December 22, 2022 at 2:40 p.m.
State regulators approve ECE absorbing North Branch electric service territory
During the PUC meeting (available on-line) Justin Jahnz, ECE President, told the commission members that this electric service territory approval is “the final piece” allowing for the cooperative to finalize acquisition of the North Branch 2,000-customer area.
North Branch officials have agreed to sell the distribution assets of the “light” portion of Water & Light for $5.3 million.
The Public Utilities Commission Chair Katie Sieben asked for documentation of when the city’s officials specifically acted on the service territory permanent transfer. North Branch City Administrator Renae Fry responded that the territory action was approved last June in a joint meeting of council and the municipal Water & Light Utility commissioners. Approved minutes of that meeting only show a not-yet-final purchase agreement being acted on; but state regulators didn’t press the stipulation that the territory revision authorization be adopted first by local officials.
North Branch Water & Light and ECE will now provide new parcel-specific maps to the state utilities regulators.
ECE service territory currently surrounds North Branch. The existing municipal power land mass will be absorbed completely. A PUC member asked about opposition expressed on this state file, including from the state municipal utility association. PUC member Matt Schuerger wondered how this application is different from prior actions adjusting territory, and why no opposition was registered for other service territory requests.
An attorney for the MNMunicipal Utilities Association, Kayla Brennan, said other territory adjustments have been for small land areas like a lone housing development or one industrial building better-served by an adjacent power organization.
In North Branch’s case the whole municipal utility is being eradicated.
There was much discussion about the act of altering territory being “premature.”
Water & Light consumers have not been granted the ability to vote on selling off the electric distribution assets. To change the map before the citizens are allowed to vote, argued attorney Brennan, violates statute. She added that the electric utility was created by a vote and it is required in state law to eliminate it by a vote. By selling to a cooperative, there will no longer be a “retail municipal” power organization, as called for in statute, for the North Branch service territory. The law says there must be no loss of this municipal service.
Staff and elected leaders in North Branch however, interpret the law differently. City leaders argue the state law allows North Branch to sell, transfer or lease the utility assets unilaterally without citizen vote, because there will be no loss of electric service. The fact that the power won’t be distributed by a municipal-owned and controlled organization, is negligible and they argue the East Central Energy cooperative service format is the same “type.”
The MNMUA argued the Public Utilities Commission should not act on the territory revision until there is a vote. If the service area is wiped out there won’t be any reason for anybody to even care, Brennan continued.
PUC Chairperson Katie Sieben commented that the state association needs to take this issue to court.
PUC members stated their responsibilities only are based on the rules now in place. The agency is not set up to question legality of a request —beyond making sure any applicant before them has fulfilled the PUC agency requirements.
City utility officials went to ECE to start negotiations about selling the assets. ECE executive Justin Jahnz stated emphatically that ECE did not go looking to acquire the electric assets, as he testified. The territory revision is a necessary part of this sale.
It was also explained last week that North Branch Water & Light Commission will continue to exist to operate the five diesel generators the municipal agency built. They are used to contribute when there is a call to address peak power needs in the grid.
The city-based utilitycommission will also have some role to play in the water utility as well. Water operations have basically been overseen for months, by North Branch Public Works Director Shawn Williams. He does give project updates at monthly meetings of the utility commission.
North Branch held a referendum on dissolving the utility in 2017 and citizens on a two-to-one margin voted to keep the utility as it was.
But, this referendum itself was even questioned. City council members voted to put a ballot measure to the people on a vote of 3-2 (Mayor Kennedy and Council member Blomquist opposed) without receiving a required petition. One of these three, Robert Canada, is still serving as of 2023.
Current customers affected by the ECE sale are supposed to receive notice of the change in their electric system prior to the closing of the sale, which is not yet announced.