Municipals, Xcel ink electric service territory agreements

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Municipals, Xcel ink electric service territory agreements

July 15, 2021

The Minnesota Public Utilities Commission July 15 acted on three joint petitions to adjust electric service territory boundaries. The petitions involved Xcel Energy and the City of Brownton, Delano Municipal Utilities and City of Waseca municipal utilities.

Unlike most boundary adjustment petitions filed in recent years, the municipal-Xcel filings included details of the agreements. While each agreement contained common elements, there were also some notable details unique to each situation.

Brownton

This transfer involves 2.3 acres of land on the city’s south side, north of U.S. Hwy. 212, which is the site of a proposed Dollar General store.

The city agreed to annually pay Xcel loss-of-revenues for each service within the transfer area for a 10-year period. The loss of revenue compensation is $0.02064 (20.64 mills) times the kilowatt hours (kWh) consumed by customers at each individual service location within the transfer area.

The area will transfer to the city “on a date to be mutually agreed upon in writing . . . following Commission approval of the joint petition.”

If any additional customers locate in the transfer area on or before the transfer date, the parties will negotiate a mutually agreeable loss-of-revenues amount.

The city will also pay any integration or re-feed costs that may be necessary.

As the city owns the land and there is no existing customer, there was no need for a letter to be sent to the customer.

The agreement was signed Feb. 17.

Delano

The Xcel-Delano agreement includes one existing customer with Xcel facilities and also 45.64 acres of the newly-developing Delano West Metro Business Park Second Addition, located south of U.S. Hwy. 12 on the west side of Delano.

Delano agreed to pay $3,184 as loss-of-revenues for the existing customer, located outside of the business park. The municipal will also compensate Xcel for its existing facilities that have an un-depreciated value of $2,807.02. Xcel will continue to serve this customer until Delano can construct facilities to serve the customer. Should any additional services be installed in the transfer area before the transfer date, Delano will contact Xcel and the parties will negotiate a mutually-agreeable loss-of-revenues amount for the additional service(s).

For 10 years beginning when the first meter is set and spinning at an individual premise located within the transfer Area (other than the existing customer described above), Delano shall pay Xcel annually a sum equal to $0.01990 (19.90 mills) times the kilowatt hours (kWh) consumed by the customer(s) located at each individual service location within the area. The consumption for the customers in the area will be determined using municipal metering records.

Delano will document consumption for the customers in the area annually, and as reasonably requested by Xcel.  The annual consumption data will be determined every year until 10 years after the first meter was set and spinning in the Transfer Area. 

Payments will be due annually to Xcel. 

Delano will also pay the net book value (original cost depreciated) of service facilities in the area, loss of revenues and any integration or re-feed costs that may be necessary. The net book value will be calculated using the average property unit cost, net of customer contributions, and the year the unit of the property was initially purchased.

The effective date of the Delano agreement was the day of signing . Delano Municipal Utilities had been granted interim service rights to the area.

 Waseca

This agreement permanently transfers 1.02 acres of land adjacent to residential areas on the northwest side of the city from Xcel to the City of Waseca. There is one customer in the transfer area. Waseca was already serving this customer, per an interim service agreement.

Municipal utilities in this area of the state have a history of making per-lot payments to NSP/Xcel in service territory agreements. That practice continued with this agreement, as Waseca agreed to pay Xcel loss of revenues of $2,787 per lot/house. Should any additional services be installed in the transfer area on or before the transfer date, the municipal will contact Xcel and the parties will negotiate a mutually agreeable loss-of-revenues amount for the additional services.

Waseca has a history of congenial negotiations with NSP/Xcel over the decades. Xcel had facilities in the transfer area, but there was no compensation paid for cost of facilities or integration expenses.

The city and Xcel assured the MPUC that the customer is informed of the proceeding. The agreement was effective upon its signing, which was Feb. 17.

An Xcel staff person will work with MNGeo and MPUC staff to provide mapping information. This stipulation also applied to the Brownton agreement.

Questions or Comments? Contact MMUA

Minnesota municipal electric utilities dealing with, or anticipating, service territory issues with a neighboring utility are requested to contact Steve Downer at MMUA, 763-746-0702 or sdowner@mmua.org

In each of its filings, Xcel outlined the statutory framework underpinning the transfer.  It wrote:

Exclusive electric service territories have existed in Minnesota since 1974, and are considered necessary to encourage the development of coordinated statewide electric service, to eliminate or avoid unnecessary duplication of utility facilities, and to promote economical, efficient, and adequate electric service to the public. 

Minn. Stat. §216B.37 provides electric utilities the exclusive right to serve customers within an assigned service territory, and Minn. Stat. §216B.40 prohibits the provision of retail electric service by another utility within that assigned service territory, absent written consent.  

Minn. Stat. §§216B.37-216B.47 provide the terms and conditions under which a city may extend retail electric service throughout the corporate limits of the city and authorize and permit electric utilities to define and revise their electric service territories by their written consent and agreement. Thus, two parties may agree to modify the boundary between their service territories by requesting Commission approval after notice and hearing under Minn. Stat. §216B.39, or service by exception is consented to under Minn. Stat. §216B.40.

Near the conclusion of each filing there follows a brief description of the particular situation addressed. The summations include a statement that, consistent with state law, the filed agreements avoid the unnecessary duplication of facilities, provide adequate electric service to all areas and customers affected, and promote the efficient and economical use and development of the electric systems of the contracting electric utilities.