HomeMy WebLinkAbout4.A. History of SPUC
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I SHAKDPEE PUBLIC UTILITIES
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I "Lighting the Way - Yesterday, Today, and Beyond"
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I A History of
I Shakopee Public Utilities
I 1902 - 2002
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I Written By:
I Bill Beck
I Lakeside Writer's Group
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I SPU History
I Chapter 1
I A Valley So Fair
I Public Power in America is nearly 125 years old. When the citizens of
Wabash, Indiana decided in 1880 that the municipality could build and operate
I the city's electrical system, they created an electric utility model that is still
thriving tOday.1 The nation's municipal utilities have brought inexpensive, reliable
I electric power to millions of Americans in the 20th century. Municipal utilities also
I give some 2,000 u.s. communities a sense of energy independence and
autonomy that they are carrying into the 21st century.
I While not the first community to own and operate its municipal utility, the
Shakopee Public Utilities' roots go well back to the industrial revolution. Early
I German, Scandinavian and Irish settlers founded the community because of the
waterpower potential of the Minnesota River for stove works and iron foundries.
I The people of Shakopee can look back with pride on 100 years of municipal
ownership of their electric power system. Unlike communities where electricity is
I provided by private, investor-owned utilities, Shakopee still controls its own
energy destiny.
I And for that, the citizens of Shakopee today and tomorrow should give thanks
to the visions of the pioneers who first installed a tiny steam electric generator in
I a small building at the foot of the bridge spanning the Minnesota River.
In little more than one generation, the settlers of 1850s Shakopee watched
I their community become a thriving, prosperous farm market village of nearly
1 ,000 people, with horseless carriages belching smoke beneath the electric
I street lights of downtown Lewis Street.
I The Valley of-the Minnesota
I Water made the settlement of Shakopee possible.
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I The Minnesota River drains most of the southern and western portions of the
I North Star state on its slow and stately journey to the Mississippi River at Ft.
Snelling. Rising in Big Stone Lake on the state's western border, the Minnesota
I cuts southeast across Minnesota before turning sharply northeast at Mankato.
By the time the river flows past Shakopee on the concluding portion of its
I passage to the Father of Waters, it is a broad highway that has made commerce
and travel possible throughout the past 10,000 years.
I The first travelers were native Americans and their forebears, paddling upriver
to the open country of the plains to the west, or floating down river to the
I Mississippi. The water highway of the Upper Midwest carried clans and families
in seasonal migrations from the time the last glaciers retreated from Minnesota
I 15 millennia ago.
What is now Shakopee was likely an encampment of the Lakota 300 years
I ago. For much of the 18th century, the river was a battleground between the
Lakota and the Ojibway, forest peoples pushed west by the Iroquois
I Confederation.2 In 1858, the Lakota and Ojibway fought their last battle on
Minnesota soil near Shakopee.3 Most of the Lakota retreated west up the
I Minnesota River and on to the Great Plains of the Dakotas and Nebraska, where
they would become the fiercest opponents of American expansion in the post-
I Civil War era.
The Lakota gave the landing on the Minnesota River where the 1858 battle
I was fought the name of their leader, Shakopee. Translated as "Little Six" in the
I Lakota language, Shakopee - or Shakpay as it was most commonly pronounced,
became the site of a trading post in 1851.4 French fur traders had been exploring
I the Minnesota River Valley since the 1700s. They were succeeded in the early
19th century by British and American fur traders pushing south from the Great
I Lakes country.
As early as 1819, the U.S. Army arrived in the Minnesota River Valley to erect
I posts to protect the vital fur trade of the region. A detachment of Army regulars
arrived that summer and built a bastion that later would be named Ft. Snelling at
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I the mouth of the Minnesota.5 Within 20 years, wood-fired steamboats were
I regularly plying the Upper Minnesota between Ft. Snelling and Lac Qui Parle.
The first settler in the Shakopee area was a French fur trader named Oliver
I Faribault, who built a log trading post in 1844.6 Three years later, the Reverend
Samuel William Pond, a Connecticut native who had been in Minnesota since
I 1834, established a mission to the Lakota adjacent to Faribault's trading pose
Settlement of the Minnesota River Valley would rapidly follow. In 1851, bands
I of the Sisseton, Wahpeton and Mdewakanton Lakota signed the Treaty of
Traverse des Sioux with the U.S. government, ceding 24 million acres of land in
I what would become Minnesota, Iowa and South Dakota.8
The ceded lands included all of the Minnesota River Valley. Within weeks,
I settlers began to stake their claims to the rich bottom lands west of Ft. Snelling.
Thomas A. Holmes, who had already founded communities in Indiana and
I Wisconsin, stepped off the flatboat Wild Paddy in the late summer of 1851 and
quickly built a small tent encampment and log trading house on the site of what
I would become Shakopee.9
In the 10 years between the establishment of Holmes' town site and the
I outbreak of the Civil War, Shakopee and surrounding Scott County would rapidly
fill with settlers. The bottom lands along both sides of the river were fertile and
I productive. German and Scandinavian farmers grew corn, wheat, oats and
barley. Many of the German settlers were refugees from the 1848 revolutions in
I the German principalities. The sloping banks and lush growth of the Minnesota
River Valley reminded them of the Rhine River.1o
I In May 1857, Shakopee was incorporated, and N.M.D. McMullen was elected
the first mayor of the town. The original incorporation papers, however, were
I lost, and the city had to file again in 1870. Shakopee was among the earliest
I settlements in Minnesota Territory to boast a newspaper, The Shakopee
Independent. In the fall of 1858, the Scott County Courthouse was completed.11
I Settlement, however, slowed dramatically during the early 1860s, primarily
because of the uprising by Lakota bands in 1862.
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I The end of the Civil War coincided with the replacement of steamboats on the
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I Minnesota River with locomotives puffing along on tracks laid on the river's
banks. The Minnesota Valley Railroad Co. began service between Shakopee
I and Mendota in 1865. Four years later, the Hastings and Dakota branch of the
Chicago, Milwaukee & St. Paul Railroad laid tracks through Shakopee. The
I George Strait flour mill shipped process wheat flour east to the Twin Cities and
beyond in the 1870s.12
I A New Century
I With the coming of the railroad, it was all the more necessary to bridge the
I Minnesota River at Shakopee. The Minnesota Legislature voted in 1878 to site a
railroad bridge at Shakopee. The legislature's decision was based on the
I strength of a vote by Shakopee residents to issue $20,000 in bonds for the
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construction of the iron bridge.13 Fighting over where in Shakopee the bridge
I was to be located consumed much of the next two years. When the bridge finally
was constructed in 1880, it entered Shakopee at Lewis Street downtown.14
I By the 1890s, Shakopee was a bustling community of 1,500 people and a
railroad hub for the agricultural community west of the Twin Cities. The Chicago,
I Milwaukee & St. Paul connected Shakopee with South Dakota to the west and ,
Winona, LaCrosse and Chicago to the south and east. The main line of the
I Chicago, St. Paul, Minneapolis & Omaha Railway connected Shakopee to the
Twin Cities and Lake Superior ports to the north and to Omaha and Denver to
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the west. The Minneapolis & St. Louis Railway ran through Shakopee from
Minneapolis and St. Paul to Iowa and points south.15
I Shakopee entered the 20th century with optimism and hope. The Minnesota
I River Valley county seat town was approaching its 50th anniversary and was
looking forward to taking its rightful place as a progressive community in one of
I the nation's most progressive states. One action it could take to achieve that
progressive reputation was to erect newfangled electric street lights downtown.
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I 1 "Public Power in America: A History," Washington, D.C.: American Public Power Association,
1990,p.1
2 Bertha L. Heilbron, The Thirtv-Second State: A Pictorial History of Minnesota Minneapolis:
I Minnesota Historical Society Press, 1966, pp.26-27
3 The WPA Guide to Minnesota Minneapolis: Minnesota Historical Society Press, 1985, p.328
4 Warren Upham, Minnesota Geoqraphic Names Minneapolis: Minnesota Historical Society
Press, 1969, p.510
I 5 Heilbron, The ThirtY-Second State, pA5
6 William Hinds, A Sketch of Shakopee, Minnesota: Historical and Industrial Shakopee: William
Hinds, 1891, n.p.
I 7 Ibid.
8 Heilbron, The Thirtv-Second State, pp.79-81
9 Michael C., Patricia A. and Joseph C. Huber, Shakopee Scrapbook, Shakopee: Parkside
Printing Inc., 1992, p.1
I 10 The WPA Guide to Minnesota, pp.328-329
11 Hinds, A Sketch of Shakopee, n.p.
12 Ibid.
I 13 Ibid., n.p.; See Also, Michael C. Huber, et.a!., Shako pee Scrapbook, p.2
14 Michael C. Huber, et.a!., Shakopee Scrapbook, p.2
15 Hinds, A Sketch of Shakopee, n.p.
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I SPU History
I Chapter 1, Sidebar 1
I Shakopee At the Turn of the Century
I It was somehow appropriate that Shakopee welcomed the new century on the
afternoon of May 30, 1901 with the appearance of the first automobile on city
I streets. Observers didn't report what model automobile it was, but the local
introduction of the automotive age generated a fair amount of excitement among
I onlookers.1
I Local resident H.O. Smith purchased the first horseless carriage in Shakopee
in 1904, but it would be close to another decade before the appearance of
I automobiles became commonplace on city streets. At the turn of the 20th
century, the fashionable method of transportation for the community's young
I people was riding a bicycle from Shakopee to Bloomington along a groomed
cycle path. 2
I In 1900, Shakopee was a growing community with an agricultural and
industrial base. A flour mill produced 500 barrels of quality wheat flour a day for
I markets as far east as Pennsylvania and New York. Shakopee was one of the
largest lime producers north and west of Chicago, and the town's pork
I packinghouse shipped bacon and ham across Minnesota and the Dakotas.3
Jacob Ries' bottling works was renowned for bottling more than half-a-million
I glass bottles a year of sasparilla and other drinks that were known at the time as
"temperance beverages." Two first-class breweries slaked the thirst of county
I residents who did not normally partake of temperance beverages.4
The Minnesota Stove Company was one of the largest manufacturers of
I home and office stoves in what was then commonly referred to as the Northwest.
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The stove works in 1900 employed a work force of nearly 500 people and
I produced more than 200 different kinds of coal and wood stoves. An extensive
machine shop and foundry provided ductile iron to the stove works as well as
I manufactured a popular brick-making machine. The town's granite and marble
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I works quarried much of the polished building stone used in nearby Minneapolis-
I St. Paul.5
Shakopee also boasted a wagon and carriage factory, a brickyard, two
I cooper shops for repairing wooden barrels and casks, a factory that made
popular roll-top desks, two wagon factories, and a cigar factory. There were
I numerous other smaller manufacturing and wholesale facilities, including a
wholesale bakery, repair shop, blacksmith shop and broom factory.
I "These industries alone insure Shakopee steady growth and permanent
prosperity," a contemporary journalist observed.6
I That permanent prosperity made Shakopee a retail hub for much of Scott and
Carver counties. By 1900, brick buildings along Lewis and Holmes streets
I downtown,had replaced the wooden storefronts of an earlier generation.
Saturday afternoon at the turn of the century found throngs of shoppers sampling
I the wares at Kohler's Dry Goods, Shakopee Cash Store, A. Greenberg's
Department Store, Wilder's Lumberyard and Lins Brothers Central Meat Market. 7
I Shakopee's growing reputation as a manufacturing center would be a major
factor in the decision of the city administration to build an electric light plant in
I 1902.
515 Words
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I 1 JA Coller II, Shakooee StOry Shakopee: North Star Pictures, Inc., 1960, p.207
2 Ibid., p.207
3 William Hinds, A Sketch of Shakooee. Minnesota: Historical and Industrial Shakopee: William
Hinds, 1891, n.p.
I 4 Ibid.
5 Ibid.
6 Ibid.
I 7 Scott County Argus, November 12, 1891, p.1
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I SPU History
I Chapter 2
I Light in the Valley
I Shakopee began to seriously consider installing electric street lights
downtown shortly after the turn of the New Year in 1900. Like many communities
I in Minnesota and the Upper Midwest, Shakopee had lighted its streets with gas
or kerosene lamps during the last two decades of the 19th century. The gas and
I kerosene lamps gave off a dim and often smoky light and had to be lit each night
by a lamplighter employed by the city.
I There was a better way to light the streets in 1900. In the 1890s, hundreds
of U.S. communities installed electric arc lights to illuminate city streets.
I Sputtering in the twilight sky, the arc lights were the technological marvel of
I their day. They consisted of a glass globe that contained two carbon rods. The
arc lights gave off a brilliant light when a spark of electricity jumped between
the two carbon rods.1
I Arc lights also required the employment of a full-time trimmer to cut back the
I burnt-out carbon from the rods once or twice a week.2 Although arc lights
created too much heat to be of much use for residential lighting, they were
I ideally suited for street lighting and lighting large commercial spaces.
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Shakopee residents in 1899 and early 1900 didn't have far to look to see
I other Minnesota communities that had made the transformation from gas
lighting to arc lighting. Minneapolis and St. Paul had changed to arc street
I lighting by 1900. The residents of both nearby St. Peter and Chaska had voted
to set up municipplly-owned utilities to light the streets of their communities. Sf.
I Peter had been a public power community since 1891, Chaska since 1899.3
The decision that faced Shakopee in 1900 was one that had been
I investigated by dozens of Minnesota communities in the 1890s: whether to
build and own an electric light plant or franchise the city's electric utility service
I to a private company.
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I The Electric Revolution
I Thomas Edison, Charles F. Brush, Elihu Thomson, Nikola Tesla and
George Westinghouse had worked tirelessly during the 1880s and 1890s in
I their quest to harness electric power.4
Brush, an engineer from Cleveland, Ohio, perfected an arc lighting system
I in 1879 and helped light Cleveland's public square with a 2,OOO-candlepower
light mounted on a steel tower that summer.
I In the fall of 1879, Edison designed a workable incandescent electric light
bulb in his Menlo Park, New Jersey workshop.s Edison unveiled a commercial
I incandescent lighting system at the Pearl Street Station in Lower Manhattan in
the fall of 1882, and the next year, he licensed his first community lighting
I system to investors in Sunbury, Pennsylvania.6
Edison reasoned that arc lights were inefficient when compared with
I incandescent lighting systems. Incandescent lights were characterized by a
softer glow, and unlike arc lights, were cool to the touch. The comparative
I coolness of incandescent lighting came from the filaments vacuum-enclosed in
a glass bulb.
I During the early 1880s, Elihu Thomson developed both incandescent and
arc lighting systems in his factory at Lynn, Massachusetts. His Thomson-
I Houston Co. was a strong Edison competitor in the mid-1880s. Meanwhile,
Pittsburgh entrepreneur George Westinghouse joined with Nikola Tesla, a
I brilliant Serbian immigrant inventor, to design an alternating current system that
was superior to Edison's delivery of electric power via direct current. 7
I In 1880s and 18908 America, electricity was fully as much a technological
marvel as computers and the Internet are today. It could light homes, offices
I and streets. Electricity could power pumps and lathes in factories. It could
operate parlor fans and toasters and other small appliances.
I But electricity also was a business. Edison, Brush, Thomson,
I Westinghouse and dozens of other electric power pioneers made money by
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I selling franchises for their systems to local entrepreneurs, who were eager to
I bring the miracle of electric power to their communities - and to reap the
financial rewards of selling electricity.
I In nearby Minneapolis, Henry M. Byllesby was electrifying the Mill City with
his privately-owned Minneapolis General Electric Company. There were those
I in the Shakopee business community who agitated for an entrepreneur such as
Byllesby to own and operate the electric utility. In the end, however, Shakopee
I elected to build and own its electric light plant.
I 'Shakopee Shall Have Electric Lights'
I Early in 1900, the newly-elected City Council appointed a committee of
three of its members to investigate the feasibility of building a "first-class" light
I . plant. The members of the committee - Herman Schroeder, A.H. Philipp and
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John Thiem - surveyed residents and visited nearby communities with
I municipally-owned electric light plants.
Thiem, who would be elected mayor later in the decade, wrote the
I committee's report recommending the construction of a light plant with a
capaCity of 45 arc lights and 600 incandescent lights. Thiem and the
I committee estimated that the City would pay $4,413.29 per year to operate the
plant. More than half of the plant's operating expense would consist of shipping
I nearly 300 tons of Iowa coal to Shakopee and burning it in the plant.8
The committee noted that even with free arc lights for the city, the plant
I would still bring in $4,500 in receipts each year for a small profit.9 The group
reported that two 1 OO-horsepower coal-fired boilers, a 100-horsepower
I compound engine, two generators (or dynamos, as they were known at the
time), a marble switchboard to control the electric power at the light plant, 200
I distribution poles and 31 arc lamps could be installed for a cost not to exceed
$15,000.10
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I "We can, of course, secure a cheaper plant by using the alternating system
I with incandescent street lights, or a smaller plant by using less arc lights, or
placing them closer to business property," Theim pointed out in his report. 11
I In the previous five years, Shakopee had paid off $40,000 in municipal
improvement bonds. The City Council agreed to put up $5,000 of public money
I for the new electric light plant if voters would approve the issuance of $10,000
in new bonds to finance the balance of the construction costs.
I Supporters and opponents campaigned throughout the spring of 1900. Not
everybody in town supported the notion of electric lights. e.G. Bowdish, editor
I and manager of the Scott County Argus, was concerned that the committee's
estimates were too low. Bowdish had speculated that the committee
I underestimated the maintenance cost for the new plant by as much as $1,000 a
year.
I "If we only had to put in the first $10,000," he wrote on the Thursday prior to
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the special bond election, "it would not be so bad, but with an extra load of
I $1,000 or so every year for many years it is paying pretty dearly for our
whistle.,,12
I The bond election was widely believed to be a toss-up. But when voters
went to the polls on Tuesday, May 22, 1900, they resoundingly approved the
I bond issue by a 2-1 margin.
"The outcome was a surprise," the editor of the Shakopee Tribune wrote
I that Friday, "for while we expected a favorable vote, no one ever thought it
would be carried by such an overwhelming majority, 168 votes. This goes to
I showthat people of Shakopee are enterprising when given an opportunity to
demonstrate.,,13
I The polls had closed at 5 p.m., and within an hour, the results were known.
An impromptu celebration ensued, with performances by the town's Cadet and
I Maroon Bands, followed by a fireworks display.14 Hopes were high that
I Shakopee's streets would be lighted within months. "It may be said," the Argus
editorialized, "that if matters are pushed with the same vigor which has marked
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I the movement thus far, the plant should be in operation by September first.
I November 1 ought to be placed as the Iimit.,,15
I Lights on the Altar
I As it was, Shakopee waited nearly two years for electric lights. Problems
with securing a site for the new power plant and delays in ordering and
I installing the equipment consumed much of 1900 and 1901. It wasn't until
September 1901 that foundation work was completed on the electric light plant,
I which was located at the foot of Lewis Street on the river bank.16
The Council hired S.L. Sly, a Twin Cities electrician, as the first
I superintendent of the City's municipal utility. Sly spent much of the 21 months
between May 1900 and March 1902 overseeing the wiring of the community.
I A 1901 national steel strike delayed the delivery of much of the structural
steel to be used in the electric light plant, but Sly and his crews installed nearly
I 1,000 incandescent lights in homes and businesses during late 1901 and early
1902. The Occidental Hotel had seven new lights, Strunk's Drugstore boasted
I 18, Kauth's Hotel had 17, and the Lander Opera House promised to be the ,
best-lit building in town with 38 incandescent lights.17
I The 1 OO-horsepower engine for the electric light plant arrived by rail in late
February 1902.18 Sly's crews worked the next month installing the equipment
I and testing the boilers and generators. Finally, on Good Friday evening, March
28, 1902, Sly turned the switch at the electric light plant that illuminated
I Shakopee. Parishioners at St. Mark's Catholic Church marveled at the electric
lights on the high altar the next night at Holy Saturday services.19
I Shakopee started municipal electric service with 32 arc lights. Most of the
businesses in town had incandescent light service. During the first decade of
I the utility's history, an increasing number of residential customers were added
I to the electric light plant's load.
Initially, rates were 12-1/2 cents per kilowatt-hour for incandescent service,
I about what other municipal utility customers in Chaska, LeSueur and Lake City
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I were charged. Shakopee customers paid 15 cents a month to rent a meter,
I and City crews wired prospective customers' homes for a cost of $1 to $3 per
lamp. Broken light bulbs were replaced by the City at a charge of 20 cents per
I bulb. The minimum charge per meter in the beginning was $1 a month.
Consumers were offered discounts of between 5 and 20 percent for prompt
I payment, depending upon the size of the monthly bil\.2o
Service during that first decade, as a contemporary observer put it, "was
I spasmodic and usually never available during daylight hours.,,21 Most of the
businesses downtown kept their gas fixtures as backups for the frequent power
I outages. The utility also contended with a recurrent turnover in
superintendents. Sly left Shakopee for a similar job in Sleepy Eye in 1903, and
I the City hired A.K. Adams for the vacant job. Adams departed in 1907 and was
replaced by A.T. Harris.22
I In 1912, the City Council made the painful decision to abandon generation
at the Lewis Street plant and seek a wholesale power contract with Minneapolis
I General Electric Company. By that time, the Shakopee municipal utility was
firmly ensconced in the water and sewer business.
I 1,960 Words
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I 1 Beck, LiQht Across the Prairies: An Illustrated Historv of Northwestern Public Service Company
Huron, South Dakota: Northwestern Public Service Company, 1969, p.14
I 2 Beck, PP&L-75 Years of PowerinQ the Future: An Illustrated Historv of Pennsylvania Power &
LiQht Co. Allentown, Pennsylvania: Pennsylvania Power & Light Co., 1995, pp.33-34
3 "State & Local Electric Utilities," Public Power, January-February 1998, pp.100, 104
4 Beck, "Arc Lighting and the Birth of Public Power," Public Power, July-August, 1998, ppAO-43
I 5 "Edison's Light," New York Herald, December 21, 1879, p.5
6 Neil Baldwin, Edison: InventinQ the Century New York: Hyperion, 1995, pp.137-138; See Also,
Beck, PP&L-75 Years of PowerinQ the Future, ppA8-54
7 Henry G. Prout, A Life of Georoe Westinohouse New York: Arno Press, 1972, pp.233-247
I 8 "Report of Committee," Shakopee Tribune, May 18, 1900
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I 9 Ibid.
10 Ibid.
11 Ibid.
12 "Electric Lights," Scott County Argus, May 17, 1900
I 13 "Shakopee Shall Have Electric Lights," Shakopee Tribune, May 25, 1900
14 "Light We Will Have," Scott County Argus, May 24,1900
15 Ibid. .
I 16 Coller, Shakopee StOry, p.211
17 News Item, Scott County Argus, October 31,1901
18 News Item, Scott County Argus, February 27, 1902
19 Coller, Shakopee StOry, p.211
I 20 "The Electric Plant," Shakopee Tribune, October 11, 1901
21 Coller, Shakopee StOry, p.212
22 Ibid., p.212
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I SPU History
I Chapter 2, Sidebar 1
I The High Line
I It was obvious almost from the start of electric utility service in Shakopee that
the Lewis Street electric light plant didn't have the capacity to serve the
I community's industrial customers. The plant's boilers were only able to build
I enough steam to power Shakopee's street lights and the residential electric
lighting load.
I That was unacceptable to Col. George Lewis Nye, the president of the
Minnesota Stove Company and the town's biggest employer. Nye had long
I argued that the City needed to either triple or quadruple the size of the Lewis
Street plant or find an alternate source of electric power.
I "When we get all the power we need," Nye said to whomever would listen,
"watch us grow, and watch Shakopee grow into a clean, live, up-to-date City of
I industry and suburban homes.,,1
Col. Nye had good reason to complain. Electrification of the factory floor was
I becoming an accomplished fact by 1910. Nye was able to see that reality in
action in nearby Minneapolis, where the Minneapolis General Electric Company
I was working furiously to electrify the grain elevators and flour mills that provided
the nation with much of its enriched wheat flower.
I Minneapolis General Electric had been founded by Henry M. Byllesby in
1892. Byllesby in 1899 had sold his interest in the company to Stone & Webster,
I then one of the nation's major electric utility contractors. Stone & Webster had
begun construction of a network of high-voltage transmission lines radiating out
I from the Twin Cities shortly after the turn of the 20th century. In 1911, the firm
had built Riverside Station in northeast Minneapolis to replace the Main Street
I Plant, which had been destroyed in a January 1911 fire.2
Riverside was a huge plant by the standards of the day. Its twin 6,000-
I kilowatt generators could produce an eye-popping 53,000 horsepower at peak
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I capacity.3 Coupled with an abundant source of hydroelectric power from St.
I Anthony's Falls Dam on the Mississippi River, the Riverside plant gave
Minneapolis General Electric an ample supply of power to serve its own
I customers, as well as wholesale customers in outlying communities such as
Shakopee.
I In 1912, Henry M. Byllesby purchased Minneapolis General Electric back
from Stone & Webster. Within three years, Minneapolis General Electric would
I become the cornerstone of Northern States Power Company, Byllesby's holding
company for his Upper Midwest properties. The stove work's Col. Nye had
I known Byllesby since the utility pioneer worked in Minneapolis in the late 1890s.
Nye arranged a meeting of Minneapolis General Electric executives and the
I Shakopee light and water committee in 1912.
Negotiations to serve the stove works continued for most of the next eight
I months. Minneapolis General Electric was adamant that the utility would reserve
the right to serve the stove works directly. The light and water committee was
I reluctant to set such a precedent, but the stove works pumped $5,000 into the
local economy every payday.4
I Finally, in July 1913, Shakopee agreed to become a wholesale customer of
Minneapolis General Electric. The light and water committee hired crews to re-
I wire the City to handle the new source of power. On Friday, August 8, 1913,
power -started flowing into Shakopee from the Minneapolis General Electric high
I line.
"For a time," the Shakopee Tribune reported, "steam will be kept up for
I pumping purposes until the electric pump is in place, and then, day and night,
I week days and Sundays, there will be all the light and power the population of
Shakopee can use and then some.,,5
I Shakopee would remain a wholesale customer of Minneapolis General
Electric and its successor, Northern States Power, for the next 75 years.
645 Words
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I 1 "ZING! Goes the Electric Current," Shakopee Tribune, August 8,1913
2 Beck, The EnerQY to Make ThinQs Better: NSP - An Illustrated Historv of Northern States Power
Company Minneapolis: Northern States Power Company, 1999, pp.12-21
3 Ibid., pp.16-21
I 4 "ZING! Goes the Electric Currenf'
5 Ibid.
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I SPU History
I Chapter 3
I Peaks and Valleys
I With the electric light plant in operation, Shakopee turned to other utility
services to offer residents. In 1908, Jacob Ries, a store owner, petitioned the
I City Common Council to establish a sewage treatment facility and waterworks.1
Alderman Henry Mergens chaired a council committee to investigate costs to
I build water and sewer mains throughout the city.
The committee hired the St. Paul engineering firm of Loweth and Wolff to
I furnish bids, and the engineers estimated that the City could begin building mains
downtown for less than $10,000. A contract was awarded to W.C. Fraser in
I October 1908 to build water mains along Lewis Street from the electric light plant
I south to Third Street, then west on Third Street to Scott Street and east on
Second Street to Main Street.2 The flurry of water main construction was one
I more sign that Shakopee was willing to take matters in hand to ensure the safety
and comfort of its residents.
I Construction of the City's first water mains was completed in the spring of
1909. But the water was drawn from the Minnesota River above Shakopee, and
I treatment was almost non-existent. Unfortunately for Shakopee and other
communities downstream toward the Twin Cities, sewage treatment was still
I more of an art than a science. Much of the river upstream from Shakopee
passed through dairy farms, which meant that the Minnesota River was laden
I with agricultural waste by the time it reached Shakopee's water intakes.
Shakopee had not experienced a typhoid outbreak since the 1890s, but
I typhoid and other water-borne intestinal diseases were an ever-present threat for
Minnesota communities. Duluth had suffered serious typhoid outbreaks during
I the 1890s before installing a pumping and filtering station on the shore of Lake
Superior northeast of the city. Fargo-Moorhead reported an average of five
I deaths per year from typhoid in the period 1900-1910.3
I 1
I
I By 1910, most Minnesota communities were discovering that the best
I prevention against typhoid was to sink deep artesian wells for a municipal water
supply. Before Shakopee took that step, however, the City embarked upon an
I ambitious sewer main construction program.
Instead of bonding for the project, Shakopee assessed property owners who
I benefited from the sewer mains. The assessments came in much higher than
the City had initially estimated, and affected property owners filed 55 separate
I lawsuits against the City by the fall of 1910. Judge P.W. Morrison consolidated
the cases and ruled in December 1910 that the City was within its rights to
I assess the property owners.4
The subject of water, meanwhile, was back in the headlines by the summer of
I 1910. In August, Mayor John Thiem went before the City Common Council with
a plea to secure a permanent water supply that would lessen Shakopee's
I dependence on "foul river water.,,5 Thiem, who had spearheaded the council's
drive to build the electric light plant 10 years before, suggested that Shakopee
I investigate drilling a deep well at the site of the electric light plant.
Thiem's recommendations were acted upon in the summer of 1911. A weIl-
I drilling crew set up a rig adjacent to the power house on Lewis Street and began
sending the bit and casing down through alternate layers of limestone, shale,
I sandstone and more limestone. At just over 690 feet, the crews hit water.
Unknown at the time to even geologists from the University of Minnesota,
I Shakopee and other Minnesota River communities west of the Twin Cities were
sitting on top of several of the larger aquifers in the state of Minnesota.6
I Well No.1 began providing Shakopee with drinking water on October 14,
I 1911. The water from the deep artesian well flowed into a horizontal, double-
acting Fairbanks steam pump with a capacity of one million gallons per day.
I Engineers from the Minnesota State Board of Health's Division of Sanitation
estimated that the flow of the well was in excess of 600 gallons per minute. They
I certified that the water was "of good sanitary quality, as evidenced by the very
low bacterial count and the absence of the E.Coli group in 100 cubic centimeter
I amounts."? In addition, they noted that the water had good color and no odor.
I 2
I
I The completion of Well No. 1 brought to a close the formative stage of
I Shakopee's foray into municipal utility services. Well NO.1 would be the
mainstay of Shakopee's municipal water system for most of the next 50 years
I and would not be abandoned until 1993 - 82 years after it was drilled.
I
I Building Load
I Freed from the headaches of operating its own small generating plant,
Shakopee's municipal electric utility could concentrate on maintaining the City's
I distribution system and building load during the 1920s and 1930s.. But
maintaining electrical systems in the 1920s was an inherently dangerous
I business. During a four-year period between 1917 and 1921, the Shakopee
municipal utility lost two of its employees to fatal electrical accidents.
I Richard J. Wise, a lineman for the City-owned utility, was electrocuted early in
September 1917 while working on a temporary connection in the Lewis Street
I alley between First and Second streets. Hundreds of Shakopee residents
mourned the popular Wise at his funeral at S1. Mary's Roman Catholic Church.8
I Four years later, in July 1921, T.E. Harris, who had been superintendent of the
electric utility since 1915, was electrocuted in the same alley within a few feet of
I where Wise had experienced his fatal acciden1.9
I ~ Herman Hein replaced Harris as superintendent, but served only three years
before turning the job over to William Sudman in 1924. Sudman oversaw the
I 1926 replacement of many of the downtown arc lights with high-intensity
incandescent street lights. The resulting "White Way" was very popular with
I downtown merchants and shoppers, especially as Saturday evening shopping
hours became common during the decade.1o
I Electric appliances - particularly fans, toasters, irons and ranges - became
increasingly affordable and popular during the 1920s. The Shakopee municipal
I utility encouraged electric appliance use as a method of building load for the
I 3
I
I utility. Even as late as 1927, the municipal utility was still wiring Shakopee
I homes for electric service. The City's population had reached nearly 2,000
people in the 1920 federal census, and there were an estimated 600 residential
I dwellings in the community. But as of 1927, only 401 residences were served
with electric power.11
I The 400 residential customers consumed 211,000 kilowatt-hours of electric
power and paid an average of 6.6 cents per kilowatt-hour, slightly more than half
I the 12.5 cents per kilowatt-hour charged residential customers at the inception of
electric power service a quarter-century before. The municipal utility reported
I 158 commercial and industrial customers in 1927. They paid an average of 5.1
cents per kilowatt-hour for 175,000 kilowatt-hours of electricity.12
I The municipal utility reported revenue of $26,129 in 1927. The City paid
Northern States Power Company (NSP), the successor to Minneapolis General
I Electric, 2 cents a kilowatt-hour for wholesale power. The only other major costs
were wages for the superintendent, a billing clerk and a combination
I lineman/groundman., The utility also owned and operated a 1926 Ford Model T
one-ton truck and a homemade pole trailer.13
I
Surviving the Depression
I
The onset of the Great Depression in 1929 devastated many communities in
I Minnesota and the Upper Midwest. Unemployment, bank failures and the worst
drought in modern times ravaged Minnesota and the Dakotas. Shakopee was
I luckier than many communities, thanks in part to the innate conservatism of the
I town's leaders. The Shakopee eleGtric light plant kept electric rates low during
the Depression decade and established a policy of working with customers who
had fallen on hard times.
I Shakopee had survived a terrible commercial setback in the mid-1920s when
I the Minnesota Stove Company, the town's major employer for decades, failed.
The stove works had been unprofitable for years, and the company's major
I
I 4
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I manufacturing plant was nearly destroyed in a March 1923 fire.14 The next year,
I the owners placed the company into receivership.
The closing of the stove works stunted Shakopee's growth for more than a
I decade. The city's population of 2,020 in the 1930 federal census was a gain of
only 32 people for the 1920s.15 But with the exception of a 1931 bank failure,
I Shakopee was relatively unaffected by local business collapses during the
Depression.
I Shakopee, in fact, was one of the first communities in Minnesota to fully
recover from the Depression. In late 1934, Rahr Malting Co. of Manitowoc,
I Wisconsin approached the City about locating a major barley malting plant in
Shakopee. The company, which operated a facility in Minneapolis, was drawn to
I 8hakopee by its rail connections, the abundance of artesian well water and the
limestone ledges underlying the site it had selected in West 8hakopee.16
I The seven-story malting plant was estimated to cost more than $1 million,
and the year-long construction phase of the project would employ almost 500
I people.17 The plant, which supplied breweries and bakeries throughout the
Upper Midwest, would provide permanent employment for 50 residents. The
I Chicago, Milwaukee & 8t. Paul Railroad and the Omaha Railway also spent
several hundred thousand dollars to upgrade tracks in Shakopee to serve the
I plant.
Shakopee's economic development coup, however, was a bittersweet victory
I for the municipal utility. As part of its negotiations with the City, Rahr Malting
requested that it be served directly by NSP. Under the terms of the wholesale
I power contract signed back in 1913 with NSP's predecessor, the Minneapolis
I General Electric Company, NSP did reserve the right to serve industrial
customers within the municipal utility's service territory. The City took the matter
I to the voters on March 18, 1936, and the electorate authorized the request by a
vote of 225-2.18
I With the Rahr Malting plant in operation, the City was able to emerge from the
Depression debt-free when the City Common Council retired Shakopee's last
I
I 5
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I outstanding bond in 1938. The next year, Shakopee's municipal utility narrowly
I missed becoming a power, gas and water utility.
Natural gas from Kansas had become available in southern Minnesota in
I 1939. When the Minnesota Valley Gas Company approached the City about
securing a natural gas franchise, the City Common Council put the matter to a
I vote of residents.
Mayor John J. Cavanaugh supported a municipal gas distribution system, but
I the electorate - by a 100-vote margin - opted for a franchise agreement with
Minnesota Valley Gas. Cavanaugh vetoed several franchise agreements with
I the gas company, but the City Common Council overrode the vetoes. In the fall
of 1939, Minnesota Valley Gas began supplying Shakopee residents with natural
I gas.19
Shakopee's municipal utility took the Rahr Malting Co. and gas franchise
I decisions in stride. By 1940, the utility was engaged in building a water tower
that would become a Shakopee landmark.
I 1,905 Words
I
I 1 Coller, Shakopee StOry. p.212
2 News Item, Scott County Argus, October 9,1908
I 3 Mark Peihl, "Deaths from Waterborne Diseases," Birth and Death Register, City of Moorhead,
v.II, 1900-1910; Copy Located in Archives, Clay County Historical Society, Moorhead, Minnesota
4 Coller, Shakopee Story, p.313
5 "Foul River Water," Scott County Argus, August 19, 1910
I 6 "Report on Water Supply, Shakopee," Minnesota State Board of Health, Division of Sanitation,
September 25,1918, pp.1-2
7 Ibid., p.3
8 Coller, Shakopee Story. p.278
I 9 Ibid., p.304
10 Ibid., p.314
11 Shakopee Electric Light Plant, Census of Electric Light and Power Stations, 1927, Department
I of Commerce, Bureau of the Census
12 Ibid.
13 Letter, Appraisal Service Company, Minneapolis, Minnesota, to City of Shakopee, July 3, 1930
14 Michael C. Huber, et.a!., Shakopee Sketchbook, p.63
I 15 Coller, Shakopee StOry, p.339
16 Ibid., pp.362-363
17 "Large Malting Plant is Being Erected in Shakopee, 1936," The Jordan Independent December
I 13,1936
I 6
I
I
I 18 Coller, Shakopee StOry. p.363
19 Ibid., p.378
I
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I 7
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I SPU History
I Chapter 3, Sidebar 1
I The Golf Tee Water Tower
I When it was erected in the summer of 1940, Shakopee's distinctive water
tower was likened to "a giant collar button.,,1 Later generations, more familiar
I with the exploits of Arnold Palmer and Jack Nicklaus, called it the giant golf tee.
I The municipal utility had added several wells to Shakopee's water system in
the late 1920s and 1930s, and the capacity of the original mid-1920s era
I standpipe water tank at Holmes Street and Shakopee Avenue was woefully
inadequate to serve the city's needs.
I In the spring of 1940, the City Common Council decided to erect a modern
municipal water tank.2 The new tank would be located at Holmes Street and
I Prairie Avenue. At the time the location was nearly out in the country, but the
Common Council bet that Shakopee's growth during the 1940s would make it the
I logical choice for the city's future water supply.
The Council placed the new water tank out for bids early in the summer. The
I capacity specified was a whopping 250,000 gallons. The successful bidder was
Chicago Bridge & Iron Company (CB&I), a 50-year old firm that had pioneered
I the erection of water and oil storage tanks around the world. The firm's founder,
Horace E. Horton, had gotten his start in 1867 by designing and building a 126-
I foot wooden arch bridge across the Zumbro River at Oronoco, Minnesota.3
In 1939, Chicago Bridge & Iron had built its first Watersphere@ elevated tank
I for the municipal utility in Longmont, CoJorado.4 The 100,000-gallon capacity
tank was a radical design departure from the wooden design and welded-steel
I design water towers that were commonplace across Minnesota and the Midwest
at the time.5
I The engineers from CB&I assured Shakopee officials that the pedestal design
they planned was quite feasible with the welding technology then available. In
I addition, they noted that the pedestal Watersphere@ design would cost far less to
I 1
I
I build than the more standard welded-steel design, simply because the older
I design would require far more steel in the tower structure to support a 250,000-
gallon tank.
I CB&I's bid came in at just under $22,000, and crews moved on to the site in
mid-summer, 1940. They quickly erected a 36-foot diameter concrete foundation
I to support the tubular column holding up the sphere. A shipment of 115 tons of
steel plates arrived at the site in late July, and the CB&I crews arranged the
I plates like sections of orange peel at the base of the tower.6 Four electric arc
welders began welding the plates together into the sphere, which started to take
I shape by early September. Shortly after Labor Day, crews manning a crane
lifted the 42-foot-diameter tank atop the concrete pedestal.7
I When it was installed, the water tower soared 130 feet above the surrounding
countryside and could be seen for miles around. "The tower will be a shining
I monument in the City because its surface will be covered with aluminum paint,"
explained S.J.Stanley, the CB&I engineer in charge of construction. "Access to
I the top of the structure will be a spiral stairway circling outside of the base and
supporting column and continuing diagonally across the outer surface of the
I spherical tank."8
The new water tower was put in service on Tuesday, September 17. City
I crews spent all night beforehand pumping water into the new tank from the mains
I and the old tank. A minor mishap occurred when a six-inch gate valve at the
Rock Springs Bottling Plant failed, flooding a tunnel beneath the street.9
I One final task remained. On Wednesday, September 18, local sign painter
Ed Fonnier climbed the 130-foot tank and erected scaffolding on the outside of
I the sphere. Then he proceeded to paint SHAKOPEE in letters 4 feet, 8 inches
high. When completed, the lettering stretched 28 feet across the sphere.
I 'That tank is plenty high," Fonnier said when he cl.imbed down.1o
715 Words
I
I
I 2
I
I
I 1 Coller, Shakopee StOry, p.390
2 Ibid., p.390
3 "History," http://www.chicago-bridge.com/history2.html
4 Ibid.
I 5 Ronald E. Spreng, "They Didn't Just Grow There - Building Water Towers in the Postwar Era,"
Minnesota History, Winter, 1992, p.136
6 "New Tank to be Biggest of Kind in World," Shakopee Argus- Tribune, August 1, 1940
I 7 "City's New Water Tank Largest of Kind In U.S.," Shakopee Argus- Tribune, September 5, 1940
8 Ibid.
9 "'That Water Tank is Plenty High,' Painter Says," Shakopee Argus- Tribune, September 19, 1940
10 Ibid.
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I 3
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I SPU History
I Chapter 4
I The Utilities Commission
I The two decades following World War 1\ were momentous years for
I Shakopee's municipal utility. Electric power demand in Shakopee, the nearby
Twin Cities and Minnesota increased sharply, with kilowatt-hour growth
I averaging 7 percent a year for much of the period. Shakopee changed the
governance of the utility from city council oversight to a utilities commission form
I in 1951. The Shakopee Public Utilities Commission ended the era by building a
new headquarters and central maintenance facility for the utility on Fourth Street
I in 1968.
In November 1946, the city signed a new contract with Northern States Power
I Company (NSP), the successor to the Minneapolis General Electric Company.1
The contract reflected one of the more beneficial realities of the post-World War
I II electric utility industry. Because of the construction of larger, more efficient
coal-fired electric power plants in the late 1940s and 1950s, the cost of electric
I power came down as kilowatt-hour demand went up.
The resulting economies of scale benefited Minnesota wholesale customers
I of NSP. Under the terms of the 1 O-year contract extension with NSP, Shakopee
paid about 1 cent per kilowatt-hour for wholesale electric power. The 1946
I wholesale power agreement with NSP saved the city 11 percent on its wholesale
power bill, which totaled just under $45,000 in 1947. NSP also offered the city a
I 5 percent discount for prompt payment of the monthly power bill. 2
As a result of the power supply contract, Shakopee boasted some of the
I lowest residential electric rates of any municipal utility in Minnesota. In a 1946
rate comparison, Shakopee reported that residential customers paid 3.9 cents a
I kilowatt-hour for 100 kwh of electricity, and 2.7 cents a kwh for 250 kwh. The
100-kwh usage was 14 percent lower than the rates paid by customers of the
I state's other 28 municipal utilities, and 11 percent less at the 250-kwh usage.3
I 1
I
I Only New Prague, Sleepy Eye, Blue Earth and Litchfield had lower electric rates
I for 100-kwh usage, a standard consumption at the time.4
Thanks to the economies of scale afforded by the NSP wholesale contracts,
I Shakopee residents would enjoy electric rates lower than in many other
Minnesota communities through the early 1960s.
I A New Way of Management
I Throughout most of its first half-century of operation, the Shakopee municipal
I utility had been managed by a superintendent with oversight by a light and water
committee of the City Council. As the utility continued to grow through the
I 1940s, it became apparent to some in the community that a change in
governance was needed. Proponents of change argued that the expanding
I municipal electric and water business demanded more time than Councilors
could afford to spend, busy as they were with the affairs of the rapidly growing
I community.
Supporters of the change in governance first raised the issue with the City
I Council in the fall of 1950. They cited Chapter 453 of the laws of the state of
Minnesota, which provided for the creation of a Water, Light, Power and Building
I commission for any city with a population of less than 10,000. The proposed
I Commission would include three appointed members, who would employ a
secretary and have the power to set all electric and water rates, audit all claims
I presented to the utility and generally oversee all electric and water operations.5
The idea of a Commission was not new. Mayor Joseph A. Ring had
I proposed an Electric Light and Water board to the council in 1910. The proposal,
however, had succumbed to political infighting and opposition by the Scott
I County Argus and resulted in Ring's resignation that summer. Since 1901, the
municipal utilityhad been operated under the direction of the City Council.6
I What appeared to be a relatively benign administrative change, however,
quickly got caught up in the maelstrom of post-World War II city politics. Since
I shortly after the end of the war, Shakopee had been embroiled in a dispute over
I 2
I
I the issuance of on-sale liquor licenses. As a fourth-class city under Minnesota
I law, Shakopee could issue no more than five on-sale liquor licenses. But since
the 1930s, the City Council had been issuing nine licenses without anyone
I questioning its righttodo so. The matter garnered local headlines in 1947, and
the issue dominated city politics for the next five years.7
I Complicating the matter was the existence of a faction in the community who
supported Shakopee's creation of a municipal liquor store. State law allowed
I fourth-class citi.es to own and operate one or more municipal liquor stores.
Supporters argued that as with the municipal utility, the community could derive
I more revenue from the ownership of a liquor store than by selling licenses to
others.
I Liquor license politics had hopelessly split the City Council. When the motion
to create a Utilities Commission came before the Council in late 1950, the issue
I faced strong opposition. Mayor Clarence Czaia and Councilman Elmer Dellwo
opposed the measure. When it passed in December, Czaia promptly vetoed it.
I In March 1951, the Council passed a revised measure by the barest of margins,
5-4. This time, Czaia signed the resolution, to become effective April 1 , 1951.8
I Richard C. Condon, Dr. James E. Ponterio and Charles Fricke were
appointed to the first Commission.9 Condon was a former superintendent of the
I city's light and water utilities, and Fricke had served on the utilities commission in
Manitowoc, Wisconsin during the 1930s.10 Ponterio was a popular local general
I practitioner. The three were appointed to staggered terms, which in effect gave
I the council the authority to appoint or re-appoint a Commissioner every year.
Full terms were three years.
I The new Commissioners quickly agreed on the employment of Florian A.
Dircks as Commission secretary, and they appointed Julius A. Coller II as SPU's
I first attorney.11
The new Commissioners had wide latitude in the operation of the utilities.
I The Council had included management of the city's sewage system as part of
SPU's responsibilities, and the Commissioners also were empowered to
I administer the city's zoning regulations and issuance of building permits. The
I 3
I
I only thing Commissioners were not allowed to do without Council approval was
I to sell or dispose of utility property.12
Working closely with Superintendents Robert S. Houts and his successor,
I James R. Kotsmith, the Commission looked forward to a bright future.
In retrospect, the 1951 establishment of the Utilities Commission proved the
I wisdom of SPU's original supporters. The 1956 election of Dr. D.L. Halver as
Shakopee's mayor resurrected many of the political passions that had
I accompanied the liquor license issue a decade before. Dr. Halver and his wife
Dorothy were outspoken proponents of a municipal liquor store, and Dr. Halver's
I term in office was marked by political infighting and the resignation of numerous
aldermen.13
I Had the municipal utility remained under the direct control of the City Council,
it is questionable whether SPU could have made the significant strides it did in
I the latter 1950s and early 1960s.
I Progress and Improvements
I The Utilities Commission had a rude introduction to the utility business.
Above average snowmelt and torrential spring rains in 1951 and 1952 caused the
I Minnesota River to flood both years. Shakopee itself was not threatened, but
SPU crews worked closely with their NSP counterparts to relocate transmission
I lines into the city.14
I In August 1951, George "Corky" Ring, a member of the SPU line crew, was
critically injured when he came into contact with a 2,300-volt distribution line.
I Although initially feared fatally injured, Ring survived following the amputation of
his right foot and hand.15
I The Utilities Commission was extensively involved with two major
improvements to Shakopee in the mid-1950s. SPU replaced many of the light
I standards in downtown Shakopee and created an attractive new downtown
street-lighting "White Way" for the community during the summer of 1954.16
I
I 4
I
I The reliability of the city's electric power supply was ensured two years later
I when NSP embarked upon an ambitious project to upgrade its high-voltage
transmission grid in the Minnesota River Valley. In the spring of 1956, the
I Minneapolis utility began construction of a 115,000-volt transmission line from
the Black Dog Generating Station in Burnsville west to the Scott County
I Substation just west of Shakopee.17 The 13.5-mile transmission line represented
an investment of $370,000.
I "The steady increase in the use of electricity throughout this area has made
necessary the construction of the new and larger line," Ray Johnson, manager of
I NSP's Minnetonka division, told reporters. "The large amount of power made
available by the high-voltage line will provide a more than adequate supply of
I power in this area for years to come.,,18
SPU spearheaded perhaps one of the major municipal improvements in
I Shakopee's history. As part of its charter, SPU was responsible for the
community's sewage system. In the mid-1950s, Shakopee was still limping
I along with the municipal sewers that Mayor Jacob Ries had built in 1910
following Joseph A. Ring's resignation. A 1946 recommendation by a Twin Cities
I consulting engineering firm suggested the construction of a conventional
treatment plant with a capacity of serving 10,000 people. The estimated cost of
I $750,000, however, raised fears that the outlay would create sewage charges
I that would cause hardship to city residents.
In the spring of 1954, Mayor George A. Phillipp signed an ordinance that
I inaugurated the first sewer rental charges in Shakopee's history. Under the
rental system, residents were assessed a charge for a fixed number of years to
I help finance construction of the sewage treatment plant. Two weeks later, the
Council created the Public Works Reserve Fund to escrow the sewer rentals and
I designated SPU to oversee the fund. At the same time, the Council selected the
Hauer property on the Minnesota River east of downtown as the site for a
I sewage treatment plant.19
Events began accelerating in 1958. In October, the City Council applied to
I the federal government for a 30 percent construction grant for the sewage
I 5
I
I treatment facility. In February 1959, the Utilities Commission transferred $30,000
I from the Reserve Fund to the City's general fund for purchase of the 32-acre
Hauer site. In May 1959, the City raised sewer rental rates. The next month, the
I . Council hired the Minneapolis firm of Toltz, King, Duvall, Anderson & Associates
to draw up the actual plans and specifications for the new plant.2o
I In December 1959, the City was notified by the U.S. Department of Health,
Education and Welfare (HEW) that Shakopee had qualified for the 30 percent
I construction grant-in-aid. In May 1960, the engineers completed the plans and
specifications for the new plant. The estimated $885,000 cost would translate
I into $626,000 once the federal grant was taken into account. Since the Utilities
Commission had escrowed more than $110,000 in the Reserve Fund since its
I inception in 1954, the City's share of the construction costs would come to
$516,000.21
I On June 16, 1960, Shakopee's voters went to the polls to approve a
$516,000 bond issue for construction of the new sewage treatment plant. The
I Utilities Commission and the City Council both feared that the sum would be too
large for residents to approve. But approve they did, by a 460-160 margin.22
I When bids were opened in August, they came in at just over $200,000 less
I than the original estimates. The city issued bonds for $265,000, about half of
what the voters had approved in June. Construction got underway in the fall of
I 1960. By the spring of 1962, contractors were completing the new facility.23
Shakopee's mayor, Dr. Joseph C, Huber, city aldermen and SPU
I Commissioners officially dedicated Shakopee's new sewage plant on Saturday,
May 26, 1962.24 It was not a moment too soon. Industrial development efforts in
I Shakopee and Scott County were beginning to bear fruit. And new companies
moving into the region demanded state-of-the-art sewage and wastewater
I treatment facilities.
2,070 Words
I
1 Minneapolis Division, Resale Contract, Northern States Power Company and City of Shakopee,
I November 1946
I 6
I
I
I 2 Ibid.
3 City of Shakopee, Residential Electric Service, September 1, 1946
4 Ibid.
5 Shakopee City Attorney's Office, "Memorandum Concerning the Management of Municipally
I Owned Utilities," 1950, pp.1-2
6 SPU, "Dedication of the New Shakopee Public Utilities Building," 1968, pA
7 Coller, Shakopee Story, ppA27 -428
I .8 Ibid., pA44
9 Ibid., pA45
10 SPU, "Dedication of the New Shakopee Public Utilities Building," 1968, pA
11 Coller, Shakopee StOry, pA45
I 12"A Resolution Creating a Water, Light and Power and Public Building Commission," March 27,
1951, p.1
13 Coller, Shakopee StOry, pp.510-515
I 14 Ibid., p.447
15 Ibid., pA51
16 Ibid., p.469
17 Beck, NSP: The EnerQV to Make ThinQs Better, pp.86-87
I 18 "NSP Building New 115,OOO-Volt Line Across County," The Shakopee Valley News, July 5,
1956
19 "City of Shakopee, Sewage Plant Dedication," 1962, p.3
I 20 Ibid., pA
21 Ibid., pA
22 Ibid., pA
23 Ibid., p.5
I 24 Ibid., p.1
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I 7
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I SPU History
I Chapter 4
I Sidebar 1
New Quarters
I
I By the mid-1960s, SPU was bursting at the seams. Revenues from the
utility's electric, water and sewage operations topped $500,000 for the first time
I in 1967.1 Electric revenues of $450,000 were nearly 10 times what they had
been in 1951 when the Commission was established.
I Utility operations were cramped for space. Barbara Thomas Menden joined
SPU as the office secretary shortly after graduating from Shakopee High School
I in 1967. The utility offices at the time were in city hall.
"Our office was right as you came in the front door," Menden recalled. "There
I was a half-counter that had the old bank teller windows. Mine was the first
window. The next window was the city clerk, and then the last window was the
I city treasurer.,,2
Martin A. Walsh, secretary of the Utilities Commission, worked in a small
I office on the first floor of city hall, as did the Shakopee city manager. The city
engineer's office shared space with the Shakopee parks and recreation
I department in the basement of city hall.
Utilities Superintendent Lee Monnens and his crew were housed in a 30-year-
I old garage on Levee Drive. At the time, the line crew, which consisted of Ed
Leaveck, Ray Friedges, Ray Lebens and Paul Geis, worked out of a 10-year-old
I yellow bucket truck. Monnens and Service Foreman Art Fideldy shared a 1950s-
era utility pickup truck. Matt Drees, the sewage plant foreman, worked out of the
I sewage plant. 3
In early 1967, Commissioners Robert Jasper, K.C. Eidsvold and F.J.
I Schneider, Jr. began studying a move to consolidated quarters. SPU took
control of a parcel of land at 1030 East Fourth Avenue in Shakopee and
I
I 1
I
I advertised for bids for construction of a new utility office and warehouse. The
I site had originally been purchased by the City for use as a park. In November
1967, SPU signed a contract with ACKRON Building and Supply Corp. of
I Minneapolis to build a 60,000-square-foot facility o'n the site.4 The $229,600
contract represented the largest single investment SPU had made since its
I inception.5
ACKRON crews moved onto the site as soon as the frost left the ground in
I the spring of 1968. SPU took possession of its new quarters in the summer of
1968, and the Utilities Commission formally dedicated the building on October
I 20, 1968.6
"I was glad to get out of city hall," Menden recalled of the move to Fourth
I Avenue. "The office area in the Fourth Avenue building at that time was only half
the size it is now, but we had a big community room, and the Commission met in
I there in the beginning.,,7
The entrance to the building was in the middle, rather than its current location
I on the west end of the building. Menden had her own office, adjacent to the
I office of Superintendent Lee Monnens. The biggest change was for the line
crews. The building contained heated garage and storage space for the utility's
I line truck fleet, which would grow dramatically during the 1970s. Poles and
conductors could be kept in a storage yard behind the building.8
I The 1968 move to the Fourth Avenue utility office and maintenance facility
I meant that SPU was growing with the community. The utility soon would begin
adding staff to serve the rapidly rising demand for electricity and water.
I 590 Words
I
I 1 "Operations Statement," City of Shakopee, Public Utilities Commission, December 31, 1967
2 Oral History Interview with Barbara Menden, Shakopee, Minnesota, July 26, 2001, p.1
I 3 Ibid., p.2
I 2
I
I
I 4 Contract, SPU and Ackron Building and Supply Corporation, November 15,1967, pp.1-2
5 Contractor's Proposal, Ackron Building and Supply Corporation, November 6, 1967, pp.1-2
6 "Dedication of the New Shakopee Public Utilities Building," October 20, 1968, p.1
7 Menden Interview, p.2
I 8 Ibid., p.2
I
I
I
I
I
I
I
I
I
I
I
-
I
I
I
I 3
I
I SPUC History
I Chapter 5
I Rate Wars
I When Nancy Huth went to work at SPU in 1971, Shakopee was still a small
I town. The town was dotted with empty lots and pastureland, and most of the
3,500 residents did the majority of their shopping downtown.
I "It was a nice small town," she said. "It wasn't a suburb yet. The only mall in
the area was Southdale in Edina.,,1
I Huth had been hired as a part-time customer service representative. When
the utility office moved to the new Fourth Avenue location, SPU's billing and
I customer service functions had remained downtown in city hall. Most of the
utility's customers still came downtown to pay their bills. And most paid in cash.
I "The billing machine we had was an old Burroughs," Huth said. "We posted
in the ledger books by hand. The old manual envelope-stuffing equipment was
I down in the basement.,,2
The customer service and billing departments moved to the Fourth Avenue
I utility offices in 1972. Barbara Menden, who had relocated to the new offices in
1968, remembered that "in the 1960s and early 1970s, we knew all the
I customers by name. We would dispatch trouble crews to the Schmidt house
instead of a street address.,,3
I Menden noted that the utility offices in the early 1970s stayed open "Friday
night until 8 p.m. People would cash their paychecks, do their grocery shopping
I and pay their utility bills. People were very happy with the utility service. If there
was trouble, we,would always get people back on very quickly. They knew they
I could talk to somebody in the office.,,4
The community room in the utility offices, which later was converted to house
I the engineering department, was a popular gathering spot in the 1970s. "The
senior citizens would hold hotdish suppers and play cards in the community
I
I 1
I
I room," Huth recalled. "There was one old guy who cheated at cards at the senior
I citizens' card games. The ladies would come out and complain to US.,,5
I A Golden Era
I For SPU and the utility industry in general, the 1960s had been a golden era.
Economies of scale that first came to the forefront in the late 1940s meant that
I the more electric power residents consumed, the less expensive it became. SPU
cut electric rates four times between 1956 and 1965, due mainly to contract
I extensions with NSP, its wholesale electric supplier. For most of the 1960s, SPU
purchased electricity from NSP at an average of less than a penny per kilowatt-
I hour.6
Since SPU sold electric power to customers for an average of 2.2 cents per
I kilowatt-hour, it returned a tidy profit to the city each year. During the 1950s, the
utility transferred more than $350,000 to the general fund.? In the 1960s, SPU
I managed to fund the $230,000 cost of its new offices and warehouse on Fourth
Avenue from capital reserves and still return nearly $500,000 to the Shakopee
I general fund. By 1972, SPU was reporting a net annual profit approaching
I $100,000.8
The Utilities Commission had invested money into improvements in the
I system. SPU had funded a major overhaul of the water system in 1962. The
community's three wells, dug in 191 J, 1945 and 1956, had been outfitted with
I new pumps and motors. A consultant at the time estimated that the wells would
be adequate to serve the city until at least the late 1970s.9
I SPU's reserve fund was frequently tapped for community improvements. In
1967, the Utilities Commission transferred $48,000 to the parks and recreation
I department for construction of a new city swimming pool, and $10,500 to the
general fund for construction of a new city hal1.1o
I A 1 Q68 Electric Utility Revenue Bond issue of $150,000 had funded major
improvements to Shakopee's distribution system, necessitated by the growth of
I
I 2
I
I the city and annexation of outlying areas.11 New 1 ,ODD-watt mercury vapor street
I lights were added whenever subdivisions were platted for development.12
SPU was one of the better-run municipal utilities in Minnesota. By 1972, the
I electric utility served nearly 2,700 customers; it had added 188 new customers
during the year, a 7 percent gain. The average electric customer in Shakopee
I consumed nearly 11,500 kwh a year, due in part to the aggressive marketing of
an electric heat rate by the utility during the 1960s. The utility sold nearly 31
I million kilowatts during 1972. More than 2 million kilowatts - 6.5 percent of the
city's total sales - were provided for street lights, lighting and heating public
I buildings, and running the pumps for the well system, all at no cost to the
taxpayer.13
I The water utility served 1,800 customers in 1972. SPU sold more than 200
million gallons of water from its three wells at a cost of 44 cents per 1,000 gallons
I of water. 14 The water reserves in the Jordan Aquifer underlying the Minnesota
River Valley led utility planners to believe that Shakopee would have an
I adequate supply of fresh water years into the future.
The 1960s had been good years for the Shakopee economy. Rahr Malting,
I which had upgraded its Shakopee facility in 1955, accounted for an annual
I payroll of more than $650,000 by 1965.15 The Valley Industrial Park, which had
first been platted in the mid-1950s, was an engine for economic growth in
I Shakopee. The Park, which counted such major tenants as Midland Glass,
Owens-Illinois, Kawasaki Motors Corp., Toro, Air Products and Chemicals, and
I Certain-Teed Products Corporation, employed more than 1,000 Shakopee and
Scott County residents in 1972.
I Midland Glass alone employed 300 people in 1972, with plans to increase
that to nearly 500 employees by 1976. The firm in 1972 was in the midst of an
I $8 million expansion that would make it the county's largest taxpayer by the mid-
1970s.16 An increasing number of Shakopee residents were driving to jobs in
I Burnsville, Bloomington and the other booming southern suburbs of Minneapolis.
Shakopee residents took pride in being Minnesotans in the early 1970s. A
I national audience of television viewers knew the Twin Cities from the television
I 3
I
I exploits of Mary Richards on the Mary Tyler Moore Show, and the Minnesota
I Vikings were almost an annual fixture in the professional football Super Bowl.
Minnesota's boyish Governor Wendell Anderson was on the cover of Time
I Magazine. Shakopee's own Maurice Stans was President Richard M. Nixon's
secretary of commerce. Shakopee residents of the time could have been
I forgiven for thinking that the good times would continue indefinitely.
I Dark Clouds on the Horizon
I The world turned upside down for the electric utility industry in Minnesota and
the United States in 1973. The first Arab oil crisis, precipitated by the Yom
I Kippur War between Israel and Egypt and Syria, created U.S. oil shortages for
the first time in the nation's history. Overnight in the fall of 1973, oil prices
I doubled, tripled and doubled again. Coupled with already existing inflationary
pressures, the oil embargo created strong pressure to raise electric rates.
I Double-digit interest rates throughout the 1970s contributed to even higher
electric prices.
I The rise in electric power costs had been developing for years. Between
I 1964 and 1972, Presidents Lyndon Johnson and Richard Nixon attempted to
fight a war in Vietnam on a peacetime economy. The resulting inflation from the
I nation's economic policies trickled down to every sector of the U.S. economy.
The Johnson tax increase of 1968, designed to help pay for the war in Southeast
I Asia, hit particularly hard at electric utilities such as NSP that were building
power plants to meet increasing demand.
I Finally, environmental costs dramatically increased the cost of building coal-
fired steam electric power plants,'the foundation of baseload generation in
I Minnesota,and the Upper Midwest since the 1930s. The first Earth Day took
place in 1970, with some of the most fervent environmental demonstrations
I occurring on the University of Minnesota campus. Within two years, Congress
had passed and President Nixon had signed landmark air and water pollution
I control legislation.
I 4
I
I The result of all the economic upheaval affecting electric utilities nationwide
I caused a jump in electric rates for all classes of customers. NSP started raising
its wholesale rates in 1970. The Minneapolis utility had a major building program
I underway at the time, with nuclear construction projects in progress at Prairie
Island on the Mississippi River south of Minneapolis_and Monticello northwest of
I the Twin Cities. NSP was also in the midst of building its coal-fired Alan King
Generating Station on the St. Croix River east of St. Paul.17
I
'A Fast Train Quick'
I
Wally Bishop was a guidance counselor in the Shakopee school system in
I 1972 when friends convinced him to toss his hat into the ring for a vacancy on
the Utilities Commission. Bishop applied to the City Council for the position and
I was appointed to serve with Ron Stocker and Don Buboltz.
I "The guy said it was only one meeting a month," Bishop recalled. "And then
we started negotiating with NSP. We got on a fast train quick.,,18
I Within a two-year period, wholesale power rates to Shakopee had increased
nearly 15 percent. When NSP filed for another wholesale power increase in
I 1973, Shakopee acted. SPU joined 13 other NSP municipal customers to form
the River Electric Association to oppose the NSP wholesale rate increase.
I Chaska, St. Peter, Anoka, North S1. Paul, Arlington, Winthrop and Lake City were
among Shakopee's neighbors in the River Electric Association.19
I In the course of the association's intervention with the Federal Power
Commission appealing NSP's rate increase, Shakopee's attorneys discovered
I that NSP was charging Midland Glass in Shakopee less at retail than it was
charging Shakopee at wholesale, explained Bill Fahey.2o Now a Minneapolis
I attorney, Fahey was hired as Shakopee's city administrator in the fall of 1973.
When SPU found out that NSP was giving preferential rates to customers
I within the city, it brought to the Utilities Commission the issue of NSP's service to
industrial customers in the Valley Industrial Park. NSP had insisted on the right
I to serve industrial customers, dating back to the original wholesale contract
I 5
I
I Shakopee had signed with Minneapolis General Electric Company, NSP's
I predecessor, back in 1913. In the 1960s, NSP had built its Blue Lake Substation
specifically to serve the industrial park.
I Bishop and the other Commissioners were wrestling with another problem
during the NSP negotiations. Several aldermen wanted to sell the municipal
I utility to NSP and reap a one-time financial windfall. Bishop's goal was to keep
the utility independent and the Utilities Commission free of local politics.
I "One issue that was always pervasive was SPU's autonomy," Bishop said. "I
wanted to see it kept separate. We were in charge of seeing to it that the city got
I safe, reliable, inexpensive electric power. That was our goal, to run this as a
business and mesh it effectively with city operations. ,,21
I Shakopee threatened to condemn the Blue Lake Substation and other NSP
property in the city through the use of its eminent domain powers. In the midst of
I negotiations, NSP in January 1974 raised wholesale prices by 15 percent.22
NSP followed that with a 16 percent increase in January 1975.23 After fruitless
I negotiations with the Minneapolis utility, Bishop and his fellow Commissioners
I convinced the City to sue NSP in early 1976.
Before the condemnation litigation could be heard before a judge, Lee
I Monnens died of a fatal heart attack in March 1976.24 A Shakopee resident his
entire life and 25-year veteran of utility work in his hometown, Monnens had
I worked his way up from the line crew to the superintendent's position in 1965.
Monnens' sudden death put the lawsuit on hold for six months.
I Monnens' successor, Lou Van Hout, joined SPU in the summer of 1976. A
Michigan native and engineering graduate of the University of Detroit, Van Hout
I had worked for the City of Detroit's Public Lighting Department from 1968 to
1976.25
I "The first cO,uple of days I was in the office," Van Hout recalled, "all the files
were on the floor with attorneys going through them. Everything was in disarray
I at that point.,,26
When the condemnation lawsuit against NSP finally did get to court, it
I appeared on the docket of U.S. District Court Judge Miles Lord. One of
I 6
I
I . Minnesota's most populist judges, Lord had made his reputation fighting for the
I interests of little people against big corporations. He had garnered national
publicity in the contentious Reserve Mining Company litigation in northern
I Minnesota, ruling in no uncertain terms that the North Shore taconite mining
company was polluting Lake Superior.27
I Fahey, who had watched with interest the City's case after he left the job of
Shakopee City Administrator, said it quickly became obvious to NSP's battery of
I courtroom attorneys that Lord was inclined to see the condemnation case as one
of the big corporation against the little guys from Shakopee. On the first day of
I hearings in Lord's courtroom, the flinty judge mused out loud that if he didn't hear
any good reasons to the contrary, he would likely rule in favor of SPU and order
I NSP to pay $1 million in damages.28
''That afternoon, NSP said, 'Let's settle,'" Fahey recalled.29 NSP began
I serious negotiations with Shakopee in early January 1977. The Minneapolis
utility agreed to reimburse Shakopee $50,000 for legal fees. Shakopee arranged
I to purchase a distribution line within the city limits from NSP for $11,000. Most
importantly, NSP agreed to let Shakopee have a second point of access to
I service, at the Blue Lake Substation, which would allow SPU to serve customers
in future years in the Valley Industrial Park.3D
I "We did settle on a positive note," Van Hout said.31 Shakopee got everything
it wanted, Fahey echoed.32
I SPU's 1977 settlement with NSP laid to rest one of the two major legal issues
that the Utilities Commission dealt with during the 1970s. The second, territorial
I dispute with a rural electric cooperative neighbor would take more than two
decades to resolve.
I 2,595 Words
I
I
I
I 7
I
I
I 1 Oral History Interview with Nancy Huth, Shakopee, Minnesota, July 24, 2001, p.1
2 Ibid., p.1
3 Menden Interview, p.3
4 Ibid., p.3
I 5 Huth Interview, p.4
6 "Shakopee Rate Comparison," February 25, 1960
7 Shakopee Public Utilities Commission, "To the Editor," February 25, 1960, p.1
I 81972 Annual Report, Shakopee Public Utilities Commission, p.2
9 Toltz, King, Duvall, Anderson & Associates, Inc., "Report on Water Supply System
Improvements - Future Requrements," July 1964, p.12
10 Minutes of the Shakopee Public Utilities Commission, June 5, 1967
I 11 SPU, Resolution No. 133, "A Resolution Providing for the Issuance and Sale of $150,000
Electric Utility Revenue Bonds of the City of Shakopee," May 1968, p.1
12 Minutes of the Shakopee Public Utilities Commission, July 10,1967
I 131972 Annual Report, Shakopee Public Utilities Commission, p.2
14 Ibid., p.2 .
15 "Rahr Malting Dominates Skyline, Payroll in Shakopee More Than $650,000 Annually,"
Shakopee Valley News, March 18, 1965
I 16 Letter, Gerard Coleman, Midland Glass, Shakopee, Minnesota, to Amos Martin, Minnesota
Chamber of Commerce, St. Paul, Minnesota, October 1, 1975
17 Beck, NSP: The Enerqy To Make Thinqs Better - An Illustrated History of Northern States
Power Company, pp.171-186
I 16 Oral History Interview with Wally Bishop, Shakopee, Minnesota, July 27,2001, p.1
19 Oral History Interview with Lou Van Hout, Shakopee, Minnesota, July 25, 2001, p.5
20 Oral History Interview with Bill Fahey, Northfield, Minnesota, July 24, 2001, p.3
I 21 Bishop Interview, p.1
22 Letter, R.O. Duncanson, manager, NSP, Edina, Minnesota, to Honorable Mayor and Council,
City of Shakopee, Minnesota, January 18,1974
I 23 Letter, Ralph Duncanson, Division Manager, NSP, Normandale, Minnesota, to Bill Fahey, City
of Shakopee, Minnesota, January 3, 1975
24 Van Hout Interview, p.1
25Ibid.,p.1
I 26 Van Hout Interview, p.4
27 Robert v. Bartlett, The Reserve Mininq Controversy: Science, Technoloqy, and Environmental
~uality Bloomington: Indiana University Press, 1980, pp.141-154
Fahey Interview, p.3
I 29 Ibid., p.3
30 Minutes of the Shakopee Public Utilities Commission, March 2, 1977
31 Van Hout Interview, p.4
I 32 Fahey Interview, p.4
I
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I 8
I
I SPUC History
I Chapter 5
I Sidebar 1
Midland Glass V5. SPUC
I
I Settlement of the 1977 condemnation, suit left one piece of unfinished
business for SPU. Rahr Malting, Midland Glass and the other industrial
I customers of NSP did not want to be served by SPU.
Midland Glass was particularly opposed to the City's plans. Midland Glass as
I early as 1975 had argued during the condemnation negotiations that the
company would be financially penalized if it was forced to switch power suppliers.
I The firm let it be known that it was considering abandoning its expansion plans in
Shakopee if SPU went ahead with the takeover.
I ' Midland Glass noted in 1975 that it paid NSP $750,000 for 45 million kwh
each year.1 The company reported that it planned to expand production in the
I late 1970s, increasing electric consumption to 150 million kwh a year. At that
level, Midland Glass would pay NSP $2.25 million a year.2
I When SPU had announced condemnation proceedings against NSP, the city
had noted that it would apply a 12 percent surcharge on NSP's industrial
I customers to help pay for the purchase of NSP's Blue Lake Substation.
"A 12 percent surcharge would equal $270,000 per annum" on the
I consumption of 150 million kwh, Midland Glass's Gerard Coleman pointed out in
the fall of 1975.3
I Coleman estimated that Midland's yearly annual additional costs should SPU
take over the NSP service could approach $500,000. Coleman added that
I Midland Glass liked the area and that the Shakopee plant was the most
productive of the four U.S. plants Midland Glass operated.4 "Our absenteeism is
I very low," he said, "and 60 percent of our employees have been with us in
I
I 1
I
I excess of five years. We think our plant is a happy plant. It should be noted that
I slightly over 60 percent of our product goes out of state.,,5
In 1976, Midland Glass sued the City of Shakopee. The company argued that
I SPU's proposed 12 percent surcharge was an unconstitutional franchise fee, and
that Midland Glass should have the opportunity to remain a NSP customer.6
I NSP joined the suit as a friend of the plaintiff.
Before the case could go to trial, the City settled with Midland Glass. In
I exchange for a $100,000 payment to the City from NSP, SPU agreed to let NSP
continue to serve Midland Glass and the other existing Valley Industrial Park
I tenants.
Several of the Commissioners had hoped that the City would hold out for a
I larger settlement. But the City was in need of money, and the utility had won the
right to serve future industrial park tenants from the second access point at the
I Blue Lake Substation.
"The case was settled in 1977," Lou Van Hout recalled. "The City was caught
I with levy limits. The Council had been very conservative in the late 1960s, and it
needed a revenue source. The settlement solved the franchise fee fight. It got
I settled on good terms, and we went forward on a much better basis."?
555 Words
I
I
1 Letter, Gerard Coleman, Midland Glass, Shakopee, Minnesota, to Amos Martin, Minnesota
I Chamber of Commerce, St. Paul, Minnesota, October 1, 1975, p.1
2 Ibid., p.1
3 Ibid., p.1
I 4 Ibid., p.2
5 Ibid., p.2
6 State of Minnesota in Supreme Court, Midland Glass Company and Northern States Power
Company vs. City of Shakopee, Brief of Defendant-Respondent, City of Shakopee, Case 44687,
I 1976, pp.1-7
7 Van Hout Interview, pp.4-5
I
I
I 2
I
I SPUC History
I Chapter 6
I The Territorial Imperative
I In 1971, the City of Shakopee annexed a large portion of the largely rural
Eagle Creek Township immediately to the east of the city Hmits. Overnight, the
I ~
physical size of Shakopee grew from just over 4 square miles to nearly 30 square
I miles. By 1973, the service territory of SPU, which included rural areas outside
__the annexed property, was 48 square miles.1
I The increased workload to serve the rapidly growing areas to the north and
east of Shakopee meant hiring more people to staff the utility. At the time of the
I annexation, SPU was operating with essentially the same size work force it had
employed since the formation of the Utilities Commission 20 years before.
I Superintendent Lee Monnens, Barbara Menden and Nancy Huth made up the
office staff. Line crew foreman Ed Leaveck had one crew, consisting of John
I Dellwo, Ray Friedges, Joe Hunterman and Ray Lebens. John Pumper answered
service calls, and Ray Friedges doubled as the shop foreman.2
I When Gene Pass joined the line crew in the spring of 1972, SPUC was
gearing up to serve the anticipated growth in the city. The 24-year-old Pass, who
I grew up on a farm south of Shakopee, was working at the Rock Springs Bottling
Company when the job on the line crew was posted. Pass recalled that SPU at
I the time had only a single hydraulic bucket truck, but had purchased a digger-
derrick truck the previous year.
I "We had an old A-frame on the back of a utility truck and used that to - .
decorate the town Christmas tree," Pass said. "The service man drove a 1970
I half-ton Chevrolet with a ladder mounted on a pedestal in the bed and a 1968
Chevrolet pickup.,,3 Line crews also had the use of a wood chipper, air
I compressors and an R-30 DitchWitch for digging trenches.
"In 1972," Pass said, "the town pretty much ended at Shakopee Avenue. I
I guess 10th and Marschall was about as far out as it went back then. Everything
I 1
I
I south of there has gone in since 1972 - Meadow's Addition, Eagle Bluff, East
I View - that's all new.,,4
Much of the development south of Shakopee would come in the 1980s. In
I 1972, the City's immediate concern was to expand service north and east of old
Shakopee. Because of the underlying geologic strata, that was often a difficult
I proposition.
"Everything north of Fourth Street is limestone," Pass explained. "We spent a
I lot of time jackhammering. In 1974, when we built the line to the industrial park,
we worked shifts from early morning to late at night. We would keep the
I jackhammer going 12-14 hours a day. We would go down the top couple of feet
and then hit limerock. It looked like chalk."s
I John Dellwo preceded Pass as a line crew member by two years. A
Shakopee native, Dellwo joined SPU in 1970. One of his worst memories of
I nearly 30 years with the utility was restoring power following ice storms, which
usually occurred in November and March.
I "The ice storms were miserable," Dellwo recalled. "They were always a
problem. We would be beating wires with insulated fiberglass poles to knock the
I ice off because the wind was causing them to gallop out of control. The ice
would build up about an inch thick, and it would just keep adding on.,,6
I Ice storms became less of a threat to Shakopee's distribution system after
1974. SPU, like many utilities in Minnesota, began installing underground
I distribution cable to serve the new subdivisions and developments surrounding
the city. Undergrounding distribution solved two problems. It lessened the
I danger to the system from the weather. And it reduced the visual impact of
overhead electric wires:
I "Undergrounding was perhaps the biggest change I saw during my career,"
I Gene Pass said. "After the mid:-1970s, everything went underground.,,7
"Going from all overhead to underground was the biggest change," John
I Dellwo added. "It was all aerial back then. And probably an even bigger change
was getting the equipment to handle that kind of underground operation."a
I
I 2
I
I Expansion North and East
I The expansion of Shakopee's city limits in the early 1970s created another
I problem for the utility. Much of the rural area east and north of Shakopee was
served by the Minnesota Valley Electric Cooperative (MVEC). Formed in the late
I 1930s as part of President Franklin D. Roosevelt's initiative to bring electric
power to the farm, Jordan-based MVEC served customers in Scott, Carver,
I LeSueur and Sibley counties. At the time of the 1971 annexation, MVEC had
approximately 500 customers in the annexed area. But the area also contained
I prime land for both industrial and residential development.
At first, it appeared that negotiations between SPU and the cooperative would
I proceed quickly and amicably. Superintendent Lee Monnens worked with the
MVEC board in 1972 and 1973 to come to an equitable split of the annexed
I property.
"Lee and MVEC reached the agreement," recalled Bill Fahey, the Shakopee
I city administrator at the time. "They had it all done and ready to sign when the
Legislature passed the Service Territory law. After that, the MVEC attorney said,
I 'Let's wait.".g
The Minnesota General Assembly passed the Service Territory act during the
I 1974 session. Municipal utilities and rural electric cooperatives had been fighting
for years about who would serve fast-growing rural territory surrounding small
I towns. In Shakopee's case, the legislation would solve nothing. It would take
nearly 20 years and another court case before Shakopee and the electric
I cooperative finally agreed to a settlement.
I For Shakopee, the objective of annexing the township east of town was to
gain access to industrial customers in what had become known as the Valley
Ie Green Industrial Park. Wally Bishop, who served on the Utilities Commission at
the time, remembered that Valley Green was a metaphorical line in the sand for
SPU.
I
I
I 3
I
I "Lee Monnens and I negotiated the territory exchange with MVEC," he said.
I "We said, 'Valley Green is Shakopee's'. We said thatany new industries that
come into the park, we want to serve them.,,1o
I Bishop, Monnens and Fahey came up with an audacious plan to lay claim to
the industrial park. In the spring of 1974, SPU crews began building a
I distribution line from the Shakopee Substation to the park. The line paralleled
MVEC and NSP lines.
I The crews built the distribution line from March-May 1974. The new Service
Territory law did not take effect until July 1974, and SPU energized the new line
I in mid-June.11
"NSP was furious that we built the line," ,Fahey said. The Minneapolis utility
I complained to the Minnesota Public Utilities Commission (MPUC) that SPU had
not finished the line before the new law went into effect. But SPU was deadly
I serious about laying claim to the industrial park. In 1975, Fahey, who doubled as
the City's Economic Development Director, met with the developer building a
I facility for Kawasaki Motors Corp. and pitched SPU's industrial rates to the new
tenant.12
I "We got a level playing field," Fahey said. "Building that line gave SPU a
major foothold 'in the Valley Green Industrial Park.,,13 For Shakopee, the new line
I was an accomplished fact in its dispute with MVEC over the annexed service
territory, although negotiations and court cases would continue for another 17
I years before an agreement was finally signed in 1991.
I Negotiations continued throughout the mid-1970s until Shakopee sued the
electric cooperative in condemnation proceedings in 1978. Under Minnesota
I law, cities have the power to take land at appraised value if that land is needed
-
for municipal improvements~ The next year, the Minnesota Supreme Court ruled
I in Shakopee's favor, asserting that the municipal utility had the right to serve the
8 square miles north and east of Shakopee served by MVEC.14
I Shakopee wasn't the only municipal utility in Minnesota waging service
territory battles during the 1970s and 1980s. Municipal utilities in Olivia and St.
I Peter both contested service territory issues with electric cooperatives during the
I 4
I
I period. And NSP, Moorhead Public Service and Cass County Rural Electric
I Cooperative engaged in a three-way fight over serving a shopping center near
Moorhead .15
I Negotiating a Fair Price
I The Utilities Commission spent much of the 1980s negotiating an equitable
I price for the electric cooperative's service territory. Barry Kirchmeier was
appointed to the Commission in 1982 to replace Eldon Reinke, who had been
I elected Shakopee's mayor. Kirchmeier, a Windom nativ.e who taught science in
the Shakopee school system for 33 years, set a goal of bringing the MVEC
I negotiations to a successful close.
"We took the approach that our rates were less," Kirchmeier said. "The
I Shakopee people who were served by MVEC wanted the exchange to take
place. And we knew we had to get it done because of the projected growth. We
I knew the growth was coming. There were already discussions taking place
about the new bridge (over the Minnesota River), and that was going to make it a
I whole new ball game.,,16
MVEC's rates in 1983 were 40 percent higher than those charged by
I Shako pee. There were approximately 500 residential customers involved in the
annexed area.17
I "We met with the board of MVEC" in 1984, Kirchmeier said. "We made a
proposal face-to-face in Jordan. We approached them not as adversaries. We
I told them we'd pay a fair, reasonable price. It was an honest, fair approach.,,18
I Shakopee also offered to exchange a rural line that served farmers from
Shakopee to Prior Lake. The line had been built by a group of Prior Lake
I farmers in the 1950s, and SPU had provided the approximately 50 farms along
the line with electric power since then.19
I Jim Kephart joined Kirchmeier and Jim Cook on the Utilities Commission in
1985. Kephart, a Richfield native who had moved to Shakopee in 1972, had
I
I 5
I
I helped inventory the annexed land in the early 1970s when he was working for a
I Twin Cities engineering firm.
"I got to know the people at SPU fairly well back in the early 1970s," Kephart
I said. "They were a well-run organization. They were small, but they had good
employees.,,20
I Kephart remembered that the negotiations with MVEC in the mid- to late-
1980s were "very time consuming. It was tough to make it equitable with the
I existing customers. We spent a lot oftime adjusting the rates. I remember that
being the hardest part, plus all the money we had to spend - $2 million and
I change to build the infrastructure to serve the new customers. But the hardest
part was getting those rates fair.,,21
I Twin Cities attorney Andy Shea was SPU's lead counsel in the MVEC
negotiations. After the Minnesota Supreme Court ruled in Shakopee's favor, the
I matter had gone to the Minnesota Public Utilities Commission to determine
compensation.
I "We went through hearings before an administrative law judge," Shea
explained. "Two-thirds of the way through the case, the parties decided to settle.
I We filed the settlement, and the MPUC approved.,,22
The agreement that SPU eventually signed with MVEC in 1990 provided that
I . the municipal utility pay the electric cooperative the value of the lines acquired
plus an allowance for loss of revenue to the cooperative for the existing
I customers in the acquired area, plus all new customers added over the next 10
years.
I Shakopee agreed to buy power from Cooperative Power for the annexed area
I for 12 years. SPU's new customers in the annexed area would pay rates 20
percent lower than what they had been paying - but still 20 percent higher than
I existing SPU customers paid - for four years to help pay for the settlement. 23
"They knewwe were sincere," Kirchmeier described the negotiations with
I MVEC to the Minnesota Municipal Utility Association in 1991. "They recognized
our right to take the territory over; we recognized their right to a fair settlement. I
I am very pleased we reached a negotiated settlement.,,24
I 6
I
I Kirchmeier also stressed the urgency of getting the negotiations completed
I because of the "fast growth phase" the city was anticipating. "The longer we
waited, the more expensive it would get," he said.25
I For Kephart, settlement of the dispute with MVEC was the cap to a fulfilling
term as a Commissioner. "My last act as president of the Utilities Commission
I was to sign the agreement with MVEC," he said, "having worked on the inventory
of the annexed area 20 years previous.,,26
I
Into the 19905
I-
With the NSP and MVEC settlements finally behind them, the Utilities
1 Commission could look forward to the growth that the City had anticipated for
more than a decade. Throughout the 1970s and 1980s, the utility had remained
I a profitable venture for the city. In 1980, SPUC had booked $2.7 million in
revenues and had reported a profit of $292,000 for the year.27 The utility also
I reported 1980 retained earnings of $1.82 million dollars.28
By 1985, the utility's operating revenue had increased to $4.6 million.
I Retained earnings had more than doubled, to more than $3.96 million.29 In 1990,
the utility reported operating revenues of nearly $6.3 million. Retained earnings
I in 1990 had climbed to $6.44 million.3D
I Since its inception, the Utilities Commission had returned a portion of its
revenues each year to the City's General Fund. In 1983, a year in which the.
I municipal utility had reported operating income of just under $365,000, the
Utilities Commission returned $266,058 to the City of Shakopee. That same
I year, the value of free street lighting service to the City was $26,093, and the
municipal utility also provided $10,000 worth of maintenance for the street
I lighting service.31
The growth of Shakopee and its municipal utility in the 1990s would make
I those revenue and retained earnings seem paltry by comparison as the decade
wore on.
I 2,375 Words
I 7
I ,
I
I
I 1 Bill Fahey Interview, p.1
2 Oral History Interview with Gene Pass, Shakopee, Minnesota, July 24, 2001, p.1
I 3 Ibid., p.1
4 Ibid., p.1
5 Ibid., p.2
6 Oral History Interview with John Dellwo, Shakopee, Minnesota, July 26, 2001, p.2
I 7 Pass Interview, p.3
8 Dellwo Interview, p.3
9 Fahey Interview, p.2
I 10 Bishop Interview, p.2
11 Fahey Interview, pA
12 Ibid., p.3
13 Ibid., ppA-S
I 14 "Delayed reaction: Years after Supreme Court decision, Shakopee, co-op negotiate pact,"
Minnesota Service Territory Times, 1991, p.3
15 "Moorhead: NSP relinquishes bare ground for nothing; co-op charges," Minnesota Service
I Territory Times, 1991, pp.1,3
16 Oral History Interview with Barry Kirchmeier, Shakopee, Minnesota, July 2S, 2001, p.2
17 "Delayed reaction," p.3
18 Kirchmeier Interview, p.1
I 19 Van Hout Interview, p.S
20 Oral History Interview with Jim Kephart, Shakopee, Minnesota, July 2S, 2001, p.1
21 Ibid., p.2
I 22 Oral History Interview with Andy Shea, Minneapolis, Minnesota, July 27, 2001, p.1
23 "Delayed reaction," p.3
24 Ibid., p.3
25 Ibid., p.3
I 26 Kephart Interview, pp.1-2
27 Departmental Statement of Operations and Retained Earnings, Year Ended December 31,
1980, Shakopee Public Utilities Commission
I 28 Ibid.
29 Departmental Statement of Operations and Retained Earnings, Year Ended December 31,
1985, Shakopee Public Utilities Commission
30 Departmental Statement of Operations and Retained Earnings, Year Ended December 31,
I 1990, Shakopee Public Utilities Commission
31 Departmental Statement of Operations and Retained Earnings, Year Ended December 31,
1983, Shakopee Public Utilities Commission
I
I
I
I
I 8
I
I SPUC History
I Chapter 6
I Sidebar 1
Growth of the Water System
I
I Throughout the 1970s and 1980s, Shakopee's water supply needs were
adequately served by eight wells and three water towers. The community's
I growth through the period was rapid, rising from approximately 2,000 people in
1970 to just over 12,000 people in the late 1980s.
I Shakopee and other Minnesota River Valley communities were fortunate in
the existence of plentiful water supplies in the aquifers that underlay the entire
I region. The Jordan, Hinckley, Mt. Simon and Franconia-lronton-Gainesville
Aquifers seemed more than capable of supplying the community's water needs
I for decades to come.
The growth of Shakopee and the southwestern suburbs of the Twin Cities in
I the late 1980s and 1990s necessitated ample supplies of water to serve that
population increase. Between 1950 and 1989, Shakopee had drilled a total of
I seven wells to join Well NO.1 that had been dug in 1911 adjacent to the utility's
original power house.1 Shakopee had added a second water tower in 1966 and
I a third on Canterbury Road in 1980.2
In 1993, SPU retired Well NO.1 after 82 years of service. Work was already
I underway on the drilling of Well No.9 and the construction of a new pump house
just south of the State Highway 101 Bypass around Shakopee. Unlike the
I previous four pump houses erected by the utility, the Well NO.9 pump house
contained two booster pumps and a backup generator acquired from St. Francis
I Hospital. Art Young, water systems supervisor for the city, explained that the
additional pump was "needed out there because of the higher elevation.,,3
I But by the mid-1990s, the days of applying for a permit, drilling a well and
building a pump house had ended. Throughout the decade, the U.S.
I
I 1
I
I Environmental Protection Agency (USEPA) and the Minnesota Pollution Control
I Agency (MPCA) published ever stricter standards for drinking water.
Andy Unseth, an administrator at Bethany House Publishers in Bloomington,
I joined the Utilities Commission in April 1995, about the time that Well NO.9 went
operational.4 Unseth assured residents the next year that Shakopee's water was
I safe.
"Our water is 'good' water," Unseth said. "We need to give it only minimal
I treatment. We just add chlorine and fluoride to it according to state standards -
very normal treatment. There's no special filtering needed.,,5
I When Shakopee applied to the Minnesota Department of Natural Resources
(MDNR) for a permit to drill Well No. 10 in the fall of 1997, SPU worked closely
I with MDNR to ensure that the new well would help deliver the safest water
possible to the community.6 SPU wanted Well No.1 0 to be drilled in the Mt.
I Simon-Hinckley Aquifer, and was concerned about the level of nitrates in some of
the wells in the Jordan Aquifer, primarily from farm fertilizer runoff in the
I Minnesota River Valley. The MDNR, however, wanted Well No. 10 to be drilled
in the Franconia-lronton-Gainesville Aquifer, which is located between and
I Jordan and Mt. Simon-Hinckley Aquifers.
I Dave Thompson is a second-term Commissioner, first appointed in 1997. A
native of East St. Paul, Thompson works in sales for Shakopee Valley Printing.
I Since joining the Utilities Commission, he has been particularly concerned with
the adequacy of Shakopee's future water supply.
I "In the 1960s, water supply was not a problem," he said. "But now, the DNR
puts a lot of pressure on us and other communities in the area of water
I conservation. It's not like we can just go put a well in.',7
Getting Well NO.1 0 permitted and drilled took far longer and cost far more
I than Shakopee had originally estimated. When pumping levels were deemed too
low in the Franconia-lronton-Gainesville Aquifer, SPU asked MDNR for
I permission to tap the Mt. Simon-Hinckley Aquifer to blend with water from Wells
No.6 and 7, which are Jordan Aquifer wells.
I "It took three years and $800,000 to get DNR approval," Thompson said,8
I 2
I
I Still, growth in Shakopee dictates that SPU continue to drill new wells to serve
I a rapidly expanding population base.
"We need to stay one well ahead of what we need," Thompson noted.9
I 730 Words
I
I
I 1 "The Tale of Shakopee Public Utilities," Shakopee Power Lines, v.1, no.3, Fall 1994, p.1
2 Ibid., p.2
3 "New Pumphouse Up and Running," Shakopee Power Lines, v.2, no. 3, Winter 1995/1996, p.1
4 "New Commissioner Begins Term in April," Shakopee Power Lines, v.2, no.1, Spring 1995, p.3
I 5 "Your Water Is Safe - And We'll Keep It That Way!" Shakopee Power Lines, v.3, no.3,
December 1996, p.1
6 "SPU Applies To Drill New Well," Shakopee Power Lines, vA, no.3, Fal/1997, p.1
I 7 Oral History Interview with Dave Thompson, Shakopee, Minnesota, July 26, 2001, pp.2-3
8 Ibid., p.3
9 Ibid., p.3
I
I
I
I
I
I
I
I
I
I 3
I
I SPUC History
I Chapter 7
I Keeping Up With Growth
I Shakopee in 1985 was a community poised for tremendous growth. After
registering a slow but steady population increase from 1950 to the late 1970s,
I the city's population passed the 11,000 mark in the 1980 census.1
I The community's industrial and economic base was evolving rapidly in the
mid- to late 1980s. Rahr Malting, the city's mainstay employer during the 1940s,
I 1950s and 1960s was no longer competitive with newer malting facilities
elsewhere. By 1985, the firm employed only 85 people. Midland Glass, SPU's
I adversary in the industrial park dispute with NSP, had a work force of more than
400 people in 1985.2 Certain-Teed Products Corporation, which made roofing
I shingles at its plant in the Valley Green Industrial Park, employed more than 200
people.
I Shakopee at the time was experiencing a diversification of its economy that
would continue through the next 15 years. In 1984, the giant retailer K-Mart had
I begun construction of a major distribution center on County Road 83 that would
contain 23 acres under roof by 1990.3 The city also was becoming the focus of a
I major entertainment and recreational industry for nearby Minneapolis-St. Paul.
In May 1976, Valleyfair opened just outside Shakopee. The amusement park
I boasted the largest ferris wheel in the Midwest, and a roller coaster with 2,800
feet of track and a 70-foot drop on the first hill.4
I Eight years later, in March 1984, Shakopee was chosen as the site of
Canterbury Downs, Minnesota's first horse racing track. Minnesota Racetrack,
I Inc., the developers, located the $70 million horse racing facility near the Valley
Green Industrial Park.5 Racing at the track began in the spring of 1985.
I At about the same time, the Mdewakanton Band of Lakota opened the Little 6
Bingo Parlor in nearby Prior Lake, which was later converted into a full-scale
I gambling casino. The entertainment dollar flowing into Scott County after the
1
I
I
I mid-1970s further diversified the regional economy and provided a strong boost
I to retail development in Shakopee.
I Joint Action for the Minnesota Valley
I When Jim Cook was appointed a Commissioner in 1983, Shakopee was
poised for rapid growth. Cook, an Indiana native, had done his undergraduate
I work at the University of Wisconsin and had come to Shakopee in 1971 to work
for the Gedney Company. Cook noted that he and fellow Commissioners Barry
I Kirchmeier and Wally Bishop were anticipating rapid growth after the mid~1950s.
Through most of the period from 1973 to the early 1990s, the Utilities
I Commission was primarily concerned with settling SPU's disputes with NSP and
MVEC. Cook recalled that he spent the majority of his time during his first two
I terms in office negotiating the agreement with MVEC.
Without the service territory eventually transferred to SPU in 1992, "this utility
I would have been a small island," Cook said. "We did everything through
consultants. It was very cordial, very slow and very methodical. But it became
I increasingly important for US.,,6
I When the agreeme"nt was signed with MVEC, Shakopee faced a major
decision on its power supply. As part of the agreement, SPU had contracted to
I buy electric power for the acquired territory from Cooperative Power Association
(CPA), MVEC's power supplier.
I Meanwhile, the environment was changing in the electric utility industry. In
1992, President GeorgeH.W. Bush signed the Energy Policy Act, one of the first
I major restructuring initiatives in the electric utility industry in decades. The act
expanded the authority of the Federal Energy Regulatory Commission (FERC) to
I order transmission sellers to provide transmission services to customers.?
Municipal utilities had long argued that investor-owned utilities, which owned
I most of the transmission grid in Minnesota and the nation, would not allow their
high-voltage transmission network to be used for wheeling power supplies from
I 2
I
I
I competing utilities. The Energy Policy Act of 1992 was the first federal legislation
I to begin encouraging competition in the wholesale electric power market.
At the same time, municipal utilities in Minnesota were beginning to band
I together to find a more competitive power supply. In 1992, eight Minnesota
municipal utilities - Anoka, Arlington, Brownton, Chaska, LeSeuer, North St.
I Paul, Olivia, and Winthrop - created the Minnesota Municipal Power Agency
(MMPA) to keep energy supply costs low fortheir residents.8 MMPA was an
I outgrowth of the River Electric Association (REA), which had been formed in
1977 to protest wholesale rate increases and to help its members negotiate
I power supply contracts with NSP.
Shakopee had belonged to the River Electric Association since its
I establishment. Unlike REA, however, MMPA was a full-fledged Joint Action
Agency, which meant it had the authority to negotiate power supply contracts for
I its members with other power suppliers., or even to own partial shares of electric
power plants itself.
I That ownership obligation concerned SPU. Chaska, Shakopee's neighbor,
was the spearhead behind the formation of MMPA. David Pokorney, Chaska's
I city administrator, served as the first chairman of the new power agency.9
I "Chaska basically formed MMPA," said Jim Cook. "Shakopee declined to be
a full member of MMPA, but we said we'd be a customer.,,10
I MMPA planned to purchase the bulk of its power supply from Rochester
Public Utilities' Silver Lake plant. The power agency would supplement its 100-
I. megawatt purchase from Rochester with 30 megawatts of power from United
"
Power Association's (UPA) Coal Creek plant and with surplus power purchases
I from members of the Mid-Continent Area Power Pool (MAPP).11
I A New Power Supply Contract
I By 1992, Shakopee had been a wholesale power supply customer of NSP
I and its predecessors for nearly 80 years. The NSP contract was up for renewal
3
I
I
I that year, and MMPA was offering SPU lower rates. Although the relationship
I with NSP had been rocky since the mid-1970s, the Minneapolis utility had been
an extremely reliable power supplier for decades.
I "We had gotten power from NSP for many, many years," Cook explained.12
"It was a comfortable relationship," Lou Van Hout added.13
I Still, the opportunity to purchase electric power at a lower rate from MMPA
was an attractive option. Van Hout and his staff put a lot of effort into
I investigating the offer in 1992. Eventually, Van Hout recommended that SPU
consider entering into a contract with MMPA to purchase power, but not to
I become a full member of the Joint Action Agency.
"It was a major change for Shakopee," Van Hout recalled. "SPU decided to
I become a customer of MMPA with the stipulation that we would be served by
UPA in case of problems.,,14
I "It was a tough decision," Jim Cook said, "but it was a very big dollar savings
on our part.,,15
I UPA agreed to stand behind the MMPA contract, and MMPAguaranteed
I Shakopee that rates would be capped at 95 percent or less than the wholesale
power rate offered by NSP.
I "That 5 percent difference between the MMPA rate and the NSP rate was the
number we were happy with," Van Hout said. "Chaska is a full member of
I MMPA, and they have had about 10 percent lower wholesale power costs than
SPU, but Chaska took a risk. SPU is more conservative. But our rates have
I been cheaper than those offered by NSP, so that was a good business
decision.,,16
I The Utilities Commission signed a contract with MMPA in July 1995. The
contract runs through December 31, 2005.17
I The 1991 agreement with MVEC required SPUC to buy electric power for the
"acquired a~ea" from MVEC's supplier, Cooperative Power Association, until
I 2003. In 1997, Cooperative Power merged with United Power Association to
form Great River Energy. The generation and transmission cooperative supplied
I all of SPU's wholesale power needs by 1998. However, under the terms of
4
I
I
I another 1991 agreement, this one with NSP, SPU will revert back to NSP, now
I XCEL Energy, as its power supplier for the "acquired area" for a six-year period
beginning in 2003.
I Building Infrastructure
I Joseph Adams returned to his native Minnesota in 1992 as an Administrative
I Assistant with SPU. Originally from West St. Paul, Adams had earned his
degree in electrical engineering from the University of Minnesota's Institute of
I Technology before spending more than eight years in California working for the
U.S. Navy.
I When Adams arrived in Shakopee, the utility provided service to slightly more
than 6,000 meters; summer peak was about 25 megawatts. But even then, the
I utility was experiencing kilowatt-hour growth in excess of 12 percent.
"I think back to my interview with Lou," Adams said. "H,e gave me the then
I current Electric System Study to review. I made the comment after the interview
that I'd look forward to coming here because it would be a varied and dynamic
I work environment. It shows you how na'ive we all were, because I don't think the
I projections of growth in that study were half of what they actually turned out to
be.,,18
I One reason Adams was hired was to oversee expansion of SPU's electric
and water infrastructure in anticipation of the expected growth of the system.
I Preparation was already underway in 1992 for the construction of the
Bloomington Ferry Bridge over the Minnesota River, as well as improvements to
I turn Highway 169 into a four-lane freeway connecting Shakopee to
Minneapolis.19
I "Two of the first things I worked on when I started here was to arrange to
have a fourth bay put in at the original Shakopee Substation and to work with
I NSP to actively energize a second circuit out of the Blue Lake Substation,"
Adams said.2o
I 5
I
I
I By 1994, SPU had decided to build a third substation on the rapidly growing
I south side of Shakopee. The new substation was initially planned for a site in
southern Shakopee on Scott County Road 78 between County Roads 17 and 79.
I At first, the Utilities Commission had considered locating the substation in or
adjacent to the Valley Green Industrial Park, but Commissioner Barry Kirchmeier
I explained that locating the substation near the industrial park "would be too far
away from our present circuits, and greatly increase the costS.,,21
I Commissioner Jim Cook noted that the new substation would increase
reliability. "Once it is built," Cook said in the spring of 1994, "the entire City of
I Shakopee can be supported by two substations, which means we won't have the
power outages we've had in the past. Any two of the three should be able to
I support Shakopee's entire load for a short period of time.,,22
After public hearings in the fall of 1995, the new substation was sited on
I Country Road 79, just over a half-mile south of Country Road 78. SPU took
I great care to get landowner input in the siting process, and the Utilities
Commission made every attempt to minimize noise and appearance impacts. "It
I won't be an eyesore," Van Hout assured local residents.23
Land purchases for the new South Shakopee Substation were completed in
I August 1996. R.W. Beck, a national engineering consulting firm with close ties to
public power utilities, designed the substation. Delta Star, Inc. of Belmont,
I California was awarded the bid for providing the new substation's transformer.24
Construction began in the fall of 1996, and a crane lowered the new transformer
I into place in early March 1997. By June 1997, the substation was operational. 25
"The existing substations are just about fully loaded now," Van Hout said in
I the spring of 1997. "With the new substation, we have room to groW.,,26
While construction was underway on the South Shakopee Substation, SPU
I crews upgraded circuits and lines to meet the city's growing needs. Throughout
the summers of 1996 and 1997, line crews worked on a number of overhead and
I underground distribution line projects.
They relocated and rebuilt feeder circuits along Scott County Roads Number
I 16, 77,42, 15 and 78. Crews built new facilities for feeder circuits across the
6
I
I
I Shakopee Bypass at County Roads Number 18,16,17,79,77 and 15, as well as
I in the Valley Green Industrial Park. In a cooperative agreement with the City of
Shakopee and downtown businesses, the line crews began a major project of
I undergrounding circuits within an eight-block area of downtown Shakopee.27
"We went from four substation exit circuits in 1992 to six exit circuits in 1994
I to 10 exit circuits in 1997," Joseph Adams said. "In 1992, we had three circuits at
the Shakopee Substation. Now we have four. We had one circuit at the Blue
I lake Substation. Now we have two. And the new South Shakopee Substation
added four circuits.,,28
I SPU's aggressive initiative to upgrade the City's electric infrastructure in the
mid-1990s was about to pay huge dividends.
I
'It Means Access'
I
On October 6, 1995, the Minnesota Department of Transportation officially
I dedicated the Bloomington Ferry Bridge over the Minnesota River at Shakopee.
The new four-lane freeway bridge spanned the full expanse of the river and
I opened Shakopee to a quick commute to Minneapolis-St. Paul, Bloomington,
Eden Prairie and other suburbs south and west of the Twin Cities.29
I The $42 million bridge made Shakopee a natural candidate for the suburban
I expansion that had been pushing south and west of Minneapolis for decades.
The $35 million Shakopee Bypass, which opened in the late summer of 1996,
I served to expedite the flow of traffic across the river between Shakopee and its
urban neighbor to the northeast.
I "It means access," said Shakopee Mayor Gary Laurent. "And access means
everything. The area businesses will have a whole new market.,,30
I Minnesota DFl State Representative Becky Kelso noted that the lack of easy
access between Scott County and the Twin Cities had long been "an impediment
I to economic development."
I 7
I
I
I With the new bridge and bypass, that would no longer be the case. From
I 1997 to 2002, Shakopee experienced more growth than it had in the half-century
since World War II. SPU was ready to serve that growth.
I 2,280 Words
I
I
I
I 1 Shakopee, Minnesota, "Community Profile," 1985
2 Ibid.
I 3 The Industrial/Commercial Commission of the City of Shakopee, Shakopee Today, 1985, n.p.
4 "Valleyfair!, a family experience, will open in May," Shakopee Valley News, March 24,1976
5 Howard W. Voigt, Editor, "Shako pee chosen; horse track named Canterbury Downs," Shakopee
Valley News, March 20, 1985
I 6 Ibid., p.2
7 Derick O. Dahlen & Sara K. Achinger, "The Energy Policy Act of 1992: Change, Opportunity,
And Risk," Municipal Energy News, Summer 1993, p.2
I 8 "Municipals Work To Keep Energy Costs Low," Municipal Energy News, Summer 1993, p.1
9 "David Pokorney," Municipal Energy News, Summer 1993, p.3
10 Jim Cook Interview, pA
11 "Municipals Work to Keep Energy Costs Low.... p.1
I 12 Jim Cook Interview, pA
13 Lou Van Hout Interview, p.5
14 Ibid., p.6
I 15 Jim Cook Interview, pA
16 Van Hout Interview, p.6
17 Van Houtlnterview, p.6
18 Oral History Interview with Joseph Adams, Shakopee, Minnesota, July 24, 2001, p.2
I 19 Ibid., p.2
20 Ibid., p.6
21 "City's growth creates need for new substation," Power Lines, Spring 1994, pp.1-2
I 22 Ibid., p.1
23 "Update on New Substation," Power Lines, Fall 1995, p.1
24 "Update on New Substation," Power Lines, Summer 1996, p.1
25 "New Substation To Be Online in June," Power Lines, Spring 1997, p.1
I 26 Ibid., p.1
27 "Progress Wears Many Faces," Power Lines, Summer 1996, p.1
28 Joseph Adams Interview, p.5
I 29 Wyatt Olson, "Ferry Bridge opens Oct. 6," Jordan Independent, September 25, 1995
30 Ibid.
I 8
I
I
I SPUC History
I Chapter 7
I Sidebar 1
Three Who Mattered
I
I SPU has always been about people, and the loss of valued co-workers and
colleagues has always been keenly felt by the close knit municipal utility. One of
I the most difficult periods in the utility's history took place between late 1995 and
early 2001. In that five-year period, SPU lost a popular Commissioner and two
I longtime water utility employees.
In the summer of 1994, Gloria M. Vierling replaced 12-year veteran Barry
I Kirchmeier on the Utilities Commission. A fourth-generation Shakopee resident,
Vierling brought a wealth of experience to her new assignment. From 1982 to
I 1994, Vierling served as the clinic manager at Sundance Medical Clinic. For the
v
18 years prior to that, Vierling had been a nurse at St. Francis Regional Medical
I Center in Shakopee.1
Vierling's years of political experience also enhanced her Commission
I appointment. A 12-year Shakopee City Council member, she also had served
four years on the Metropolitan Waste Control Commission. Vierling was the
I city's liaison to the Suburban Rate Authority and served on the Metropolitan
Technical Advisory Committee, which dealt with utility issues in the Twin Cities
I area.2
Vierling expressed her desire to promote good teamwork between SPU and
I the city, and she noted that she wanted the Utilities Commission "to be proactive
rather than reactive.,,3
I Vierling had only two years to put her stamp on the future direction ofthe
Utilities Commission. In early 1996, she died in Shakopee after a short fight with
I a fast-acting cancer.
I
I 1
I
I "She was a hard-working Commissioner," SPU Manager Lou Van Hout said.
I "She studied the issues carefully and was always prepared to make decisions.,,4
Vierling's death followed by two months the untimely passing of Art Young,
I the utility's Water Systems Supervisor. The jovial Young had started with SPU
as a Water Systems Operator, maintaining pumps, repairing and installing water
I meters, and overseeing the utility's hydrants. As supervisor of the water
department, he was responsible for a daily check of the utility's pump houses,
I inspection and construction of new water mains, and periodic tests of the water
samples.
I ~
"The system is always getting bigger," Young said just days before his death
in December 1995. "Since I've been working here, four new wells have been
I dug, two pump houses have been built, and a water tower was constructed."s
Just over five years after Young's death, the utility was shocked when
I Young's longtime partner in the water department passed away suddenly. Ken
Menden, who succeeded his friend as Water Systems Supervisor, died of a heart
I attack on January 11,2001.6 Menden had worked in the utility's water
department since 1980, and his wife, Barbara Menden, SPU's office manager,
I was the utility's longest-serving employee in terms of seniority.
I A Shakopeenative, Menden graduated from the Shakopee High School and
was an avid boater, angler, cross-country skiier and bowler?
Menden's sudden death saddened all of his co-workers. Ken and Barbara
I Menden knew virtually everybody in Shakopee, and they looked out for their
I fellow employees. "He was a valued member of the operation, and we'll all miss
him," eulogized Lou Van Houl. "Kenny always gave his best to the utility and did
I his best for everybody."s
580 Words
I
I
I
I 2
I
I
I 1 "New Commissioner Named," Power Lines, Summer 1994, p.2
2 Ibid., p.2
3 Ibid., p.2
41n Memory, Power Lines, Spring 1996, p.1
I 5 "The Spotlight's on ... Art Young," Power Lines, Winter 1995-1996, p.3
6 "Kenny Menden," Power Lines, Winter 2001, p.3
7 "The Spotlight's on ... Ken Menden," Power Lines, Spring 1997, p.3
I 8 "Kenny Menden, Power Lines, Winter 2001, p.3
I
I
I
I
I
I
I
I
I
I
I
I
I
I 3
I
I SPUC History
I Chapter 8
I Boom Years
I The opening of the Bloomington Ferry Bridge in October 1995 and the
I improvements made to the Shakopee Bypass in the following year created all of
the elements necessary for sustained economic development in Shakopee and
I surrounding townships of Scott County.
The transportation enhancements coincided with a booming Minnesota and
I u.s. economy and placed Shakopee squarely in the path of the suburban
development pushing outward from Minneapolis.
I "We experienced explosive growth," explained Joseph Adams, SPU's
Administrative Assistant. "It really pumped up in the space of five years' time. It
I is all related to the growth of the Twin Cities.,,1
Shakopee was never a Minneapolis suburb, and the mayor and city council
I took great pains in the latter half of the 1990s to retain the small-town character
of the community. SPU worked closely with city planners to redevelop the city's
I downtown, completing a major project in 1995-1996 that replaced all of the
overhead distribution lines serving downtown with underground cable.
I Population growth went hand-in-hand with economic development after 1995.
The city's population swelled to an just over 20,500 people by the time of the
I 2000 federal census, with even more explosive population growth predicted for
the first decade ,of the 21 st century.
I "We have nearly doubled our population in the last 10 years," Adams said.
"And we are told it will nearly double again in the next 10 years.,,2
I In 1995, SPU served just over 6,500 electric meters.3 By 2002, when the city
celebrated 100 years of ownership of the municipal utility, SPU served slightly
I over 12,000 electric meters. The utility's summer peak load in the mid-1990s
averaged about 25 megawatts. By the summer of 2002, the forecast peak load
I was 70 megawatts.4
I 1
I
I Much of the new residential development took place in the service territory
I SPU acquired from MVEC in 1992. Seemingly overnight, tracts of land that had
been farm fields for generations blossomed with new houses. In 1999,
I developers built 500 new homes in one Shakopee subdivision alone.5
I 'The Grass Is Getting Greener'
I With the population growth came new business development. Much of that
economic expansion was centered in and around the Valley Green Business
I Park. Because SPU had negotiated the agreement with NSP to serve new
tenants of the business park, and the new service territory law, most of the
I development after 1993 meant that new industrial customers were served by
SPU.
I Even before the dedication of the new bridge and freeway, SPU's industrial
and commercial load was growing. In 1993, the Minnesota Women's
I Correctional Facility - an SPU customer - doubled its bed capacity. S1. Francis
Regional Medical Center, another SPU customer, in 1994 announced
I construction of a new medical complex on the south side of Shakopee. That
same year, Opus Corporation, a major Twin Cities developer, completed
I construction of a 300,000-square-foot facility for American National Can
Company.6
I By the summer of 1995, Valley Green Business Park was the largest planned
I business environment in the Twin Cities metropolitan area. Stretching nearly 2
miles south of the Minnesota River and 3 miles east to west, the business park
I became oneof the hottest development sites in the Twin Cities during the
second half of the 1990s.
I A 1997 study by the Metropolitan Council in Minneapolis found that the
average commute time in the Twin Cities was 22 minutes. Valley Green boasted
I that the average commute to the business park from Bloomington was eight
minutes, 10-12 minutes from Richfield and Edina, 15-18 minutes from South
I Minneapolis and 20-22 minutes from Minnetonka and Plymouth.7
I 2
I
I The result of the increased access to the south and west suburban Twin
I Cities was a steady expression of interest in the business park. Valley Green
Project Director Jon Albinson pointed out that access wasn't the only factor
I attracting new businesses to Shakopee.
"At the heart of it, companies don't necessarily buy a site," Albinson said.
I "They buy a location: the amenities of an entire community; availability of work
force; roadways; moderate taxes; and easy access to suppliers and customers."8
I The business park began advertising that "the grass really is greener on our side
of the river."g
I Developers from the Twin Cities and Midwest quickly began erecting
speculative buildings in the business park, most designed to attract local
I businesses from the seven-county metropolitan area interested in expanding or
relocating. The majority of the new speculative buildings were 60,000 to
I 150,OOO-square-foot facilities that were suitable for light industrial or distribution
purposes.1O
I
ADC and Seagate
I
In the fall of 1995, ADC Telecommunications announced the purchase of 8.26
I acres of land in Valley Green Business Park. The Eden Prairie manufacturer and
I distributor of broadband telecommunications networks and equipment
announced plans to build a 90,000-square-foot distribution facility in the business
I park.11
ADC's interest in Shakopee was an indication of the changing nature of
I economic development in Scott County. For much of the city's history, Shakopee
had been a manufacturing center. But during the 1990s, the Twin Cities began
I to establish a reputation for high technology manufacturing and distribution. A
biomedical corridor developed along U.S. Highway 52 between Minneapolis and
I Rochester, and a high technology plastics manufacturing industry located along
Interstate 94 between St. Paul and Menomonie, Wisconsin.
I
I 3
I
I In 1997 and 1998, that high technology growth came to Shakopee. Shortly
I after opening its new facility in Valley Green Business Park, ADC
Telecommunications purchased an adjacent 22.5 acre parcel and began
I immediate construction on a 345,000-square-foot office, manufacturing, and
research and development facility.
I Rick Palmer, the company's director of corporate facilities, noted that "in
addition to the developability of the land and good soil that is environmentally
I clean, Valley Green fits our existing shipping patterns, including ease of access
to southwestern truck routes and close proximity to the airport.,,12
I Less than a year after ADC opened its new facility, Seagate Technology
broke ground in June 1998 on a 280,OOO-square-foot manufacturing and
I research and development building in the business park. California-based
Seagate, the world's largest producer of computer disk drives, consolidated the
I operations of several of its Twin Cities operations under one roof in Valley Green.
Seagate's new High Performance Products Group headquarters opened in
I August 1999.13 Also, ADC expanded several times and then bought the building
next door and filled it with manufacturing and office facilities.
I For SPU, the ADC and Seagate Technology expansions at Valley Green
meant the addition of large industrial loads to the utility's system. Each ADC
I plant consumes about four megawatts of electric power; Seagate Technology's
I disk drive manufacturing facility consumes five megawatts.14 By 2000, tenants of
Valley Green Business Park were consuming nearly 40 megawatts of power,
I nearly equivalent to SPU's entire electric power load in 1995.
I Dean Lake Sub
I The spectacular growth of electric power demand in Shakopee averaged 13
percent annually from 1992 to 2002, more than double the increase in the Twin
I Cities and nearly three times the average rate of kilowatt-hour growth nationally.
The spike in demand meant that SPU needed to build a new substation. In
I the late summer of 1998, about the time that construction of the new Seagate
I 4
I
I Technology plant at Valley Green Business Park got underway, SPU announced
I the planned construction of Dean Lake Substation. Located south of the
Shakopee Bypass, west of Scott County Road 83, and just north of and adjacent
I to County Road 16, Dean Lake Substation would be the fourth on the Shakopee
electric grid .15
I "There's just been tremendous growth in this city," Lou Van Hout explained
the need for the new substation. "We at SPU have to stretch ourselves to keep
I up with it. We have to do that as part of a growing community."16
Ground was broken for the Dean Lake Substation in the late summer of
I 1999.17 The $2 million facility, which stepped down electricity from the adjacent
115,000-volt transmission line to a more usable 13,800 volts for distribution to
I residential and industrial customers in east Shakopee, was energized and placed
in service on May 19, 2000.18
I "I'm certainly pleased to have this in place for this summer and beyond to
meet the growth of this area," Utilities Manager Van Hout said at the new
I substation's dedication.19
While the Dean Lake Substation was under construction, SPU crews
I continued to rebuild and upgrade the city's distribution system. Electric projects
underway in the late 1990s and early 2000s included upgrading power lines in
I the older part of the city from 4,160 volts to 12,470 volts, upgrading circuitry
serving Valley Green, and improving circuits and switches for the new residential
I developments east of old Shakopee.2o
I "We always think we're providing a little breathing room," said Joseph Adams,
"and then the growth just ramps up again.,,21
I Financing Growth
I For 25 years, from 1968 to 1993, Shakopee paid for improvements to its
I electric and water system from the utility's retained earnings. "The bond issue in
1968 was the last bond issue before 1993," said Lou Van Hout. "We financed all
I of our improvements internally.,,22
I 5
I
I The utility issued $4.25 million in bonds in August 1993 to pay for construction
I of the South Shakopee Substation and related electric system improvements.23
SPU went to the bond markets again in late 1999 to raise another nearly $10
I million to pay for the Dean Lake Substation, as well as electric improvements and
two new water storage facilities.24
I The increasing complexity of the utility's financial affairs necessitated
revamping the way SPU did business. In 1999, the Commission asked a
I Madison, Wisconsin utility consultant to recommend ways SPU could become
more efficient. One of the first recommendations made by the consultant was
I that the utility hire a finance manager.
Jerry Fox joined SPU in the newly-created position in the spring of 2000. A
I Decorah, Iowa native, Fox worked for 22 years in the finance department of
Muscatine Power & Water, a municipal utility in lowa.25
I "It was a brand new position here when J started," Fox said. "But growth has
made this a much bigger utility. We're getting close to being the second largest
I municipal utility in Minnesota.,,26
Working with the utility's staff, Fox set about to reorganize most of SPU's front
I office functions. The utility's accounting system had not been updated since
1989. Meter readers were still posting their readings in a ledger book. A local
I certified public accountant did the utility's monthly bookkeeping.27
I "Everybody shared duties," Fox explained. "We spent a lot of time just giving
people titles, duties and responsibilities. I worked for much of my first year
I implementing a new billing accounting system.,,28
With annual revenues approaching $20 million, SPU has the financial cushion
I . to institute change to keep up with the growth of its host community. Fox noted
that the Commission's investment in future computerization will pay definite
dividends.
I "We need to make major strides in office technology," Fox said. "That will be
I one of my big projects down the road.,,29
Commissioner Dave Thompson said he agreed with Fox's assessment of the
I necessity for computerization of the utility. "Computers are scary when you've
I 6
I
I done everything manually for years," he said. "But right now, everything is
I designed to keep up with growth. We're in a change mode. Change is coming to
an organization that has been doing things the same way for 30 years, yet the
I people who work for this utility have adapted to that change.,,3o
I
I
I A 21 st Century Water System
I The untimely deaths of Art Young in December 1995 and Ken Menden in
January 2001 robbed SPU of nearly 40 years' experience in maintaining the
I town's water system.
Water revenues account for approximately 15 percent of SPU's income, but
I without adequate supply of clean, potable water, Shakopee's growth would
evaporate overnight. SPU has long factored water into its planning decisions,
I understanding that the city's water supply is absolutely essential to sustain both
industrial expansion and population increase.
I For nearly 100 years, the utility's water system operator had to manually
I monitor the gauges on the wells and pumps to ensure that water was flowing
through the mains.
I As part of the 1993 and 1999 bond issues, SPU installed a sophisticated
Supervisory Control And Data Acquisition (SCADA) network for its water supply
I system.
"SCADA involves telemetry at every well," said Joe Hillstrom, a Champlin
I native who joined SPU as a water system operator in 1996. "There's a central
processing unit at the SPU offices where we can monitor flowage rates and tower
I levels. That was a big addition right there.,,31
Since 1998, SPU has been involved in a major upgrade of the water supply
I system. Besides replacing mains and hydrants throughout the city, the utility
I 7
I
I plans for the construction of two new water storage facilities. A new, $1 million
I tower was recently built on the bluff above St. Francis Regional Medical Center.32
A 5-million-gallon water reservoir is planned on the east edge of Shakopee to
I provide water to the South Bridge commercial area and the adjacent residential
development. The city also committed to $1.5 million for interior and exterior
I painting of SPU's existing water towers.
The improvement of Shakopee's water system will continue as long as
I Shakopee keeps growing. Water Superintendent John Crooks, a Rockford,
Illinois native who worked for Rockford's municipal water system for 20 years,
I said that planning for the water system's future is well underway.
"We have had comprehensive studies done on the water system throughout
I the 1990s," said Crooks, who arrived in Shakopee as SPU's water system
supervisor in March 2001. "The last one was done in 1999. We're trying to
I update everything every two or three years."33
Growth. Planning. Improvement. Shakopee's future will be determined by
I how well SPU meets the challenges of each.
2,510 Words
I
I
I 1 Joseph Adams Interview, p.1
2 Ibid., p.5
3 "Shakopee's Growth Spurt Means New Substation Needed," Power Lines, Fall 1998, p.1
I 4 Joseph Adams Interview, p.2
5 "Shakopee's Growth Spurt Means New Substation Needed," Power Lines, Fall 1998, p.1
6 "Partnerships: New river crossing opens doors to Shakopee," NSP Wholesale Connections,
Second Quarter 1994, pp.2-3
I 7 "We're Now Closer Than Ever," Valley Green Business Park Update, Winter 1998, pp.1,3
8 'The Grass Is Getting Greener On Our Side Of The River," Valley Green Business Park Update,
Summer 1995, p.1 .
I 9 Ibid., pA
10 "New Developments Planned for Valley Green," Valley Green Business Park Update, Summer
& Fall 1994, p.1
11 "New Facility for ADC Telecommunications at Valley Green," Valley Green Business Park
I Update, Winter 1995~96, p.1
12 "Easy Access to Points North & South," Valley Green Business Park Update, Spring 1997, p.2
13 "Valley Green Welcomes Seagate Technology," Valley Green Business Park Update, Summer
I 1998, pp.1-2
I 8
I
I
I 14 Joseph Adams Interview, p.1
15 "Shakopee's Growth Spurt Means New Substation Needed," Power Lines, Fall 1998, p.1
16 Ibid., p.1
17 "Update on Dean Lake Substation," Power Lines, March 2000, p.3
I 18 "Dean Lake Substation Update," Power Lines, Summer 2000, p.1
19 Ibid., p.1
20 "SPU Invests in a Growing Shakopee," Power Lines, Fall 1999, p.1
I 21 Joseph Adams Interview, p.7
22 Van Hout Interview, pp.9-10
23 Shakopee Public Utilities Commission, Shakopee Public Utilities Revenue Bonds, Series 1993,
$4,250,000, August 24, 1993, p.1
I 24 Shakopee Public Utilities Commission, Shakopee Public Utilities Revenue Bonds, Series 1999,
$9,850,000, December 1,1999, p.1
25 Oral History Interview with Jerry Fox, Shakopee, Minnesota, July 25, 2001, p.1
I 26 Ibid., pp.1-2
27 Ibid., pp.1-2
28 Ibid., p.1
29 Ibid., p.1
I 30 Dave Thompson Interview, p.2
31 Oral History Interview with Joe Hillstrom, Shakopee, Minnesota, July 24, 2001, p.2
32 "SPU Invests in a Growing Shakopee," Power Lines, Fall 1999, p.1
I 33 Oral History Interview with John Crooks, Shakopee, Minnesota, July 25, 2001, pp.1-2
I
I
I
I
I
I
I
I
I
I 9
I
I SPUC History
I Chapter 8
I Sidebar 1
Above and Beyond
I
I For the Minnesota lineman, the most dreaded enemies of daily routine are
wind and ice. Windstorms and tornadoes, usually associated with the passage of
I a strong cold front, buffet the North Star State in late spring and early summer.
Ice storms, in which freezing rain and sleet combine to weigh down trees and
I distribution lines with as much as several inches of ice, are most prevalent in
. March and November.
I The spring of 1998 will be remembered by linemen from Shakopee and other
utilities in the Minnesota River Valley for as long as they live. In the space of two
I months that spring, tornadoes and windstorms devastated municipal electric
systems the length and breadth of the Valley. Hundreds of distribution poles
I were uprooted or sheared in the storms, and customers went without power for
days at a time.
I The first storm hit at St. Peter, a municipal utility community 35 miles
southwest of Shakopee. A tornado with estimated wind speeds of 260 mph
I slammed into St. Peter on Sunday, March 29, 1998.1 Within the space of a half-
hour, the tornado ripped the small town apart.
I More than 90 percent of the 2,500 homes in the community of 10,000 people
were destroyed or damaged, and 125 businesses were completely or partially
I destroyed. More than half of the municipal utility's distribution poles were down.
The winds flipped 9,000-pound transformers on their sides.2
I Municipal utilities in Minnesota sign mutual assistance pacts with their utility
neighbors to provide trained line crews in times of emergency. Within hours of
I the tornado, utility line crews from Shakopee, Rochester, Fairmont, New Prague,
Waseca and 20 other utilities were rolling into S1. Peter to assist with restoration
I
I 1
I
I efforts. Crews from as far away as East Grand Forks and Brookings, South
I Dakota arrived to help with the c1ean-up.3
Kent Sanders and Gene Pass from the Shakopee line crew drove a bucket
I truck to St. Peter early on the first Saturday of April. When they pulled up to the
visitors' center in the middle of town, the parking lot was filled with buses and line
I trucks from all over the state. A St. Peter police officer directed them through
bar~icades to a work site, and they spent the weekend working with crews from
I Chaska and New Ulm to set poles and restore service.4
I 'It Hit Hard'
I Sanders didn't realize it at the time, but he would be delighted to see those
utility crews he worked with in S1. Peter arrive in Shakopee just two months later.
I The last week of May was hot and muggy in southern Minnesota.
Temperatures had been in the 80s since mid-week, with humidity approaching 90
I percent. 5 An approaching cold front from the north and west promised relief from
the heat over the weekend, but when the front did move through the Minnesota
I River Valley on Saturday night, May 30, it packed super cell thunderstorms and
straight line winds of more than 80 mph.6 The black wall of storm clouds moved
I slowly across the southern fringe of the Twin Cities from 9 p.m. until midnight.
The resulting devastation crippled Shakopee's electric distribution system and
I left more than 300,000 people without electric power from Shakopee east to
Wisconsin.
I Kent Sanders was watching television news Saturday night and following the
progress of the storm on the local station's weather radar. His wife Sandy was
I preparing to leave for the Mystic Lake Casino. Sanders, a Little Falls native and
I 19-year SPU lineman, called fellow lineman Gene Pass and said he was getting
ready to come in 'should he be needed.
I "The wife left, and it hit," Sanders said. "It hit hard. Gene called back and
said to get in here right away.,,7
I
I 2
I
I Sanders' wife had gotten a mile from home and turned around when she
I couldn't see to drive because of the torrential rain and wind. Sanders took his
daughter to the neighbors and set out for the SPU headquarters on Fourth
I Avenue.
"I got up to Tenth and Spencer, and Spencer was impassable," Sanders said.
I "I zigzagged down to County Road 17, and it was a mess. At that point, I knew
the whole system was down."a
I Sanders headed north on County Road 17 and eventually worked his way
through the storm debris to Ninth Avenue. Shakopee police manning a barricade
I told him to be careful, that wires were down all over the city. When he did reach
the utility shops, he discovered that Gene Pass had gone directly to the old
I Shakopee Substation, and Brad Gustafson, another lineman, had tried to make
his way to the Blue Lake Substation. Sanders headed to the South Shakopee
I Substation.9
What none of the linemen knew at the time was that the storm had knocked
I out power from the three NSP transmission lines that provided power to
Shakopee. Steel towers and wood poles on the 345,OOO-volt, 115,OOO-volt and
I 69,000-volt transmission lines serving the city were twisted hulks of metal and
splinters.1o
I Power was out all over Shakopee. Because the breakers on the substations
were closed, Sanders, Pass and Gustafson had to manually trip the breakers so
I that when the transmission system was repaired, power wouldn't start flowing
again to the distribution lines down in every neighborhood of the city.
I
'Get Them Back On'
I
I Employees got to the SPU offices Saturday night any way they could. Nancy
Huth was at the Elko Speedway Saturday night when the storm hit. On the way
I back to Shakopee, she said, "I told my husband to just drop me off at the office.
When I got here, Lou Van Hout and Barb Nevin were already taking calls.,,11
I Huth, Nevin, Sherr; Anderson, Sharon Veglan and Barb Menden would make
I 3
I
I themselves invaluable during the next week, answering the phone, running
I errands and making arrangements to feed and house the support crews from all
over Minnesota.
I Line Superintendent Marv Athmann was on vacation in Missouri. He called
into the office early Sunday and told Van Hout that he was on the way back to
I Shakopee. Athmann would spend the next week dispatching the mutual aid
crews to assist Shakopee crews in restoring service.12
I Lineman John Oellwo arrived home Sunday night from a fishing trip in
Canada. Oellwo reported for work early Monday morning and worked 72 hours
I straight,13
NSP managed to route power to the Blue Lake Substation at 1 a.m. Sunday.
I Shakopee crews restored power to the S1. Francis Regional Medical Center, the
Scott County and City Emergency Centers and the SPU offices by dawn Sunday.
I NSP restored power to the South Shakopee Substation early Sunday afternoon
and to the old Shakopee Substation Sunday evening.
I At that point, nearly 90 percent of Shakopee residents were still without
electricity. For the next four days, line crews worked around the clock, setting
I and repairing poles and bringing neighborhoods back onto the system, one by
one.
I "We found that there were a lot of backyards with no access," Oellwo
explained. "There are no alleys in a lot of these new subdivisions. That means
I you can't get a truck back in there. Restoration takes a lot longer."14
Damage was so extensive in Shakopee that line crews had to go street by
I street making repairs. Many of the distribution lines had sustained tree damage,
I and crews cut limbs from the lines before energizing them. Most of the initial
work was temporary.
I "We did a lot of temporary work," Dellwo said. "We figured we could make it
permanent later on. Our philosophy was make it safe. Tie it up. Get them back
on.,,15
I SPU crews and office employees worked 18-hour days for the next week to
I restore power to all of Shakopee's 7,600 electric customers.
I 4
I
I
I 'We Knew We Needed Mutual Aid'
I On Sunday morning, Lou Van Hout took a call from the Minnesota Municipal
Utility Agency (MMUA) offering assistance under the terms of the mutual aid
I pact. By noon Monday, the first crews from surrounding utilities were arriving in
Shakopee and being dispatched to particularly difficult trouble spots.
I "We knew we needed mutual aid," said Van HOUt.16
Crews from S1. Peter, New Ulm, Owatonna, Elk River and Anoka spent most
I of the week in Shakopee. Crews from Chaska, New Prague, North St. Paul,
Glencoe, Buffalo and Le Sueur helped out in Shakopee whenever they could
I spare a couple of hours from storm restoration duties in their communities.17
"I drove into the parking lot early Tuesday morning," Kent Sanders recalled,
I "and I was simply amazed at all the line trucks there.,,18
MVEC helped out by arranging to have cooperative line crews repair the joint
I use lines shared with Shakopee in the rural area of Prior Lake.
With the help of the mutual aid crews, SPU restored power by 5 p.m. Friday
I to all but a few customers whose interior electric wiring had been damaged by
the storm. For Sanders, it was one of the most satisfying events in his utility
I career.
"Our guys would work until 1 0 at night," he said. "And then they'd be back
I here at 6 a.m. I'd walk in at 5:30 in the morning, and everybody would be sitting
here waiting for me. Our crews were great. They didn't want to go home at night
I until that last customer was back on. That adrenaline just started pumping.,,19
I Jim Cook, who served 12 years as a Commissioner for SPU, wasn't surprised
by the utility's response to the May 1998 storm.
I "I would pit the Shakopee crew against NSP or any other utility in the U.S.,"
Cook said. "It was amazing how well the utility functioned during that 1998
I storm. They did a truly phenomenal job.,,20
1,690 Words
I
I 5
I
I
I 1 Steve Downer, "Tornado ravages S1. Peter," The Resource, Minnesota Municipal Utility
I Association, April 1998, p.1
2 .
Ibid., p.1
3 Ibid., p.?
4 Oral History Interview with Kent Sanders, Shakopee, Minnesota, July 27,2001, p.5
I 5 Beck, The EnerQV To Make ThinQs Better: NSP - An Illustrated Historv of Northern States
Power Companv~ p.358
6 Ibid., p.358
I 7 Kent Sanders Interview, p.3
8 Ibid., p.3
9 Ibid., p.3
10 "Spring storms leave Shakopee in the dark; other municipals come to aid," The Resource, June
I 1998, p.1
11 Nancy Huth Interview, p.3
12 "Spring storms leave Shakopee in the dark," p.2
13 John Dellwo Interview, p.2
I 14 Ibid., p.3
15 Ibid., p.3
16 "Spring storms leave Shakopee in the dark," p.2
I 17 'The Winds Blew... and Darkness Fell... ,.. Power Lines, Summer 1998, p.1
18 Kent Sanders Interview, p.4
19 Ibid., pA
20 Jim Cook Interview, p.4
I
I
I
I
I
I
I
I
I
I 6
I
I SPUC History
I Chapter 9
I SPU: A Second Century of Service
I Change is perhaps the only constant in the utility industry. As SPU
I celebrates the beginning of its second century of service, it must address the
same types of change that faced past generations of SPU Commissioners and
I staff.
SPU's century long adherence to the principles of public power has ensured
I residents that the community is making the critical decisions about utility
infrastructure, service and rates. Electric arid water utility payments don't go to a
I corporate office in Minneapolis, Denver or New York. The money stays in
Shakopee and is reinvested for the betterment of all.
I Deregulation, the efficient use of electric power, continued growth of electric
and water infrastructure, and water conservation are all issues that SPU will
I confront in the decade ahead. The challenges faced by SPU and its people in
the 21st century are complex. But they are no more difficult than the challenges
I faced by the utility during the past 100 years.
The first generation of utility managers faced the sometimes intractable
I problem of providing Shakopee's residents with an electric power supply that was
both reliable and affordable. In the years after World War II, the community
I wrestled with utility governance issues that led to the creation of the Shakopee
Public Utilities Commission in 1951. During the 1970s and 1980s, the
I Commission grappled with power supply and service territory issues that dictated
the direction SPU would take in the 1990s.
I In the decade just past, SPU became the fastest growing municipal utility in
the Midwest, with demand for water and electric power fueled by the industrial
I and population growth of Shakopee. That demand is likely to continue surging
through the next 10 to 20 years.
I
I 1
I
I How SPU reacts to the changes taking place at the dawn of its second
I generation of operations will determine the utility's future success. If the
philosophies expressed by Commission members and staff regarding change are
I any indication, then SPU's achievements at the start of its second century of
operations should equal or exceed those of the first 100 years.
I "I happen to like change," said Commissioner Joan Lynch. "It doesn't scare
me because I know that we have an incredibly dedicated staff, and they work
I hard.,,1
I Growth, Growth, Growth
I SPU reported revenues of more than $20.5 million in 2001, its centennial year
of operation.2 Revenues increased 13 percent over the $18 million reported in
I 2000, making Shakopee one of the financially healthiest municipal utilities in
Minnesota.
I "We're getting close to being the second biggest municipal utility in
I Minnesota," said Jerry Fox, SPU's finance manager. "Rochester is the biggest,
but I think we are now one of the five largest in the state.,,3
I Retained earnings of $26.2 million grew nearly 25 percent from 2000 to
2001.4 The growth of SPU's physical assets has been even more dramatic. In
I 2001, the utility reported total assets of $63.3 million, up nearly $19 million from
the $44.6 million reported at the end of 2000.5 The 42 percent gain in asset
I value was the greatest one-year increase in the utility's history.
From 1996 to 2001, SPU added 4,400 customers and in the first year of its
I second century of operations is serving nearly 12,000 customers.6 The
continuing torrid growth pace means that no sooner than one electric or water
I infrastructure improvement is completed than another improvement begins.
In May 2000, SPU placed Dean Lake Substation into operation. Almost
I immediately, utility planners began to map out improvements to the substation,
Shakopee's fourth. During the fall of 2001, crews and electrical engineering
I consultants began adding a second transformer and erecting a second
I 2
I
I switchgear building? The improvement work doubled the capacity of Dean Lake
I Substation when it was completed in the summer of 2002.8
Continued growth of Shakopee also has affected the water system. In the
I summer of 2002, crews installed and painted the city's fourth water tower. The
500,000-gallon tower was built on a four-acre site south of Valley View Road,
I Shakopee's first high-elevation service district,9
The site also contains Wells No. 12 and 13, as well as Pump House No. 12.
I Well No. 12 began flowing in the late spring of 2002, and Well No. 13 was drilled
and will begin flowing in late 2002.10
I "We needed these new wells, the pump house and water tower in addition to
promoting consrvation because Shakopee is still growing by leaps and bounds,"
I said John Crooks, water system supervisor. "We need to be able to supply the
demands of our customers and try to avoid having to impose further restrictions
I on water use or outright water bans. With proper planning on our part, we hope
to stay ahead of Shakopee's growth rate - which is almost 10 percent annually,
I and it won't stop for awhile. There's a lot of planning involved for the anticipated
I growth."11
Shakopee experienced two dry summers in 2000 and 2001, but through
I careful conservation measures, Shakopee avoided some of the more draconian
steps taken by municipal water suppliers in Prior Lake, Minnetonka and St. Louis
Park.
I "A lot of communities had outright water bans in 2001," Crooks said.
I "Fortunately we didn't, although we did have odd-even watering restrictions. We
were able to fill our towers every day. In this business, you never plan on rain.,,12
I Once Well No. 13 starts flowing, SPU has plans to build three more wells to
serve the city by 2006. Shakopee already has purchased property for a water
I storage facility south of the city, and current blueprints call for the creation of a
future well field in the vicinity of the new City Soccer Complex east of Sunpath
I Elementary School.13
"Because of the growth," Crooks said, "we're accelerating our schedule of
I putting wells in.,,14
I 3
I
I Commissioner Dave Thompson, a sales executive for Shakopee Valley
I Printing who was appointed to the Commission in 1997, has closely followed
water issues during his five-year tenure. He pointed out that Minnesota
I Department of Natural Resources regulation of the state's water supply has
become steadily more stringent during his two terms on the Commission. But he
I added that Shakopee's escalating expansion dictates a constant search for new
water supplies.
I "We always need to stay one well ahead of what we need," Thompson
noted.15
I
Power Supply and Deregulation
I
In the fall of 2001 , the Minnesota Public Utilities Commission (MPUC) issued
I the most comprehensive update on electric utility regulations in the state in more
than 20 years.
I Much of the report deals with energy conservation. No Minnesota utility has
built a baseload steam electric station since the early 1980s. Although power
I supplies in the state are projected to be adequate through 2010, Minnesotans
I have become adept at making the most efficient use of electricity.
SPU has been active in energy conservation issues for most of the past 10
I years. SPU has worked with Scott County social service agencies to ensure that
low income customers are kept informed of energy assistance programs
I available through the utility. In 2001, SPU spent approximately $171,500 on
electric conservation measures, and in 2002, the amount is projected to exceed
I $300,000.16
An innovative load management program instituted in 2000 saves electricity
I by controlling municipal water wells to fill storage tanks during off-peak hours.
"I'm a firm believer in conservation," said Commissioner Joan Lynch.
I "Americans are not thinking energy conservation, and that's a concern for the
whole U.S. We all make choices here, and that's the choice we as a
I Commission are making.,,17
I 4
I
I Another choice that the Commission will have to make in the near future
I concerns power supply. SPU's contract with MMPA expires in 2005, and the city
is obligated to notify the power agency of its intentions three years prior to
I expiration of the contract.
"We have to notify MMPA by the end of 2002 what we intend to do in the
I 2005 renegotiations," said Commissioner Dave Thompson. "That's a big
decision. In fact, it's a $150 million decision over 10 years."18
I Complicating the contract discussions with the power agency is the issue of
deregulation. Spurred by calls for more competition in the wholesale and retail
I electric power industry, the federal government since 1992 has deregulated
much of the high-voltage electric transmission grid serving the United States.
I Most of the nation's investor-owned utilities have sold or leased their high-voltage
transmission networks to Regional Transmission Organizations (RTOs), which
I now control the flow of electric power across the continent.19
In addition, some states have required electric utilities to sell generating plant
I assets in expectation that third-party energy marketers will be able to sell electric
power cheaper to end-use customers than in a regulated environment. The
I anticipation that private power marketers could sell electric power cheaper than
I regulated electric utilities evaporated with the California power crisis in 2000-
2001 and the Enron collapse in 2002.
I Minnesota's kilowatt-hour costs are among the lowest in the country, and so
far, North Star state legislators have been hesitant to do radical surgery on
I Minnesota's regulated electric utility industry. The Spring and Summer 2002
revelations that many energy trading companies have been padding their
I financial results caused legislators in many states to re-visit the wisdom of
electric utility deregulation.
I "We don't know the answer to deregulation," SPU's Lynch said. "Nobody
does. But I will venture to say that people will take a second look at it because
I they just don't understand deregulation that well."2o
Shakopee's innate conservatism has served the community well during a
I century of utility ownership. Five generations of Shakopee residents have
I 5
I
I benefited from 100 years of energy independence brought about when the city
I council and electric light committee decided to build an electric light plant at the
foot of Lewis Street on the river bank in 1901. Generations to come will continue
I to benefit from municipal ownership of Shakopee's critically important electric
power and water supply.
I 1,775 Words
I
I
I
I 1 Telephone Oral History Interview with Joan Lynch, Shakopee, Minnesota, June 26,2001, p.1
2 Shakopee Public Utilities Commission, Combining Statements of Income and Retained
Earnings, Years Ended December 31, 2001 and 2000, p.1
3 Jerry Fox Interview, p.2
I 4 Shakopee Public Utilities Commission, Combining Statements of Income and Retained
Earnings, Years Ended December 31,2001 and 2000, p.1 .
5 Shakopee Public Utilities Commission, Combining Balance Sheets, December 31,2001 and
I 2000, p.1
6 "Dean Lake Substation Update," Power Lines, Fall 2001, p.2
7 Ibid., p.2
8 "Dean Lake Substation Update," Power Lines, Spring 2002, p.2
I 9 'Water Department Improvements," Power Lines, Spring 2002, p.3
10 Ibid., p.3
11 Ibid., p.3
I 12 Crooks Interview, p.3
13 Ibid., pp.3-4
14 Ibid., p.2
15 Thompson Interview, p.3
I 16 "State of Minnesota Issues Update on Utility Matters," Power Lines, Fall 2001, p.3
17 Joan Lynch Interview, p.2
18 Dave Thompson Interview, p.1
I 19 "MISO, PJM, SPP and TRANSLink Execute Memorandum of Cooperation," Midwest
Independent Systems Operator Press Release, May 13, 2002, p.1
20 Lynch Interview, p.2
I
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I
I Chapter 9
I Sidebar 1
New Quarters
I
I If all goes according to plan, SPU will move into new quarters on the
northeast side of Shakopee sometime in the fall of 2003, 35 years after relocating
I to the Fourth Avenue offices, maintenance shop and service center.
When it was built in 1968, the SPU service center had plenty of room to
I house all of the utilities' myriad functions. SPU consolidated employees from
several different locations around town, including city hall. Line crews and
I mechanics worked on equipment in spacious heated garage facilities. Most of
the front office employees had private offices. There was even a conference
I room where Commissioners held monthly meetings.
But as Shakopee has grown, so too has the city's utility. The conference
I room was partitioned into offices. The fleet of bucket trucks and line equipment
outgrew the garage space years ago.
I "Our utility has shown dramatic growth," Utilities Manager Lou Van Hout said
in the fall of 2001, "and we need more space to work in an organized fashion, to
I be more efficient. Both the electric and the water operations have become more
complex, and we want to better serve our customers.,,1
I Van Hout added that SPU needs "a place to hold employee meetings for such
things as safety training and to meet privately with customers to discuss their
I accounts or to talkto them about energy conservation.,,2
In October 2001, SPU contracted with the Twin Cities architectural firm of
I Boarman Kroos Vogel Group (BKV) to spearhead a three-phase site selection
study for a new service center.
I Phase 1 consisted of an in-depth analysis of space needs in a future service
I center, which would include expanded room for electric and water operations, a
I 1
I
I much bigger heated garage and workshop complex, covered storage for
I recyclable materials, an expandable open pole yard, ample parking for
employees and customers, and storm water runoff retention ponds.3
I Phase 2 involved a general overview of seven different sites in the city,
matching SPU's needs to each of the sites. At the conclusion of Phase 2, the
I Commission narrowed the list to three sites.
In Phase 3, which began late in the fall of 2001, BKV assessed the three final
I sites for a number of development considerations, including road access, zoning,
bedrock, wetlands, and potential surrounding residential and industrial
I development. 4
BKV ranked and evaluated each of the sites in the spring of 2002, and the
I Commission made a final selection. The site selected was a 20-acre parcel just
south of Highway 101 between Shenandoah and Sarazin roads. Construction of
I the new service center in the proposed Shenandoah Business Park will begin in
the fall of 2002, with completion and occupancy expected in fall 2003.
I 465 Words
I
I 1 "Site-Selection Study Underway for New Service Center," Power Lines, Fall 2001, p.1
2 Ibid., p.1
I 3 Ibid., pA
4 Ibid., p.1
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