10/2015 State Position Statements
ADMDMIL(l
riffiririvjg Position Statement
Refundable City Sales Tax Exemption
Background !
In 2013, the Minnesota Legislature enacted an
exemption of the sales tax on some purchases made by
local governments.The administration of this sales tax
exemption proved difficult for both the Department of
Revenue and local governments alike, so in 2014, the
Legislature provided additional clarification as to the i tix airlu hi&Mari purchases and political subdivisions eligible for the to T'
sales tax exemption. However, there remains in effect s gg
a Department of Revenue rule that makes it extremely p _.,..
difficult for local governments to receive the sales
tax exemption for materials related to a construction
project by not allowing purchases made by the local «...-
government's contractor to be eligible. Municipal projects,like public libraries,benefit the common good.
In practice, this is difficult to manage, as traditional MMUA Position
bidding for construction projects include all labor, MMUA supports efforts to simplify the process to
materials, and equipment needed. The Department of
Revenue rule does allow the sales tax exemption for receive the local government sales tax exemption for
construction material purchased by local governments, construction materials. Statute should be amended
provided the construction contract is for labor only and to allow cities to report sales taxes paid and then to
the local government bears all ownership and liability for receive a refund from the Department of Revenue. This
the materials. The rule also permits a local government would permit cities to use the traditional contracting
to designate a contractor as a"purchasing agent" in process and avoid the added expense and inconvenience
a contract, and thus receive the sales tax exemption of breaking apart construction contracts and assuming
on the condition that all vendors are notified of this liability for materials. MMUA would also support
arrangement, the title of all materials is transferred to making all goods and services purchased by local
the local government, and the local government assumes governments eligible for the sales tax exemption.
all liability for the materials.Along with being time
consuming and difficult to understand, the separate k
purchase of materials or use of a purchasing agent ends 4
up being costly to cities(storage, insurance, etc.).As
MMUA member cities consider upgrades to wastewater
treatment facilities or water utilities—projects with `
significant capital costs—receiving the sales tax r ,
exemption for materials would help defray the cost to
municipal property taxpayers and rate payers.
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Street projects often include replacement of underground sewer
and water facilities. Water supply goes hand-in-hand with municipal electric service.
2015 State Position Statements/11
AMDM L(
rinriagfil Position Statement
Clean Water Costs
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 fie.
comply with current environmental mandates.
MMUA members, who have made heavy investments I �
in sewer and water facilities over the years, are
experiencing first-hand the need for much greater M;
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 The cost of clean water affects the price of many other products
must be dealt with under state and federal law. In and commodities.
August 2014, the Minnesota Pollution Control Agency
adopted new numeric nutrient and Total Suspended supports a requirement that a specific agency in state
Solids standards that will result in the classification of government be charged with keeping track of these costs
many rivers and streams as"impaired" and hundreds of going forward and report the results of these studies at
millions of dollars in compliance costs. the beginning of each biennial session.
MMUA members recognize that expanded investment It is not the intent of MMUA or its members to argue
in water and wastewater facilities is not only important for or against the inclusion of particular substances
for public health, but has become an essential ingredient in the list of contaminants established by State
for economic development. The heavy cost increases or Federal authorities that must be removed from
for water and wastewater facility investment, if not drinking water or from wastewater, but we encourage
addressed, are sure to adversely impact the economic the scientific peer review of proposed regulations.We
viability of our Minnesota cities. Despite these cost believe that elected and appointed policy makers must
increases, there have been serious proposals on the state be provided information that will help focus attention
and federal level to eliminate the income tax exemption on the dramatically increasing costs of clean water.
on municipal bonds, the most important financial tool we Access to accurate cost data will be a great help in the
have in funding necessary infrastructure improvements development of policies to address this quiet crisis in
to water and wastewater facilities. local government services. Further, performing a cost-
benefit analysis of proposed water regulations would
There seems to be both a lack of integrated planning help policymakers determine if the proposal is the best
and recognition at the state and federal levels regarding means to deliver the desired clean water outcome.
the tremendous problem that this situation has created
for Minnesota communities, which must bear most of Also, we call upon the State Legislature and Congress to
the burden from the increased costs of new water and preserve the state and federal income tax exemption on
wastewater treatment facilities.We believe that public municipal bonds, our most important financial vehicle
policy makers at all levels should be in a position to for raising the capital to fund the increasingly expensive
review and understand the increased costs brought infrastructural improvements that must be made to
about by this increased regulation. protect Minnesota's water resources. We further request
that the State Legislature enact a provision to allow
MMUA Position cities to track exemptible sales taxes paid out and to
MMUA favors a state study that would chart historic receive a refund from the Department of Revenue. This
costs of construction, operation and maintenance tool would be specifically helpful in circumstances such
of water and wastewater treatment facilities.We as construction contracts that include both material and
envision a study that would also establish a standard labor costs.
for comparing costs based on plant output. MMUA also
12/2015 State Position Statements
DMML(
IVIIVIWIJ Position Statement
Broadband
Background
Access to 21st Century high-
speed data is crucially important
for local economies and the
future of rural communities.Yet
many rural communities are
stuck with 20th century Internet � x
capability. The Legislature
has set goals for expanding
s
broadband access in Minnesota
but is far from meeting those
goals.Meanwhile the idea of
local government involvement in
providing telecommunications '1
access has received significant
unwarranted and misdirected
criticism.We in Minnesota Municipal broadband projects bring intense local involvement and scrutiny,as this picture
finally need to stop pointing of a joint multi-city/township official and citizen meeting in Winthrop shows.
fingers and aim our efforts together at solving the Wilson, N.C., petitioned the Federal Communications
problem. Commission(FCC)to pre-empt state laws in their
states that ban cities from expanding their high-speed
Where service is lacking, communities must be able to networks. The cities'actions mark the first effort by
offer their own solutions. Cities have proven capable of municipalities to enlist the FCC in challenging state
providing a full range of telecommunications services laws that restrict local governments from offering
over the years. Counties are providing cutting-edge internet service to residents. Supporters of the federal
communications services.The Southwest Minnesota pre-emption note there are similar restrictions in 20
Broadband Services project(a consortium of eight cities) states. Minnesota is cited as one of these states, due to
shows how ordinary people, working through their local its supermajority referendum requirement to build a
governments, can provide high-quality voice, video and municipally-owned telephone exchange.
data service at reasonable prices.
It should not take federal intervention in order for
In Renville and Sibley counties, broadband supporters Minnesota to remove economic development barriers
worked hard and formed a fiber cooperative in an effort that stand in the way of long-term growth and stability
to build out a fiber optic network. The project has been in Greater Minnesota. Our communities and businesses
enthusiastically supported by rural and city interests need high-quality broadband to be competitive in
alike. today's economy. It is essential for business growth
that everyone in Greater Minnesota have access to fast,
Where public-private partnerships are able to bridge reliable broadband service, regardless of who provides
the high-speed digital divide, they should be encouraged the service.
and pursued. A perfect example of public-private
partnerships exists in the electric utility industry. MMUA Position
Municipal, investor-owned and cooperative utilities Minnesota is lagging in meeting its broadband goals.
jointly invest in capital-intensive projects on a regular The Border-to-Border Broadband Fund created by the
basis. Utilities do this because they recognize the level of Legislature in 2014 with $20 million in competitive
capital needed to improve service, and they realize that grants provided some much-needed help to public and
an effective way to raise the needed capital is to focus on private entities in extending high-speed Internet to
their common interests and partner with others seeking areas of rural Minnesota. Still many areas of the state
to invest. Such partnerships have worked in the telecom continue struggling to get by at very low data speeds.
field as well and serve as models for the cooperative MMUA supports further appropriation to the Border-to-
spirit called for in order to connect all of Minnesota. Border Broadband Fund and the removal of barriers to
Recently, city officials in Chattanooga, Tenn., and broadband expansion.
2015 State Position Statements/13
imalArffav fp
Why Public Power?
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photo courtesy of the Owatonna People's Press
One hundred twenty-five Minnesota cities benefit interests of stockholders. Our focus is Main Street,
from having a locally owned and locally operated not Wall Street. We work for you.
municipal electric utility. Thirty-one cities have a
municipal natural gas system. Fifty of our eighty- • We're not in it for the money. Municipal
seven county seats are served by a municipal utilities are not-for-profit and operated in the
electric or gas system. A not-for-profit municipal public interest. Our goal is long-term community
electric or gas utility is a tremendous asset in benefit, not short-term gain. We work hard to save
these uncertain times. Here are some of the you money.
reasons why:
• We're the yardstick for the industry. For
• We have great service. We're part of the generations, public power systems have set
community and our policy makers, managers and standards for rates and service that other utilities
workers are part of the community. Our crews are have had to meet.
always on hand in the event of emergency. You
don't need to call an 800 number to talk to us. • We'll be there. Most Minnesota's municipal
electric utilities have served their communities for
• We're locally regulated. Members of the more than a hundred years. In an era when new
community who live in the community set rates competitors come and go faster than we can learn
and service practices. If you have a problem, you their names, you can count on us. We will be there
know who to talk to. when you need us.
• We're owned by our customers. There is no • We're Public Power.
tension between the interests of customers and the We're here for you!
14/2015 State Position Statements
1MDMEL(
IVIIVIWt
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Roseau
'J�arroad•
•tialiock '
Steoben
.Argyle .Nebvtolden
Alvarado
' 'Warren Thie'River Fads
•East Grand Forks
Clearbrook Mountain Iron •Grand Maass
Nesville ossron •Brwabk
Buhl. u�«,a
:Shelly 'Bag1ei' Keewatin 1-,cr"nc • -Gilbert
•Halsted
Ada r_ohas-5e? • Nashwauk
Grand Rapids
I .s'rs. :ake Pa,
Moorhead •Detroit Lakes ,•
Barnesville
Proctor.
• Perham
N ss.New t�rk M •Mtn• ,Wadena Moose Lake•
Menric•g Staples •Brarierd
•Brecxenndge real"Lake Eagle Bend
.Ciarrssa .Raytail Municipal
Elbow Lake pier
Akexartona• Mora. Electric &
Sauk Centre
• .Melrose
`rmeicp North Bran Natural Gas
•0ronville _Benson Elk River
Kandiyari Grove City ButraA Anoka CrctePmes Utilities of
AfaE15Gn Y.'Illmar Ltteti're!d Derarrn Norih St Paul Minnesota
Nutz,r ,_
.Granite Fa•?s Glencoe Chaska_.Shakopee
0kva Brownton .
Arkrrgtan
Redwooc Falls 1M1hNtr°Q Le Sueur.New Prague Lake Cn.
Marshall. Fairfax :r ,
r13?' Nex Ulm
Sail Peter kihue
T}`e• 'Sleepy Eye •Kasora .Kenyon
Westbrook Springfield Lake Crystal Janes+n^
Mcrnta n Lake •Made•a 45a Rochester
Sant,ate Kasson •Sail Cranes
Dundee •tih'rndom Truman •Bbommg Praf"e Pe ersorl Rushtord
9 e,vscer, Lakeheld • ``IS Spring Valley .•tienalan
Leveme Adnan Worthington • .Alpha •Fairrnom •At.i " Presicri Laresbero Caledonia
Rushmore . Jackson . . Ce glue Earth .Sorg Grove
Bigelc,v „ir,, ,..e Durrell Y Mate Eiden
IIIElectric ■ Electric and natural gas ■ Natural gas only
Note:Many of these utilities also provide water service,and may provide other services as well.
2015 State Position Statements/15
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Minnesota Municipal Utilities Association
3025 HARBOR LANE N., SUITE 400
PLYMOUTH, MN 55447
WWW.MMUA.ORG