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6.2. ERMUSR 03-12-2019 Elk River Municipal Utilities UTILITIES COMMISSION MEETING TO: FROM: ERMU Commission Troy Adams, P.E.—General Manager MEETING DATE: AGENDA ITEM NUMBER: March 12, 2019 6.2 SUBJECT: American Public Power Association Legislative Rally Update ACTION REQUESTED: No action requested BACKGROUND: Every year the American Public Power Association (APPA) holds a legislative rally fly-in where public power representatives from around the nation travel to Washington D.C. to share their main street stories with Congressional members and to advocate for the best interests of their consumer owners. During this rally the APPA Legislation & Resolutions (L&R) Committee also held meetings to vote on APPA regulatory policy. DISCUSSION: This year more than 600 public power representatives including more than 40 Minnesota public power representatives attended the rally.This year's rally was held on February 25-27. Commissioner Matt Westgaard and I attend this year's rally. The L&R Committee considered these five resolutions: 1. Resolution 19-01: In Support of Reducing Wildfire Risk by Adequately Funding Fire Suppression and Forest Health Programs 2. Resolution 19-02: In Support of Ensuring Proper Cost Allocation for the Central Valley Project Improvement Act 3. Resolution 19-03: In Support of Affirming Local Control of Pole Attachments 4. Resolution 19-04: In Support of Municipal Bond Modernization 5. Resolution 19-05: In Support of Controlling Transmission Cost Increases Minnesota Municipal Utilities Association (MMUA) was a sponsor for the resolution on pole attachments and bond modernization. All five resolutions passed unanimously. The APPA legislative priorities were: grid security, power marketing administrations (PMAs), distributed generation, environment, and wholesale electricity markets. Minnesota typically supports all the APPA priorities, but not always. Regardless, MMUA's Government Relations Committee develops federal position statements every year which are specific to the MMUA membership's concerns.These position statements are published and distributed to our congressional members and their staff.The MMUA membership who travels to DC then speaks Page 1 of 2 125 on a focus few issues from these position statements.They year's key MMUA legislative talking points were: 1. Support and Improve Tax-Exempt Financing 2. Preserve Local Pole Attachment Regulation 3. Protect Western Area Power Administration Customers The Minnesota public power delegation was able to meet will all of our congressional members and/or staff to deliver our main street stories as they relate to the MMUA position statements. Additionally, MMUA hosted a reception for congressional members and staff after the day on The Hill.This was the third year MMUA has hosted a reception and was easily had the highest attendance. During the trip to Washington D.C., Commission Westgaard and I also had the opportunity to addend a Midwest Municipal Transmission Group event to meet with our fellow municipal Brookings transmission line owners. ATTACHMENTS: • Minnesota Municipal Utilities Association 2019 Federal Position Statements Page 2 of 2 126 1MIiife V,IYWdth , , 1 Minnesota Municipal Utilities Association 20V FEDERAL POSITION TATEME £ , tell r > fit £"z r { a Illik 10 . 1 1 r 1 1r 0 1 r 11. 4, 12111„/8 I,I,,,wi Table of Contents Why Public Power? 3 Improve Tax-Exempt Financing to Facilitate Infrastructure Development 4-5 Restore and Preserve Local Control of Pole Attachments 6-7 Reasonable and Effective Environmental Regulation 8-9 Protecting the Interests of WAPA Customers 10-11 -, -. - 7,...q. , .. ,1 y w. #� fir.. 'WO .a __- K0, .rr'1 1 sl 1 ... . .. c tr'. • Y1�x.z...T., ruiv, ... , ... .... ."... . .„, , i, `H �.,. tea Photo credits: All photographs by MMUA,except for: Page 3-Owatonna People's Press Page 4-MPCA(Flickr,Creative Commons) Page 10-Western Area Power Administration About MMUA: The Minnesota Municipal Utilities Association is a is to support and serve as a common voice for non-profit entity representing 124 electric, 170 water, municipal utilities. Its core values: People, Safety, and 33 gas utilities owned and operated by cities Advocacy, Teamwork, Communication, Creativity, across the state.MMUA strives to be a recognized Dedication, Integrity, and Environment. For more leader in advocacy, bringing value to municipal about MMUA, its mission and values,visit us online utilities and enhancing their position within the at www.mmua.org industry. MMUA's mission 128 1MDMIIJ,/ Position Statement Why Public Power? 'Nab a44,, ": 11114*1 Ot • One hundred twenty-four Minnesota cities benefit We're not in it for the money. Municipal from having a locally-owned and locally-operated utilities are not-for-profit and operated in the municipal electric utility. Thirty-three cities have public interest. Our goal is long-term community a municipal natural gas system. Of our 87 county benefit, not short-term gain. We work hard to save seats, 50 are served by a municipal electric or gas you money. system. A not-for-profit municipal electric or gas utility is a tremendous asset. Here are some of the We're the yardstick for the industry. For reasons why: generations, public power systems have set standards for rates and service that other utilities We have great service. We're part of the have had to meet. community and our policy makers, managers and workers are part of the community. Our crews are We'll be there. Most Minnesota's municipal always on hand in the event of emergency. You electric utilities have served their communities for don't need to call an 800 number to talk to us. more than a hundred years. In an era when new competitors come and go faster than we can learn We're locally regulated. Members of the their names, you can count on us. We will be there community who live in the community set rates when you need us. and service practices. If you have a problem, you know who to talk to. We're Public Power. We're here for you! We're owned by our customers. There is no tension between the interests of customers and the interests of stockholders. Our focus is Main Street, not Wall Street. We work for you. 2019 Federal Position Statements/3 129 ,VIIVIW Position Statement Improve Tax-Exempt Financing to Facilitate Infrastructure Development • Congress needs to do more to encourage and help power systems, and other key infrastructure. This fund investments in infrastructure. follows the $2.3 trillion in such tax-exempt bond financed investments made in the previous 10 • Tax-exempt bonds are an essential tool for years. Public power utilities alone are making $5 financing much needed public infrastructure billion a year in investments in their generation, maintenance, repair, and replacement. transmission, and distribution systems using tax- exempt bonds. • Congress needs to restore the authority for municipalities to use advance refunding of bonds Despite these massive investments, U.S. invest- to further the value of investments made in public ment in infrastructure is still lagging. Based on infrastructure. research conducted by the Minnesota Pollution Control Agency (MPCA), Minnesota Department • Congress should also revise 30-year old of Health, and the U.S. Environmental Protection private use rules, increase the $10 million small Agency, Minnesota's drinking water infrastructure issuer "bank-qualified"exception, and end the needs exceed $7 billion over the coming 20 years, sequestration of tax credit payments to Build and our wastewater infrastructure needs total America Bond issuers. nearly $5 billion over the same period. Background Federal lawmakers are considering new ways to Over the next decade, state and local governments encourage additional infrastructure investments. are on track to make more than $3 trillion in While Congress discusses such proposals, it should tax-exempt bond financed investments in roads, also focus on improving already powerful tools in bridges, water systems, schools, hospitals, public hand, including tax-exempt financing of public { The City of Willmar ' ! +,,;. wastewater treatment , �, plant(left)went into � ; n service in 2010. Cost '" - a _ moo of the facility was$86 fir_tmillion. In 2018,Willmar approved an$8.5 million -» � t j w � 7';41-161/4:illiwr".--"L"---- thecityect'stodrinkinbettergfilterwa , # ., -. as pro there wasn't a cost- ter R effective way remove '` certain eleme'nots in the rya' " �, _� �... „ � ,� mw011t ,. wastewater process. 2019 Federal Position Statements/4 130 investments in public infrastructure. • Make it easier for more small counties, towns, Tax-exempt municipal bonds have been, and and villages to sell their bonds to banks by will remain, the most powerful and effective increasing the $10 million small issuer"bank- tool for financing public investments in public qualified" exception, a limit which has not been infrastructure. Congress could incentivize further updated permanently since 1986. investments in infrastructure, and it should focus on improving this incredibly powerful financing tool • End the sequestration of tax credit payments to with comprehensive municipal bond modernization Build America Bond issuers. legislation. These are consensus proposals developed by the A review of tax-exempt financing laws provides American Public Power Association and other state an opportunity to address the errors of the past, and local stakeholders. Implementation of these update provisions not amended in more than 30 proposals would go a long way toward facilitating years, and generally modernize the treatment of new investment in publicly-owned infrastructure. tax-exempt municipal bonds. MMUA Position Congress should: To jump-start the development of much-needed infrastructure by local governments, • Repeal the ban on advance refunding of bonds. Congress should support the continued use o.f tax- This ban has reduced the ability to refinance past exempt bonds and reinstate advance refunding of debt and increased the cost of issuing new debt. bonds. Congress should also increase the small- issuer"bank-qualified" exception from $10 million • Revisit private-use rules created more than to $30 million, exempt payments to Build America 30 years ago that are needlessly complex and Bond issuers from federal budget sequestration, punitively single out public power. and repeal outdated private-use rules. Tax-exempt bonds help finance municipal water projects,and a host of other public-interest ,t„.. infrastructure. .41it F � � .44 2019 Federal Position Statements/5 131 DMDMIJ8 Iv,',,11M Position Statement Restore and Preserve Local Control of Pole Attachments • MMUA actively supports access to reliable broadband services for all Minnesotans, but strongly opposes the FCC's September 26, 2018 order regarding small-cell telecommunications antennae that preempts local control over rights-of- or 4 way and municipally owned utility poles. _���� • These FCC regulations ignore express language in _ m . "� federal law exempting municipal utility poles from , ,;4`, ` - ,� ,,r- — FCC regulations on pole attachments and fees. � ' .�� '- : • • Counter to FCC implications, municipal utilities do NOT pose a barrier to the expansion of broadband or otherforms oftelecommunication. / .r. — IFr „$ Q�� • Congress needs to pass legislation returning e , control over local rights-of-way and public '"" � infrastructure to the cities responsible for them. Background � .��, " `, In recognition of the local jurisdiction's 4" „l' OW m responsibility to protect the public interest in its public infrastructure assets, municipal utilities tor Tor* ' *i have historically been exempted from Federalot + ° Communications Commission (FCC)jurisdiction over utilities' rights-of-way (ROWs), pole ' attachments, and related fees. This exemption was codified in 1978 as Section 224 of the amended °- '' Communications Act of 1938. Congress again :‘ `4 affirmatively upheld local control during debate , ` ,. - .4 ; . 1 _ ., of the 1996 Telecommunications Act, expressly # ' finding that decisions about the use of ROWs Municipalities have zoning, land use,and technical and infrastructure are best left to the most local considerations(including the National Electric Safety Code) that justify local authority over the use of our infrastructure. governing body. Despite the clear benefits of, and congressional support for, maintaining this local accountability, On September 26, 2018, over the objection of in or around 2010, the FCC began recommending hundreds of comments submitted by public utilities to Congress that municipal utilities' exempt and their associations, including MMUA and the status should be amended or repealed. After American Public Power Association (APPA), the unsuccessfully pushing the telecommunications FCC issued a Declaratory Ruling and Third Report industry's stone uphill for nearly a decade, the FCC and Order subjecting municipal utility poles and decided to act on its own. municipal rights-of-way to FCC jurisdiction for 2019 Federal Position Statements/6 132 11111.11/8 ffirtrirlsoatt installation of small-cell telecommunications and the publicly-owned utilities serving equipment. This order took effect January 14, municipalities must have the authority to account 2019. The order is under legal challenge, a move for the safety and health of their communities supported by MMUA and APPA, but the legal as well as authority over technical and aesthetic issues could more efficiently and cost-effectively considerations. They must also be able to impose be dealt with by congressional action vacating the fees that fully cover the costs associated with order and restoring local control. processing small cell installation applications and enforcing related local ordinances and regulations The new FCC regulations prescribe what small applicable to small-cell providers. This is the only cell antennae equipment cities must allow in their way to fully ensure that the public not be forced to ROWs and on their infrastructure, such as utility subsidize the protected private use of the public's poles. These regulations include tight timelines assets. for processing applications, and fee limits that, if exceeded, are presumed to be excessive and thus an Without Congressional action to undo the FCC's unlawful barrier to access. order, MMUA and its member utilities will be forced to continue seeking relief from the courts. The Minnesota Legislature debated this issue in Litigation is far more costly than reasonable 2017. Legislation was developed that would have legislation to restore long protected local control preempted local control on a number of issues efforts. To minimize costs, MMUA is currently related to the expansion of 5G service and"small working with three other states to identify the cell"wireless, but in the end the Legislature best way to support and participate in current and exempted municipal utilities from the new possible future legal challenges to the FCC's order, regulations. but even shared efforts are expensive. The basis for the FCC's approach appears to be a MMUA Position new perspective that simply disregards the benefits MMUA urges Congress to pass legislation in line of local accountability, combined with a suggestion with Rep. Eshoo's HR 530 which would overturn that local governments may be creating a "barrier the FCC's jurisdictional overreach and restore local to service providers" seeking to establish their more control over public rights-of-way, utility poles and profitable 5G networks via the use of small-cell attachments, and the fees which can be charged for equipment. providing access to them. Finally, Congress needs to oppose efforts to bypass previously provided When establishing appropriate regulations and congressional exemption from most FCC oversight fees regarding pole attachments and public of municipal utilities' control of their ROWs and rights-of-way under their care, local governments infrastructure. Safety and aesthetics are legitimate local government concerns. Pole attachments can be particularly troublesome in cities tt 114 ' _ where much of the utility T, infrastructure has already been placed underground. "41" � :1 Pictured here is Barnesville. �.�. "7s �''""'A • 2019 Federal Position Statements/7 133 DMDMIL( IVIIVIUPJ Position Statement Reasonable and Effective Environmental Regulation • Municipal utilities are strong supporters of clean air and water. • Municipal utilities are working hard to meet evolving customer expectations, and to help provide cleaner air and water. r,$. • Municipal utilities believe _.. ' that incentives work better �.` .- than mandates and that all 1 ` - •regulations need to account mow- i for needed infrastructure, .e. time, and costs before being imposed, in order to ensure that the goals are viable, Municipal utilities support their communities and reasonable, effective environmental sustainable, and limit regulation.Two Harbors, pop.3,500, recently spent$3 million to upgrade its wastewater secondary impacts. treatment plant. Pictured is the Two Harbors Lake Superior breakwater. Background Whether one supports the `Green New Deal' or statutorily imposed deadlines. And, Minnesota's applauds the use of executive orders to repeal municipal water and wastewater facilities are perceived prior overreach in imposing government proud to have long been on the front lines of regulations, there is no question that environment maintaining Minnesota's high level of water related matters are at the forefront of both state quality. However, these efforts have not come and federal political efforts. without expense, hard work, and innovations. Municipal utilities are investing in cleaner and Municipal utilities recognize the need for more efficient power generation, including the appropriate and effective regulation of both air increasing use of renewables; improving load quality and water quality, and have a long history management; educating consumers on ways to of sharing concerns and ideas about proposed save energy (and money); and implementing regulations, and working hard to comply with innovations, all to position ourselves to meet those eventually adopted. But for a regulation to be a changing market, to meet evolving customer effective, the entity proposing it must, at the very expectations, and to help provide cleaner air and least, consider the following: water. • Whether the technology and infrastructure Minnesota's municipal electric utilities are necessary to implement the regulation are meeting, and frequently exceeding, the mandatory available; use of renewable energy sources, often before 2019 Federal Position Statements/8 134 V f.8 I,II,Iw , • Whether proposed timelines take into account options. Further, most electric utilities have had factors like planning and siting of transmission at least some discussion about how to plan for, or lines, permit approvals, expiration dates of existing maybe even incentivize, increased use of electric purchase agreements, etc.; vehicles. And, of course, they maintain a focus on efficiencies and best management practices. On • Costs to be borne by regulated entities and the the water side, MMUA and APPA look forward public; and to working on new provisions to more accurately define and effectively regulate the Waters of the • Potential unintended consequences of the U.S. (WOTUS). proposed new regulation. MMUA Position As an example of unintended consequences, Municipal utilities are already taking, and will increasing a solar mandate could help reduce continue to take, important but prudent steps to overall greenhouse gas emissions, but it might also reduce their carbon footprints and protect air and result in large amounts of prime tillable acreage water quality. Mandates are not necessary and may being taken out of production, which would have be counterproductive. For example, some power other consequences. Thus, dialogue is needed before agencies saw significant price increases for wind regulations are adopted, standards increased, power when early renewable mandates were first or other major changes in how utilities provide imposed. Congress and the administration need services are imposed. to engage in meaningful dialogue with municipal utilities and need to fully research issues such as On the electric side, municipal utilities costs, viability, needed v. available technology, etc. acknowledge the growing demand for reliance before adopting stricter regulations with shorter on renewables and are already pursuing viable time frames for compliance. I i 6 I 1 111 ?i � a > s .. qq 1 t• t .. -'�4' g it w Renewable �-� • � - ,� ` .. y ,m-'�."'...mati + „ties, , �,,r A� . ku "+�'a w • y energy mandates have resulted in massive invII"estment in electric transmission infrastructure. 2019 Federal Position Statements/9 135 EMIMII/ IVIIVIWJ Position Statement Protecting the Interests of WAPA Customers • The Administration's proposals to sell off PMA transmission assets and require PMA power to be sold at market rates should be rejected. • Selling off PMA transmission assets would provide a one-time infusion of$9.5 billion out of a projected $4.5 trillion budget and lead to decades of higher transmission rates for dozens of small municipal utilities in western Minnesota. • Abandoning the long-standing policy of cost - " based rates and moving to market-based rates would result in a $1.9 billion rate increase for PMA customers. `� The Oahe Dam powerplant,just north of Pierre,South Dakota, Background provides electricity for much of western Minnesota and the The four federal power marketing administrations north-central United States.Along with power,the project (PMAs) deliver reliable, cost-based hydroelectric provides flood control,irrigation and navigation benefits estimated by the Corps of Engineers at$150 million per year. power to various regions of the United States. Approximately 1,200 public power systems and rural electric cooperatives throughout the country The Administration's Budget Proposals buy low-cost, zero-emissions hydropower from the Unfortunately, the Administration's FY 2019 PMAs that market this power from the federal budget seeks to disrupt this long-standing multi-purpose dams. relationship with two troubling proposals. The Western Area Power Administration (WAPA) First, the Administration proposes privatizing is the PMA that delivers power to a 15-state WAPA, Southwestern Power Administration and region of the central and western United States the Bonneville Power Administration transmission that also includes the western third of Minnesota. assets, as well as The Tennessee Valley Authority. WAPA's 17,000-mile transmission system carries The budget estimates that: electricity from 55 hydropower plants operated by the Bureau of Reclamation, the U.S. Army Corps • Selling Western Area Power Administration's of Engineers and the International Boundary and transmission assets will raise $580 million; Water Commission. Minnesota is served by WAPA's • Selling Southwestern Power Administration Upper Great Plains Region office which provides transmission assets will raise $15 million; electricity from the seven dams of the Pick-Sloan • Selling Bonneville Power Administration Missouri River Program established by Congress in transmission assets will raise $5.193 billion; and 1944. • Selling Tennessee Valley Authority transmission assets will raise $3.671 billion. WAPA is critical to Minnesota municipal utilities, providing about one third of the wholesale power The $9.5 billion that the federal government needs of 47 public power systems serving over might receive for selling off these publicly-owned 200,000 people in the western part of the state. transmission assets will not move the needle much The relationship between WAPA and most of the in a $4.5 trillion budget, but the negative impact Minnesota municipal utilities it serves has been in on the public and not-for-profit entities that rely on place since the 1950s. those assets will be felt for decades. 2019 Federal Position Statements/10 136 111111111111111 IIIIIII11:20 Many of these transmission assets have been in help to cover the costs of other activities authorized place for years and are substantially depreciated. by these multipurpose dams such as navigation, A new owner, likely a for-profit transmission flood control, water supply, environmental company, would seek to recover the full purchase programs, and recreation. PMA power is generally price plus a rate of return in rates. The result will low-cost in relation to other sources of electricity likely be sharp increases in transmission costs for because hydropower is a renewable resource public agencies, small town municipal utilities, and and most dams were constructed long ago, when rural electric co-ops. The modest one-time benefit material and labor costs were much lower than from selling these assets is simply not worth the today. ongoing increased cost to not-for-profit entities across the country. The Administration's proposal would impose an unwarranted $1.9 billion rate increase on small The administration estimates that the federal municipal utilities and other not-for-profit and government could raise an additional $1.9 government PMA customers. billion over 10 years by charging PMA customers market-based rates instead of the current cost- MMUA Position based rate structure. This proposal would violate MMUA urges Congress to reject proposals that current federal law in addition to upsetting the would disrupt the stable, low-cost, and emission- longstanding beneficial partnership between WAPA free power that WAPA provides to so many and its preference customers. Minnesota communities. For well over half a century there has been a successful partnership In accordance with federal law, PMA"cost-based" between federal power marketing administrations rates are set at the levels needed to recover the and the communities that receive a federal costs of the initial federal investment (plus interest) hydropower allocation, which has helped keep in the hydropower and transmission facilities. costs low for our customers. The Administration's The PMAs annually review their rates to ensure proposals to sell off PMA transmission assets and full cost recovery. None of the costs are borne require PMA power to be sold at market rates by taxpayers. If a deficit is projected, rates are should be rejected. adjusted to eliminate any deficit. Power rates also Any disruption to the federal hydropower program would harm ''.'I' the successful partnerships * ,,, .,°; * „ ,, between the power marketing wt t agencies and the cities and . ..t , z rural electric cooperatives that #'". to It have supported hydropower '. .. # development for well over half a ` e :, !' , ,` century. - .. r . l aihk. } Y ' Ally h talite . !: 'IL_ _ ... ;� _.ems a"'. .4 hi , 2019 Federal Position Statements/11 4 4 tt - ' ;wj ' ; any, _�,—. YY y "73 Ar A W ) . v t i The most recent Minnesota Lineworkers Rodeo was held at the MMUA Training Center in Marshall on September 11,2018. The event starts with a flag-raising ceremony and singing of the Star Spangled Banner. 1212II/J IVIIVIWt Minnesota Municipal Utilities Association 3025 Harbor Lane N., Suite 400, Plymouth, MN 55447 www.mmua.org 138 Elk River Municipal Utilities 2019 GOVERNANCE AGENDA Tuesday, January 8: Tuesday, February 12: • Annual Review of Committee Charters • Review Strategic Plan and 2018 Annual Business Plan results Tuesday, March 12: Tuesday, April 9: • Oath of Office • Annual Commissioner Orientation and Review • Election of Officers Governance Responsibilities and Role • Audit of 2018 Financial Report • Financial Reserves Allocations • Review 2018 Performance Metrics Tuesday, May 14: Tuesday, June 11: • Annual General Manager Performance • Evaluation and Goal Setting Tuesday, July 12: Tuesday, August 13: • Annual Commission Performance Evaluation • Annual Business Plan—Review Proposed 2020 • Review and Update Strategic Plan Travel, Training, Dues, Subscriptions, and Fees Budget Tuesday, September 10: Tuesday, October 8: • Annual Business Plan—Review Proposed 2020 • Annual Business Plan— Review Proposed 2020 Capital Projects Budget Expenses Budget Tuesday,November 12: Tuesday, December 10: • Annual Business Plan- Review Proposed 2020 • Adopt 2020 Official Depository,Newspaper, Rates and Other Revenue and Regular Meeting Schedule • Adopt 2020 Fee Schedule • Adopt 2020 Governance Agenda • 2020 Stakeholder Communication Plan • Adopt 2020 Annual Business Plan 139