HomeMy WebLinkAbout3.a. Overview of SPUC Dedication
SPU Centennial History
When the citizens of Shakopee voted to have the City own and operate the electric and
water utility in 1900, they placed the community's energy and infrastructure demands
squarely in their own hands.
Electricity was a comparatively new phenomenon, and City officials instinctively
understood that control of the marvelous new technology would best be exercised
locally rather than by investors in Minneapolis or Chicago or New York.
For nearly the first half - century of the utility's existence, it was ably run by the Mayor
and City Council. Even though the City had closed its electric light plant in 1913 and
elected to purchase wholesale power from neighboring Northern States Power
Company and its predecessors, utility crews were responsible for the safe and reliable
operation of substations and miles of distribution lines within the City.
The formation of the Shakopee Public Utilities Commission in 1951 was recognition
that providing electric and water services to the community had become more and
more complex as the years had gone by. The appointed volunteer commissioners were
able to devote their full attention to the all- important task of ensuring that Shakopee's
residents had access to ample supplies of inexpensive and reliable electric power and
safe, clean water.
Shakopee's ownership of its electric and water system these past 100 years have been
both a wonderful financial and social investment. Unlike privately -owned utility
systems, Shakopee Public Utilities invests its profits back into the community; And
Shakopee has benefited greatly from the volunteer efforts and community leadership
skills of its utility employees.
To all of those commissioners, employees and customers /citizens who have made
Shakopee Public Utilities- past, present and future- such a vital force in the community,
this centennial history is dedicated.
Shakopee Public Utilities Commission
Shakopee Public Utilities Commissioners
1951 -2003
Charles Fricke Randy Gorman
Dr. J.E. Ponterio Jim Kepart
Robert Condon Jerry Wampach
Lawrence Kreuser Terrance O'Toole
Robert Wampach Gloria Vierling
Frank J. Schneider Jr. Andy Unseth
Robert Jasper Joseph Wolf
Ken Eidsvold David Thompson
Ron Stocker Joan Lynch
Don Bubotz Mark Miller
Wallace Bishop Robert Sweeney
Eldon Reinke John Engler
Russell Nolting Cole Van Horn
Barry Kirchmeier Brian Young
Jim Cook
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E
CHAPTER 1 - A Valley So Fair
Public Power in America is nearly In little more than one generation, the
125 years old. When the citizens of Wabash, settlers of 1850s Shakopee watched their
Indiana decided in 1880 that the community become a thriving, prosperous
municipality could build and operate the farm market village of nearly 1,000 people,
city's electrical system, they created an with horseless carriages belching smoke
` electric utility model that is still thriving beneath the electric street lights of
tiN z .
today. The nation's municipal utilities have downtown Lewis Street.
- brought inexpensive, reliable electric power
to millions of Americans in the 20th century.
�:. - Municipal utilities also give some 2,000 U.S. T Valley of the Minnesota
} communities a sense of energy
r independence and autonomy that they are
, carrying into the 21st century.
Water made the settlement of Shakopee
..-:-.A7,,, possible.
While not the first community to own and
' ;' operate its municipal utility, the Shakopee The Minnesota River drains most of the
Public Utilities' roots go well back to the southern and western portions of the North
industrial revolution. Early German, Star state on its slow and stately journey to
Scandinavian and Irish settlers founded the the Mississippi River at Ft. Snelling. Rising
h ; community because of the waterpower in Big Stone Lake on the state's western
: potential of the Minnesota River for stove border, the Minnesota cuts southeast across
rt works and iron foundries. The people of Minnesota before turning sharply northeast
" . Shakopee can look back with pride on 100 at Mankato. By the time the river flows past
years of municipal ownership of their Shakopee on the concluding portion of its
electric power system. Unlike communities passage to the Father of Waters, it is a broad
where electricity is provided by private, highway that has made commerce and
Ziff- ` ; travel possible g ossible throu hout the past 10,000
investor -owned utilities, Shakopee still
t ' , controls its own energy destiny. years.
ii And for that, the citizens of Shakopee today The first travelers were native Americans
..
�';; and tomorrow should give thanks to the and their forebears, paddling upriver to the
a
visions of the pioneers who first installed a open country of the plains to the west, or
' " c generator in a small floatin down river to the Mississippi. The
tiny steam electric i g pp
.. ` water highway of the Upper Midwest
building at the foot of the bridge spanning g y pp
C the Minnesota River carried clans and families in seasonal
migrations from the time the last glaciers
II
1
i
s ' ;:;
retreated from Minnesota 15 millennia ago. fought the name 0
What is now Shakopee was likely an
of their leader,
encampment of the Lakota 300 years ago. Shakopee.
Translated as � i �
For much of the 18th century, the river was a „ . ` 1441 -
battleground between the Lakota and the Little Six m�
Ojibway, forest peoples pushed west by the
the Lakota
Iroquois Confederation. In 1858, the Lakota language,
and Ojibway fought their last battle on Shakopee - or o
Minnesota soil near Shakopee. Most of the Shakpay as it a'
was most
Lakota retreated west up the Minnesota
River and on to the Great Plains of the commonly o
Dakotas and Nebraska, where they would pronounced, c
410010
become the fiercest opponents of American became the site_..,_
expansion in the post -Civil War era, of a trading post Chief Shakopee (Little Six)
in 1851. French
The Lakota gave the landing on the fur traders had been exploring the
Minnesota River where the 1858 battle was Minnesota River Valley since the 1700s.
ry ._ r mx s ...r,,.� : �s' �P�£. ,i !'mom . t' ,;` 'a +� Pr rr ±" ..
3 }t`St 5. ;� ,' ..g. 7 e�: : rt r 4., _i - .n� ..:car "'�.r v t - � ? x*ds a'k" ' t' :.:c a
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...' .. 1 r i r . .. gi p s :,. %9 # N + t':+ z *t�,:.. . g ,,. �' 1" c:: . E,-��K `..J .. + ,r :':.# & c,a .,
g a a _.,,f^ + * 1-, 1 s 1 c !. , ' ;' ws ' : i4' it . ; v-41* t''z .� s
i . . , r: _: t s , .�. z . z �. i , f . ° *-fi ` w,„ a 'n = -s , ' s , 3 'A,r >: _ k,- � �t , §1,% , : �`�3 x ;s ' ,,q � i" ,� - } }. 4' ,sY:
• .� <r .r .,... � �$'-S S � ���, i� r'� {� n. � � �, * i- i� '�� s' :��,f' �',�� � { t ✓�'�' , .�,,. tssv v2 r v� ��'ah..
. h Turn off .. Pg., e i s _ '' - t .: `. t at, 6 yzk �
§ 'fir tf "`7 # s!+ 3 rt. t
3
It w s ome h o w appro tha , ' bacon and ham across Minn an t casks a factory that made po ular roll-
Shakopee °welconed the`;new ce tury on; Dakotas. t x N. top de t wo. w a g on fa - an d a z ' �
s � � r ,
the`afternoon of M 1 wi th Jacob Ri "s'�j ,, - -wo s' ;: .�. c igar factory There w num other�t
' automobil on c ity . g small and wholesale = ,, � p
°st O didn't report w hat f bottling m than halfia millio,r glass ; fa including a wholesa Ilbak '
model automobile it 'was, bu the local .. i
b t w e re kn a t he ? thee ° r blacks A rid broom; �` j
i o f the automotive age gen „ i o� ,, ° • - factary�
temperan b e v er a ges Two first - cl as s H. ` onto a fai amount of excitement among breweri s laked t he thi of county resr Thes n alone:insure S i
onLaokers den who �dr riot n orma tl .. a rt a keof stead .' rowth and ermanent ros en
Y P Y p p fi tS!r `
Local "rrst hoesidenele s t H 0 :::',I'll'-:.::,.,..
ge Smith pu i the temperance beverages a •contemporary` journalist obser ved '
"firss carria in akpee n
19 04 , but it w be�dose to another
The Min Sto ve Comp was one of Tha p e rm a n e n t prosperity` mad "' 4 �1� {
the la manufacturers � o h ome a Sha a ret hub f or m u '
c S co t t i ,t
'dec before the ap - a ran c e of au �
.. bite s became commonplac on, ci office stoves in what was t h e n c ommonl y an C cou By 1900 = -t , t' �
streets. = At the turn of the 20th'centu,ry,,' re to the'Northwest Th stove b u i ldin g s a lo n g' L e wis a nd Holmes s tr e e t s
the fashionabte''method Hof tran
works in 1900 employed a work; force of downtown h ad' repla the wood t
nearly 500people and produced more storefronts of an earlier generation'
for the co y fry y oun g people w as than , An 200 different kinds' of coat and' wood.: ; r Saturda a at t urn; of t ,
ridin a +bic ■from Shako t stov '' ext e n s iv e mach s hop and century foun thron of sh oppers ram
Bloomington along a groomed cycle pa found rov� ded ductile rror to the stove
ry p pting the wa f K D
In 1 Sha wa a grow com - - °wo rks as well a s manufactured a popul . , - :Shakope Cas Sto A G re en berg s
. munity with, an agri cultural and: in bric m ma chine Th to granite D parfinent,Store,, Wi Lumb _
b ase. A` flour mill pro 500 barrel of and marble work q ua r ried much of,the and Lin Brother Central Meat M ;
qua lity whe at flour a day for markets as polished .building s u i n nearby
fa east'as Pennsy lvania and New York Minneapolis; -S P aul .Shakopee s growing reputafi a a m
Shakopee was o of th large prop` factun center would be a major f actor
ducers north and we of Chicago, and Shakopee also boa a wagon a nd 'car in the d of the city administration
the town's pork shipped na factory, a brickyard, two c oop e r to buil e l e ct r i c tig p 1902
shop ' for repainng barre 'a
They were succeeded in the early 19th communities in Indiana and Wisconsin,
century by British and American fur traders stepped off the flatboat Wild Paddy in the
pushing south from the Great Lakes country late summer of 1851 and quickly built a
As early as 1819, the U.S. Army arrived in small tent encampment and log trading
the Minnesota River Valley to erect posts to house on the site of what would become
protect the vital fur trade of the region. A Shakopee.
detachment of Army regulars arrived that In the 10 years between the establishment of
summer and built a bastion that later would Holmes' town site and the outbreak of the
be named Ft. Snelling at the mouth of the Civil War, Shakopee and surrounding Scott
Minnesota. Within 20 years, wood -fired County would rapidly fill with settlers. The
steamboats were regularly plying the Upper bottom lands along both sides of the river
Minnesota between Ft. Snelling and Lac Qui were fertile and productive. German and
Parle. Scandinavian farmers grew corn, wheat, oats
The first settler in the Shakopee area was a and barley. Many of the German settlers
French fur trader named Oliver Faribault, were refugees from the 1848 revolutions in
who built a log trading post in the German principalities. The
1844. Three years later, -
sloping banks and lush
the Reverend Samuel x growth of the
William Pond, a
k Minnesota River
Connecticut Valley reminded
� them of the
native who had tkk • been in Rhine River.
Minnesota ot o 0 0+! In May 1857,
since 1834, foireA ' Shakopee was
established a � x � ' incorporated,
mission to the VW and N.M.D.
Lakota adjacent to ' - McMullen was
Faribault's trading post. elected the first mayor
Settlement of the of the town. The
Minnesota River Valley Downtown Shakopee, 1876 original incorporation
Photo by Sweet - Jacoby, Minnesota Historical Society papers, however, were
would rapidly follow. In
1851, bands of the lost, and the city had to
Sisseton, Wahpeton and Mdewakanton file again in 1870. Shakopee was among the
Lakota signed the Treaty of Traverse des earliest settlements in Minnesota Territory to
Sioux with the U.S. government, ceding 24 boast a newspaper, The Shakopee
million acres of land in what would become Independent. In the fall of 1858, the Scott
Minnesota, Iowa and South Dakota. County Courthouse was completed.
Settlement, however, slowed dramatically
The ceded lands included all of the during the early 1860s, primarily because of
Minnesota River Valley. Within weeks, the uprising by Lakota bands in 1862.
settlers began to stake their claims to the rich
bottom lands west of Ft. Snelling. Thomas The end of the Civil War coincided with the
replacement of steamboats on the Minnesota
A. Holmes, who had already founded
River with locomotives puffing along on
3
� s� j? `,� r r q m , n� r � -ab �� & a � � } % �` • �" - � �r � �`' k���tk`i � tt� '�t
ib y '3" ny+ltts- l8 S' �,3: .mss `� `° { " F .,
4� r � t�� 4 t �' � -r '�`" .% �+ � �` � � ''i �. �
rc�` ° v yam, fi .
(>11 b1` +`, 7Y015 �` " +- W 3
3 �.
re - m
1'n
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Lewis Street Bridge (swing bridge built in 1879, in use until 1927, torn down in 1942)
tracks laid on the river's banks. The By the 1890s, Shakopee was a bustling
Minnesota Valley Railroad Co. began service community of 1,500 people and a railroad
between Shakopee and Mendota in 1865. hub for the agricultural community west of
Four years later, the Hastings and Dakota the Twin Cities. The Chicago, Milwaukee &
branch of the Chicago, Milwaukee & St. Paul St. Paul connected Shakopee with South
Railroad laid tracks through Shakopee. The Dakota to the west and Winona, LaCrosse
George Strait flour mill shipped process and Chicago to the south and east. The
wheat flour east to the Twin Cities and main line of the Chicago, St. Paul,
beyond in the 1870s. Minneapolis & Omaha Railway connected
Shakopee to the Twin Cities and Lake
Superior ports to the north and to Omaha
A New Century and Denver to the west. The Minneapolis &
St. Louis Railway ran through Shakopee
from Minneapolis and St. Paul to Iowa and
With the coming of the railroad, it was all points south.
the more necessary to bridge the Minnesota
River at Shakopee. The Minnesota Shakopee entered the 20th century with
Legislature voted in 1878 to site a railroad optimism and hope. The Minnesota River
bridge at Shakopee. The legislature's Valley county seat town was approaching its
decision was based on the strength of a vote 50th anniversary and was looking forward
by Shakopee residents to issue $20,000 in to taking its rightful place as a progressive
bonds for the construction of the iron bridge. community in one of the nation's most
Fighting over where in Shakopee the bridge progressive states. One action it could take
was to be located consumed much of the to achieve that progressive reputation was to
next two years. When the bridge finally was erect newfangled electric street lights
constructed in 1880, it entered Shakopee at downtown.
Lewis Street downtown.
4
CHAPTER 2 - Light in the Valley
Shakopee began to seriously changed to arc street lighting by 1900. The
consider installing electric street lights residents of both nearby St. Peter and
downtown shortly after the turn of the New Chaska had voted to set up municipally-
Year in 1900. Like many communities in owned utilities to light the streets of their
Minnesota and the Upper Midwest, communities. St. Peter had been a public
Shakopee had lighted its streets with gas or power community since 1891, Chaska since
kerosene lamps during the last two decades 1899.
of the 19th century The gas and kerosene The decision that faced Shakopee in 1900
lamps gave off a dim and often smoky light was one that had been investigated by
and had to be lit each night by a lamplighter dozens of Minnesota communities in the
employed by the city 1890s: whether to build and own an electric
There was a better way to light the streets in light plant or franchise the city's electric
1900. In the 1890s, hundreds of U.S. utility service to a private company.
communities installed electric arc lights to
illuminate city streets. Sputtering in the
twilight sky, the arc lights were the The Electric Revolution
technological marvel of their day. They
consisted of a glass globe that contained two
carbon rods. The arc lights gave off a Thomas Edison, Charles F. Brush, Elihu
brilliant light when a spark of electricity Thomson, Nikola Tesla and George
jumped between the two carbon rods. Westinghouse had worked tirelessly during
Arc lights also required the employment of a k # ` .� k , 4,
t , 1s f<
full -time trimmer to cut back the burnt -out � � ��
carbon from the rods once or twice a week. ��
Although arc lights created too much heat toA ,
be of much use for residential lighting, then
they
were ideally suited for street lighting and, }
lighting large commercial spaces. < 'F {
Shakopee residents in 1899 and early 1900
didn't have far to look to see other ) 1 - - �
Minnesota communities that had made the
k Y *XteY
transformation from gas lighting to arc
lighting. Minneapolis and St. Paul had Lewis Street Plant
5
1
fi
t
i'
the 1880s and 1890s in their E
quest to harness electric power.
Brush, an engineer from
ifm Cleveland, Ohio, perfected an ; �
arc lighting system in 1879 and ��
1, l , -
helped light Cleveland's public � '
f
square with a 2,000- candlepower ¢!-„ = r 0
light mounted on a steel tower V � 4
..r,.
that summer. ..'
,? TW , i , a 2i a S ,fil*,...._" 0 — In the fall of 1879, Edison .
designed a workable � `�_z . "`k 4 M.
incandescent electric light bulb < i - , - , , i
0
in his Menlo Park, New Jersey R 1 . ' ) . ' .
workshop. Edison unveiled a 2 � ' 1 o
commercial incandescent �: ,�
lighting system at the Pearl ' .. * ' � ? `' ' 1 4 o
f� ;mil - , x,
Street Station in Lower � ', o
Manhattan in the fall of 1882, Erecting a Utility Pole at First Ave. and Lewis Street in Shakopee -1910
and the next year, he licensed his
first community lighting system computers and the Internet are today. It
to investors in Sunbury, Pennsylvania. could light homes, offices and streets.
Edison reasoned that arc lights were Electricity could power pumps and lathes in
inefficient when compared with factories. It could operate parlor fans and
incandescent lighting systems. Incandescent toasters and other small appliances.
lights were characterized by a softer glow, But electricity also was a business. Edison,
and unlike arc lights, were cool to the touch. Brush, Thomson, Westinghouse and dozens
The comparative coolness of incandescent of other electric power pioneers made
lighting came from the filaments vacuum- money by selling franchises for their
enclosed in a glass bulb. systems to local entrepreneurs, who were tr
During the early 1880s, Elihu Thomson eager to bring the miracle of electric power ,`
developed both incandescent and arc to their communities - and to reap the
lighting systems in his factory at Lynn, financial rewards of selling electricity.
Massachusetts. His Thomson- Houston Co. In nearby Minneapolis, Henry M. Byllesby
was a strong Edison competitor in the mid- was electrifying the Mill City with �'
1880s. Meanwhile, Pittsburgh entrepreneur privately-owned f Minneapolis General ,'
George Westinghouse joined with Nikola Electric Company. There were those in the
Tesla, a brilliant Serbian immigrant inventor, Shakopee business community who agitated
to design an alternating current system that for an entrepreneur such as Byllesby to own
was superior to Edison's delivery of electric and operate the electric utility. In the end,
power via direct current. however, Shakopee elected to build and own
In 1880s and 1890s America, electricity was its electric light plant.
fully as much a technological marvel as
t
6
'Shakopee Shall Have Electric Lights' plant with a capaCity of 45 arc lights and
600 incandescent lights. Thiem and the
committee estimated that the City would
Early in 1900, the newly- elected City pay $4,413.29 per year to operate the plant.
Council appointed a committee of three of More than half of the plant's operating
its members to investigate the feasibility of expense would consist of shipping nearly
building a "first- class" light plant. The 300 tons of Iowa coal to Shakopee and
members of the committee — Herman burning it in the plant.
Schroeder, A.H. Philipp and John Thiem — The committee noted that even with free arc
surveyed residents and visited nearby lights for the city, the plant would still bring
communities with municipally -owned in $4,500 in receipts each year for a small
electric light plants. profit. The group reported that two 100-
; Thiem, who would be elected mayor later in horsepower coal -fired boilers, a 100-
the decade, wrote the committee's report horsepower compound engine, two
recommending the construction of a light generators (or dynamos, as they were
Th High f L
It was obvious almost from the start of elec- founded by Henry Byllesby in 1892. 1890s. Nye arranged a meeting of
tric utility service in Shakopee that the Byllesby in 1899 had sold his interest in the Minneapolis General Electric executives and.
Lewis Street electric light plant didn't have company to Stone & Webster, then one of ? the Shakopee light and water committee in
the capacity to serve the community's Indus- the nation's major electric utility contrac- 1912.
trial customers. The plant's boilers were ; tors. Stone & Webster had begun construe- Negotiations serve the stove works con -
only able to build enough steam`: to power tion mi to on of a network of high - voltage trans
s -- timed for on s to of the next eight months.
Shakopee's street lights and the residential sion lines radiating out from the Twin Cities ti Minneapolis ed most of
Electric was adamant
electric lighting load shortly after the turn of the 20th century. that the utility would reserve the right to
' In 1911,the firm had built Riverside Station
That was unacceptable to Col. George Lewis - serve the stove works directly. The light and
in northeast Minneapolis to replace the Main ,
Nye, " the.president of the Minnesota Stove , water committee was reluctant to set such a
Street Plant, which had been destroyed in a
Company and the town's. biggest employer. January 1911 fire. precedent, but the stove works pumped
Nye had long argued that the City needed, to $5,000 into the local economy every payday.
either triple or quadruple the size of the Riverside was a huge plant by the standards Finally, in July 1913, Shakopee agreed to
Lewis Street plant. or find an alternate of the day. Its twin 6,000 - kilowatt genera- become a wholes 13, customer of Minneapolis
source of electric power. tors could produce an eye-popping 53,000 horsepower at peak capacity Coupled with General Electric. The light and water corn-
.
When, we get all the power we need," Nye an abundant source of hydroelectric power mittee hired crews to re-wire the City to
said, to whomever would listen, "watch us handle the new source of power. On Friday,
from St. Anthony's Falls Dam on the
grow, and watch Shakopee grow into a August 8, 1913, power started flowing into
Mississippi River, the Riverside plant gave
clean, live, up -to -date City of industry and M Shakopee from the Minneapolis General
Minneapolis General Electric an ample supply
suburban homes ", Electric high line.
of power to serve its own customers, as well
Col. Nye had good reason to complain. as wholesale customers in outlying commu- "For a time," the Shakopee Tribune reported,
Electrification of the factory floor was . nities such as Shakopee. "steam will be kept up for pumping purposes
becoming an accomplished fact by 1910. until the electric pump is in place, and then,
In 1912, Henry M. Byllesby purchased
Nye was able to see that reality in action in day and night, week days and Sundays, there
Minneapolis General Electric back from Stone
nearby M where the Minneapolis &Webster. Within three years, Minneapolis will be all the light and power the popula-
General' Electric Company was working furl- tion of Shakopee can use and then some."
ously to electrify the e grain elevators and General Electric would become the corner-
flour to c ri f t ' vdgr grain
vaion wind stone of Northern States Power Company, Shakopee would remain a wholesale cus-
much of its .enriched wheat flower. , Byllesby's holding company for his Upper tourer of Minneapolis General Electric and its
Midwest properties. The stove work's Col. successor, Northern States Power, for the
Minneapolis General Electric had been Nye had known Byllesby since the utility next 75 years.
pioneer worked in Minneapolis in the late
r
known at the time), a marble switchboard to the committee underestimated the
control the electric power at the light plant, maintenance cost for the new plant by as
200 distribution poles and 31 arc lamps much as $1,000 a year.
could be installed for a cost not to exceed "If we only had to put in the first $10,000," 1 '
$15,000. he wrote on the Thursday prior to the
"We can, of course, secure a cheaper plant special bond election, "it would not be so
by using the alternating system with bad, but with an extra load of $1,000 or so 1
I
incandescent street lights, or a smaller plant every year for many years it is paying pretty j
by using less arc lights, or placing them dearly for our whistle."
closer to business property," Theim pointed
The bond election was widely believed to be
out in his report. a toss -up. But when voters went to the polls
In the previous five years, Shakopee had on Tuesday, May 22, 1900, they resoundingly I
paid off $40,000 in municipal improvement approved the bond issue by a 2 -1 margin. {
bonds. The City Council agreed to put up "The outcome was a surprise," the editor of t
$5,000 of public money for the new electric the Shakopee Tribune wrote that Friday, "for
light plant if voters would approve the while we expected a favorable vote, no one 4
issuance of $10,000 in new bonds to finance ever thought it would be carried by such an
the balance of the construction costs. overwhelming majority, 168 votes. This goes
Supporters and opponents campaigned to show that people of Shakopee are
throughout the spring of 1900. Not enterprising when given an opportunity to
everybody in town supported the notion of demonstrate."
electric lights. C.G. Bowdish, editor and The polls had closed at 5 p.m., and within
manager of the Scott County Argus, was an hour, the results were known. An
concerned that the committee's estimates impromptu celebration ensued, with
were too low. Bowdish had speculated that performances by the town's Cadet and
' ,, - � x Maroon Bands, followed by a
',. ti , f display. Hopes were
, f ,, 4 4,,,,:.,.
i 4.. hig t
� g �� x q; o d be at lighted within months.
P "� "It may be said " th s Argus
-4 editorialized "that if matters streets
are
pushed with the same vigor
11 i which has marked the movement
2' thus far, the plant should be in
operation by September first.
November 1 ought to be placed
as the limit."
z , ,,� ��c-s t > V, °
Shakopee Stove Company
8
t fndip t : ,,- 4, 4 .
i y r ,
r v
2
Lights on the Altar
. - - to __
As it was, Shakopee waited nearly two years -
for electric lights. Problems with securing a , ` r �`
site for the new power plant and delays in x Shakopee, M�aa. , „ ., . v,
ordering and installing the equipment
consumed much of 1900 and 1901. it A postcard of Main Street in Downtown Shakopee 1910
until September 1901 that foundation work
f was completed on the electric light plant, increasing number of residential customers
which was located at the foot of Lewis Street were added to the electric light plant's load.
i i on the river bank. Initially, rates were 12-1/2 cents per
The Council hired S.L. Sly, a Twin Cities kilowatt -hour for incandescent service,
electrician, as the first superintendent of the
about what other municipal utility
City's municipal utility. Sly spent much of customers in Chaska, LeSueur and Lake
the 21 months between May 1900 and March City were charged. Shakopee customers
1902 overseeing the wiring of the paid 15 cents a month to rent a meter, and
community City crews wired prospective customers
homes for a cost of $1 to $3 per lamp.
A 1901 national steel strike delayed the Broken light bulbs were replaced by the City
delivery of much of the structural steel to be at a charge of 20 cents per bulb. The
used in the electric light plant, but Sly and minimum charge per meter in the beginning
his crews installed nearly 1,000 incandescent was $1 a month. Consumers were offered
lights in homes and businesses during late discounts of between 5 and 20 percent for
1901 and early 1902. The Occidental Hotel prompt payment, depending upon the size
had seven new lights, Strunk's Drugstore of the monthly bill.
boasted 18, Kauth's Hotel had 17, and the Service during that first decade, as a
Lander Opera House promised to be the
best -lit building in town with 38 contemporary observer put it, was
spasmodic and usually never available
incandescent lights. during daylight hours." Most of the
The 100-horsepower engine for the electric
p � businesses downtown kept their gas fixtures
light plant arrived by rail in late February as backups for the frequent power outages.
1902. Sly's crews worked the next month The utility also contended with a recurrent
installing the equipment and testing the turnover in superintendents. Sly left
boilers and generators. Finally, on Good Shakopee for a similar job in Sleepy Eye in
Friday evening, March 28, 1902, Sly turned 1903, and the City hired A.K. Adams for the
the switch at the electric light plant that vacant job. Adams departed in 1907 and
illuminated Shakopee. Parishioners at St. was replaced by A.T. Harris.
Marks Catholic Church marveled at the
electric lights on the high altar the next night In 1912, the City Council made the painful
at Holy Saturday services. decision to abandon generation at the Lewis
Street plant and seek a wholesale power
Shakopee started municipal electric service contract with Minneapolis General Electric
with 32 arc lights. Most of the businesses in Company. By that time, the Shakopee
town had incandescent light service. During municipal utility was firmly ensconced in
the first decade of the utility's history, an the water and sewer business.
9
4.
CHAPTER 3 - Peaks & Valleys
With the electric light plant in which meant that the Minnesota River was
operation, Shakopee turned to other utility laden with agricultural waste by the time it
services to offer residents. In 1908, Jacob reached Shakopee's water intakes.
Ries, a store owner, petitioned the City Shakopee had not experienced a typhoid
Common Council to establish a sewage outbreak since the 1890s, but typhoid and
treatment facility and waterworks. other water -borne intestinal diseases were
Alderman Henry Mergens chaired a council an ever - present threat for Minnesota
committee to investigate costs to build water communities. Duluth had suffered serious
and sewer mains throughout the city typhoid outbreaks during the 1890s before
The committee hired the St. Paul installing a pumping and filtering station on
engineering firm of Loweth and Wolff to the shore of Lake Superior northeast of the
furnish bids, and the engineers estimated city. Fargo- Moorhead reported an average I`
that the City could begin building mains of five deaths per year from typhoid in the
downtown for less than $10,000. A contract period 1900 -1910.
was awarded to W.C. Fraser in October 1908 By 1910, most Minnesota communities were f
to build water mains along Lewis Street discovering that the best prevention against
from the electric light plant south to Third typhoid was to sink deep artesian wells for a
Street, then west on Third Street to Scott municipal water supply. Before Shakopee 1
Street and east on Second Street to Main took that step, however, the City embarked
Street. The flurry of water main upon an ambitious sewer main construction
construction was one more sign that
program.
Shakopee was willing to take matters in
hand to ensure the safety and comfort of its Instead of bonding for the project, Shakopee
residents. assessed property owners who benefited
from the sewer mains. The assessments
Construction of the City's first water mains came in much higher than the City had
was completed in the spring of 1909. But initially estimated, and affected property
the water was drawn from the Minnesota owners filed 55 separate lawsuits against the
River above Shakopee, and treatment was City by the fall of 1910. Judge P.W. Morrison
almost non - existent. Unfortunately for consolidated the cases and ruled in
Shakopee and other communities December 1910 that the City was within its
downstream toward the Twin Cities, sewage rights to assess the property owners.
treatment was still more of an art than a
science. Much of the river upstream from The subject of water, meanwhile, was back
Shakopee passed through dairy farms, in the headlines by the summer of 1910. In
}
10
3 V x S t
_ � ,
z
' . drinking water on October 14, 1911. The
., water from the deep artesian well flowed
F 0 z . - into a horizontal, double -acting Fairbanks
, ii steam pump with a capacity of one million
_ a _ s gallons per day.
I ,w1,1 •y�2R X+ �; A . Engineers from the Minnesota State Board of
Health's Division of Sanitation estimated
-- u j £ , _— v that the flow of the well was in excess of 600
■
rc allons per minute. They certified that the
fi fi g P Y
•' �� water was "of good sanitary quality, as
evidenced by the very low bacterial count
11 and the absence of the E.Coli group in 100
cubic centimeter amounts." In addition,
s they noted that the water had good color
;o
and no odor.
4
§ `' -•. -J
p a The completion of Well No. 1 brought to a
Si
close the formative stage of Shakopee's foray
Two women with Singer Vacuum Cleaners into municipal utility services. Well No. 1
would be the mainstay of Shakopee's
August, Mayor John Thiem went before the municipal water system for most of the next
City Common Council with a plea to secure 50 years and would not be abandoned until
a permanent water supply that would lessen 1993 — 82 years after it was drilled.
Shakopee's dependence on "foul river
water." Thiem, who had spearheaded the Building Load
council's drive to build the electric light
plant 10 years before, suggested that
Shakopee investigate drilling a deep well at Freed from the headaches of operating its
the site of the electric light plant. own small generating plant, Shakopee's
Thiem's recommendations were acted upon municipal electric utility could concentrate
in the summer of 1911. A well - drilling crew on maintaining the City's distribution
set up a rig adjacent to the power house on system and building load during the 1920s
Lewis Street and began sending the bit and and 1930s. But maintaining electrical
casing down through alternate layers of systems in the 1920s was an inherently
limestone, shale, sandstone and more dangerous business. During a four -year
limestone. At just over 690 feet, the crews period between 1917 and 1921, the Shakopee
hit water. Unknown at the time to even _ municipal utility lost two of its employees to
geologists from the University of Minnesota, fatal electrical accidents.
Shakopee and other Minnesota River Richard J. Wise, a lineman for the City-
communities west of the Twin Cities were owned utility, was electrocuted early in
sitting on top of several of the larger aquifers September 1917 while working on a
in the state of Minnesota. temporary connection in the Lewis Street
Well No. 1 began providing Shakopee with alley between First and Second streets.
11
Hundreds of Shakopee residents mourned 175,000 kilowatt -hours of electricity.
the popular Wise at his funeral at St. Mary's The municipal utility reported revenue of
Roman Catholic Church. Four years later, $26,129 in 1927. The City paid Northern
in July 1921, T.E. Harris, who had been States Power Company (NSP), the successor
superintendent of the electric utility since to Minneapolis General Electric, 2 cents a
1915, was electrocuted in the same alley kilowatt -hour for wholesale power. The
within a few feet of where Wise had only other major costs were wages for the
experienced his fatal accident. superintendent, a billing clerk and a
Herman Hein replaced Harris as combination lineman /groundman. The
superintendent, but served only three years utility also owned and operated a 1926 Ford
before turning the job over to William Model T one -ton truck and a homemade
Sudman in 1924. Sudman oversaw the 1926 pole trailer.
replacement of many of the downtown arc
lights with high- intensity incandescent street
lights. The resulting "White Way" was very Surviving the Depression
popular with downtown merchants and
shoppers, especially as Saturday evening -
shopping hours became common during the The onset of the Great Depression in 1929
decade. devastated many communities in Minnesota
and the Upper Midwest. Unemployment,
Electric appliances - particularly fans, bank failures and the worst drought in
toasters, irons and ranges - became modern times ravaged Minnesota and the
increasingly affordable and popular during Dakotas. Shakopee was luckier than many
the 1920s. The Shakopee municipal utility communities, thanks in part to the innate
encouraged electric appliance use as a conservatism of the town's leaders. The
method of building load for the utility. Even Shakopee electric light plant kept electric
as late as 1927, the municipal utility was still rates low during the Depression decade and
wiring Shakopee homes for electric service. established a policy of working with
The City's population had reached nearly customers who had fallen on hard times.
2,000 people in the 1920 federal census, and
there were an estimated 600 residential Shakopee had survived a terrible
dwellings in the community. But as of 1927, commercial setback in the mid -1920s when
only 401 residences were served with electric the Minnesota Stove Company, the town's
power. major employer for decades, failed. The
stove works had been unprofitable for years,
The 400 residential customers consumed and the company's major manufacturing
211,000 kilowatt -hours of electric power and plant was nearly destroyed in a March 1923
paid an average of 6.6 cents per kilowatt- fire. The next year, the owners placed the
hour, slightly more than half the 12.5 cents company into receivership.
per kilowatt -hour charged residential
customers at the inception of electric power The closing of the stove works stunted
service a quarter- century before. The Shakopee's growth for more than a decade.
municipal utility reported 158 commercial The city's population of 2,020 in the 1930
and industrial customers in 1927. They paid federal census was a gain of only 32 people
an average of 5.1 cents per kilowatt-hour for for the 1920s. But with the exception of a
12
p ` fi 1 s t't a ,- ; °- , s �; n tt
tsC al A 4 � a k t3
t �
3 S
Y1 s 6
+ �.� fit,, � 'k'
'} 1, g t
Y t
� u
, , 8_`t , O
� : 1 3 a '' - ate:
Ball Park, Shakopee, 1948
barley malting plant in Shakopee. The of 225 -2.
company, which operated a facility in With the Rahr Malting plant in operation,
Minneapolis, was drawn to Shakopee by its the City was able to emerge from the
rail connections, the abundance of artesian Depression debt -free when the City
well water and the limestone ledges
Common Council retired Shakopee's last
underlying the site it had selected in West outstanding bond in 1938. The next year,
Shako Shakopee's municipal utility narrowly r
,
The seven -story malting plant was estimated missed becoming a power, gas and water
to cost more than $1 million, and the year- utility.
long construction phase of the project would
Natural gas from Kansas had become
employ almost 500 people. The plant, available in southern Minnesota in 1939.
which supplied breweries and bakeries 1
throughout the Upper Midwest, would When the Minnesota Valley Gas Company
approached the City about securing a
provide permanent employment for 50
„ natural gas franchise, the City Common
residents. The Chicago, Milwaukee & St. Council put the matter to a vote of residents. 4
Paul Railroad and the Omaha Railway also
spent several hundred thousand dollars to Mayor John J. Cavanaugh supported a I`
upgrade tracks in Shakopee to serve the municipal gas distribution system, but the s
plant. electorate — by a 100 -vote margin — opted for
a franchise agreement with Minnesota
Shakopee's economic development coup, Valley Gas. Cavanaugh vetoed several
however, was a bittersweet victory for the
franchise agreements with the gas company,
municipal utility. As part of its negotiations but the City Common Council overrode the
with the City, Rahr Malting requested that it vetoes. In the fall of 1939, Minnesota Valley
be served directly by NSP. Under the terms i
Gas began supplying Shakopee residents r
of the wholesale power contract signed back with natural gas. J
in 1913 with NSP's predecessor, the
Minneapolis General Electric Company, NSP Shakopee's municipal utility took the Rahr
did reserve the right to serve industrial Malting Co. and gas franchise decisions in
customers within the municipal utility's stride. By 1940, the utility was engaged in
service territory. The City took the matter to building a water tower that would become a
the voters on March 18, 1936, and the Shakopee landmark.
electorate authorized the request by a vote
14
CHAPTER 4 - The Utilities Commission
The two decades following World offered the city a 5 percent discount for
War II were momentous years for prompt payment of the monthly power bill.
Shakopee's municipal utility. Electric power
demand in Shakopee, the nearby Twin Cities As a result of the power supply contract,
and Minnesota increased sharply, with Shakopee boasted some of the lowest
kilowatt-hour growth averaging 7 percent a residential electric rates of any municipal
year for much of the period. Shakopee utility in Minnesota. In a 1946 rate
changed the governance of the utility from comparison, Shakopee reported that
city council oversight to a utilities residential customers paid 3.9 cents a
commission form in 1951. The Shakopee kilowatt -hour for 100 kwh of electricity, and
2.7 cents a kwh for 250 kwh. The 100 -kwh
Public Utilities Commission ended the era usage was 14 percent lower than the rates
by building a new headquarters and central paid by customers of the state's other 28
maintenance facility for the utility on Fourth municipal utilities, and 11 percent less at the
Street in 1968. 250 -kwh usage. Only New Prague, Sleepy
In November 1946, the city signed a new Eye, Blue Earth and Litchfield had lower
contract with Northern States Power electric rates for 100 -kwh usage, a standard
Company (NSP), the successor to the consumption at the time.
Minneapolis General Electric Company. Thanks to the economies of scale afforded
The contract reflected one of the more by the NSP wholesale contracts, Shakopee
beneficial realities of the post -World War II
electric utility industry. Because of the residents would enjoy electric rates lower
than in many other Minnesota communities
construction of larger, more efficient coal- through the early 1960s.
fired electric power plants in the late 1940s
and 1950s, the cost of electric power came
down as kilowatt -hour demand went up. A New Way of Management
The resulting economies of scale benefited
Minnesota wholesale customers of NSP.
Under the terms of the 10 -year contract Throughout most of its first half - century of
extension with NSP, Shakopee paid about 1 operation, the Shakopee municipal utility
cent per kilowatt -hour for wholesale electric had been managed by a superintendent with
power. The 1946 wholesale power oversight by a light and water committee of
agreement with NSP saved the city 11 the City Council. As the utility continued to
percent on its wholesale power bill, which grow through the 1940s, it became apparent
totaled just under $45,000 in 1947. NSP also to some in the community that a change in
15
v
governance was needed. Proponents of headlines in 1947, and the issue dominated
change argued that the expanding municipal city politics for the next five years.
electric and water business demanded more Complicating the matter was the existence of
time than Councilors could afford to spend, a faction in the community who supported
busy as they were with the affairs of the Shakopee's creation of a municipal liquor
rapidly growing community. store. State law allowed fourth -class cities to
Supporters of the change in governance own and operate one or more municipal
first raised the issue with the City Council liquor stores. Supporters argued that as
in the fall of 1950. They cited Chapter 453 with the municipal utility, the community
of the laws of the state of Minnesota, could derive more revenue from the
which provided for the creation of a Water, ownership of a liquor store than by selling
Light, Power and Building commission for licenses to others.
any city with a population of less than Liquor license politics had hopelessly split
10,000. The proposed Commission would the City Council. When the motion to create
include three appointed members, who
a Utilities Commission came before the
would employ a secretary and have the Council in late 1950, the issue faced strong
power to set all electric and water rates, opposition. Mayor Clarence Czaia and
audit all claims presented to the utility and Councilman Elmer Dellwo opposed the
generally oversee all electric and water measure. When it passed in December,
operations. Czaia promptly vetoed it. In March 1951,
The idea of a Commission was not new. the Council assed a revised measure by the
p y
Mayor Joseph A. Ring had proposed an barest of margins, 5 -4. This time, Czaia
Electric Light and Water board to the signed the resolution, to become effective
council in 1910. The proposal, however, April 1, 1951.
had succumbed to political infighting and Richard C. Condon, Dr. James E. Ponterio,
opposition by the Scott County Argus and and Charles Fricke were appointed to the
resulted in Ring's resignation that summer.
Since 1901, the municipal utility had been first Commission. Condon was a former
operated under the direction of the City superintendent of the city's light and water
Council.
utilities, and Fricke had served on the
utilities commission in Manitowoc,
What appeared to be a relatively benign Wisconsin during the 1930s. Ponterio was a
administrative change, however, quickly popular local general practitioner. The three
got caught up in the maelstrom of post- were appointed to staggered terms, which in
World War II city politics. Since shortly effect gave the council the authority to
after the end of the war, Shakopee had appoint or re- appoint a Commissioner every
been embroiled in a dispute over the year. Full terms were three years.
issuance of on -sale liquor licenses. As a
fourth -class city under Minnesota law, The new Commissioners quickly agreed on
Shakopee could issue no more than five the employment of Florian A. Ducks as
on -sale liquor licenses. But since the 1930s Commission secretary, and they appointed
the City Council had been issuing nine Julius A. Coller II as SPU's first attorney.
licenses without anyone questioning its The new Commissioners had wide latitude
right to do so. The matter garnered local in the operation of the utilities. The Council
16
ri r �
ya 3 T f- g P *S! Vl
3
Front, l to r: Dr. James Ponterio, Charles Fricke, and Richard Condon
Back, l to r: F.A. Dircks, R.S. Houts, Julius Colter, II.
had included management of the city's Progress and Improvements
sewage system as part of SPU's
responsibilities, and the Commissioners also
were empowered to administer the city's The Utilities Commission had a rude
zoning regulations and issuance of building introduction to the utility business. Above
permits. The only thing Commissioners average snowmelt and torrential spring
were not allowed to do without Council rains in 1951 and 1952 caused the Minnesota
approval was to sell or dispose of utility River to flood both years. Shakopee itself
property was not threatened, but SPU crews worked
Working closely with Superintendents closely with their NSP counterparts to
Robert S. Houts and his successor, James R. relocate transmission lines into the city
Kotsmith, the Commission looked forward In August 1951, George "Corky" Ring, a
to a bright future. member of the SPU line crew, was critically
In retrospect, the 1951 establishment of the injured when he came into contact with a
Utilities Commission proved the wisdom of 2,300 -volt distribution line. Although
SPU's original supporters. The 1956 election initially feared fatally injured, Ring survived
of Dr. D.L. Halver as Shakopee's mayor following the amputation of his right foot
resurrected many of the political passions and hand.
that had accompanied the liquor license The Utilities Commission was extensively
issue a decade before. Dr. Halver and his involved with two major improvements to
wife Dorothy were outspoken proponents of Shakopee in the mid- 1950s. SPU replaced
a municipal liquor store, and Dr. Halver's many of the light standards in downtown
term in office was marked by political Shakopee and created an attractive new
infighting and the resignation of numerous downtown street- lighting "White Way" for
aldermen. the community during the summer of 1954.
Had the municipal utility remained under The reliability of the city's electric power
the direct control of the City Council, it is supply was ensured two years later when
questionable whether SPU could have made NSP embarked upon an ambitious project to
the significant strides it did in the latter upgrade its high - voltage transmission grid
1950s and early 1960s. in the Minnesota River Valley. In the spring
17
that Mayor Jacob Ries had built in 1910 the new plant. The estimated $885,000 cost
following Joseph A. Ring's resignation. A would translate into $626,000 once the
1946 recommendation by a Twin Cities federal grant was taken into account. Since
consulting engineering firm suggested the the Utilities Commission had escrowed
construction of a conventional treatment more than $110,000 in the Reserve Fund
plant with a capacity of serving 10,000 since its inception in 1954, the City's share of
people. The estimated cost of $750,000, the construction costs would come to
however, raised fears that the outlay would $516,000.
create sewage charges that would cause On June 16, 1960, Shakopee's voters went to
hardship to city residents. the polls to approve a $516,000 bond issue
In the spring of 1954, Mayor George A. for construction of the new sewage
Phillipp signed an ordinance that treatment plant. The Utilities Commission
7 inaugurated the first sewer rental charges in and the City Council both feared that the
Shakopee's history. Under the rental system, sum would be too large for residents to
is residents were assessed a charge for a fixed approve. But approve they did, by a 460 -160
} number of years to help finance construction margin.
y of the sewage treatment plant. Two weeks
.a When bids were opened in August, they
later, the Council created the Public Works came in at just over $200,000 less than the
Reserve Fund to escrow the sewer rentals original estimates. The city issued bonds for
and designated SPU to oversee the fund. At $265,000, about half of what the voters had
x the same time, the Council selected the approved in June. Construction got
Hauer property on the Minnesota River east underway in the fall of 1960. By the spring
of downtown as the site for a sewage of 1962, contractors were completing the
treatment plant. new facility
Events began accelerating in 1958. In Shakopee's mayor, Dr. Joseph C. Huber, city
October, the City Council applied to the
4 federal government for a 30 percent aldermen and SPU Commissioners officially
construction grant for the sewage treatment dedicated Shakopee's new sewage plant on
facility. In February 1959, the Utilities Saturday, May 26, 1962. It was not a
moment too soon. Industrial development
Commission transferred $30,000 from the efforts in Shakopee and Scott County were
Reserve Fund to the City's general fund for beginning to bear fruit. And new companies
purchase of the 32 -acre Hauer site In May moving into the region demanded state-of-
,' the City raised sewer rental rates. The the -art sewage and wastewater treatment
f next month, the Council hired the Minne- facilities.
apolis firm of Toltz, King, Duvall, Anderson
& Associates to draw up the actual plans
and specifications for the new plant.
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 construction
grant -in -aid. In May 1960, the engineers
completed the plans and specifications for
19
CHAPTER 5 - Rate Wars
When Nancy Huth went to work at their grocery shopping and pay their utility
SPU in 1971, Shakopee was still a small bills. People were very happy with the
town. The town was dotted with empty lots utility service. If there was trouble, we
and pastureland, and most of the 3,500 would always get people back on very
residents did the majority of their shopping quickly. They knew they could talk to
downtown. somebody in the office."
"It was a nice small town," she said. "It The community room in the utility offices,
wasn't a suburb yet. The only mall in the which later was converted to house the
area was Southdale in Edina." engineering department, was a popular
Huth had been hired as a part -time gathering spot in the 1970s. "The senior
customer service representative. When the citizens would hold hotdish suppers and
utility office moved to the new Fourth play cards in the community room," Huth
Avenue location, SPU's billing and customer recalled. "There was one old guy who
service functions had remained downtown cheated at cards at the senior citizens' card
in city hall. Most of the utility's customers games. The ladies would come out and
still came downtown to pay their bills. And complain to us."
most paid in cash.
"The billing machine we had was an old A Golden Era
Burroughs," Huth said. "We posted in the
ledger books by hand. The old manual
envelope - stuffing equipment was down in For SPU and the utility industry in general,
the basement." the 1960s had been a golden era. Economies
The customer service and billing of scaleihat first came to the forefront in the
late 1940s meant that the more electric
departments moved to the Fourth Avenue power residents consumed, the less
utility offices in 1972. Barbara Menden, who expensive it became. SPU cut electric rates
had relocated to the new offices in 1968, four times between 1956 and 1965, due
remembered that "in the 1960s and early mainly to contract extensions with NSP, its
1970s, we knew all the customers by name. wholesale electric supplier. For most of the
We would dispatch trouble crews to the 1960s, SPU purchased electricity from NSP
Schmidt house instead of a street address." at an average of less than a penny per
Menden noted that the utility offices in the kilowatt -hour.
early 1970s stayed open "Friday night until 8 Since SPU sold electric power to customers
p.m. People would cash their paychecks, do
20
for an average of 2.2 cents per kilowatt -hour, SPU was one of the better -run municipal
it returned a tidy profit to the city each year. utilities in Minnesota. By 1972, the electric
During the 1950s, the utility transferred utility served nearly 2,700 customers; it had
more than $350,000 to the general fund. In added 188 new customers during the year, a
the 1960s, SPU managed to fund the 7 percent gain. The average electric
$230,000 cost of its new offices and customer in Shakopee consumed nearly
warehouse on Fourth Avenue from capital 11,500 kwh a year, due in part to the
reserves and still return nearly $500,000 to aggressive marketing of an electric heat rate
the Shakopee general fund. By 1972, SPU by the utility during the 1960s. The utility
was reporting a net annual profit sold nearly 31 million kilowatts during 1972.
approaching $100,000. More than 2 million kilowatts - 6.5 percent
The Utilities Commission had invested of the city's total sales - were provided for
money into improvements in the system. street lights, lighting and heating public
buildings,
SPU had funded a major overhaul of the and running the pumps for the
water system in 1962. The community's well system, all at no cost to the taxpayer.
three wells, dug in 1911, 1945 and 1956, had The water utility served 1,800 customers in
been outfitted with new pumps and motors. 1972. SPU sold more than 200 million
A consultant at the time estimated that the gallons of water from its three wells at a cost
wells would be adequate to serve the city of 44 cents per 1,000 gallons of water. The
until at least the late 1970s. water reserves in the Jordan Aquifer
SPU's reserve fund was frequently tapped underlying the Minnesota River Valley led
for community improvements. In 1967, the utility planners to believe that Shakopee
Utilities Commission transferred $48,000 to would have an adequate supply of fresh
the parks and recreation department for water years into the future.
construction of a new city swimming pool, The 1960s had been good years for the
and $10,500 to the general fund for Shakopee economy. Rahr Malting, which
construction of a new
city hall. �•A �
J i P� v °' �s i 3 2 tL s
A 1968 Electric Utility �� fi ' ,g;*,
} t .14 11 -,..
� , � �
Revenue Bond issue of ,
i{ 4 " w {e ":�+,/- 'j
$150,000 had funded g 4 s
major improvements to '
p [ f , fi. ,tom „ � rz `.' y� 4 q
• x' '� w x- a w
Shakopee 's distribution : �Y
system, necessitated by
the growth of the city
and annexation of qq `
1 �a � fEt � StiY i ` }�
outlying areas. New
•c
1,000 -watt mercury
vapor street lights were tea° y
added whenever etiacla.t a 4a 141n04, _
subdivisions were
platted for
development. Rahr Malting Company
21
had upgraded its Shakopee facility in 1955, Dark Clouds on the Horizon
accounted for an annual payroll of more
than $650,000 by 1965. The Valley
Industrial Park, which had first been platted The world turned upside down for the
in the mid- 1950s, was an engine for electric utility industry in Minnesota and the
economic growth in Shakopee. The Park, United States in 1973. The first Arab oil
which counted such major tenants as crisis, precipitated by the Yom Kippur War
Midland Glass, Owens - Illinois, Kawasaki between Israel and Egypt and Syria, created
Motors Corp., Toro, Air Products and U.S. oil shortages for the first time in the
Chemicals, and Certain -Teed Products nation's history. Overnight in the fall of
Corporation, employed more than 1,000 1973, oil prices doubled, tripled and doubled
Shakopee and Scott County residents in again. Coupled with already existing
1972. inflationary pressures, the oil embargo
Midland Glass alone employed 300 people created strong pressure to raise electric rates.
Double -digit interest rates throughout the
in 1972, with plans to increase that to nearly 1970s contributed to even higher electric
500 employees by 1976. The firm in 1972
was in the midst of an $8 million expansion prices.
that would make it the county's largest The rise in electric power costs had been
taxpayer by the mid- 1970s. An increasing developing for years. Between 1964 and
number of Shakopee residents were driving 1972, Presidents Lyndon Johnson and
to jobs in Burnsville, Bloomington and the Richard Nixon attempted to fight a war in
other booming southern suburbs of Vietnam on a peacetime economy. The
Minneapolis. resulting inflation from the nation's
Shakopee residents took pride in being economic policies trickled down to every
Minnesotans in the early 1970s. A national
sector of the U.S. economy. The Johnson tax
audience of television viewers knew the increase of 1968, designed to help pay for
Twin Cities from the television exploits of the war in Southeast Asia, hit particularly
Mary Richards on the Mary Tyler Moore
hard at electric utilities such as NSP that
were building power plants to meet
Show, and the Minnesota Vikings were increasing demand.
almost an annual fixture in the professional
football Super Bowl. Minnesota's boyish Finally, environmental costs dramatically
Governor Wendell Anderson was on the increased the cost of building coal -fired
cover of Time Magazine. Shakopee's own steam electric power plants, the foundation
Maurice Stans was President Richard M. of baseload generation in Minnesota and the
Nixon's secretary of commerce. Shakopee Upper Midwest since the 1930s. The first
residents of the time could have been Earth Day took place in 1970, with some of
forgiven for thinking that the good times the most fervent environmental
would continue indefinitely. demonstrations occurring on the University
of Minnesota campus. Within two years,
Congress had passed and President Nixon
had signed landmark air and water
pollution control legislation.
22
x
i �!
S..
I
P
't
tr a Commission the issue of NSP's service to
industrial customers in the Valley Industrial
1 -,/ '
c41 Park. NSP had insisted on the right to serve
' �,. s ue " `€ ° � � <
rt ., Yi 3 = , industrial customers, dating back to the
t f" original wholesale contract Shakopee had
P ' e / 4 signed with Minneapolis General Electric
�� 4` Company, NSP's predecessor, back in 1913.
} ` { In the 1960s, NSP had built its Blue Lake
S �' �1 # 3 ¢ J
Substation specifically to serve the industrial
, '
. 7 k ,,. park.
( Lee Monnens
Bishop and the other Commissioners were
Within a two -year period, wholesale power wrestling with another problem during the
rates to Shakopee had increased nearly 15 NSP negotiations. Several aldermen wanted
percent. When NSP filed for another to sell the municipal utility to NSP and reap
wholesale power increase in 1973, Shakopee a one -time financial windfall. Bishop's goal
acted. SPU joined 13 other NSP municipal was to keep the utility independent and the
customers to form the River Electric Utilities Commission free of local politics.
Association to oppose the NSP wholesale "One issue that was always pervasive was
rate increase. Chaska, St. Peter, Anoka, SPU's autonomy," Bishop said. "I wanted to
North St. Paul, Arlington, Winthrop and ,,
see it kept separate. We were in charge of
Lake City were among Shakopee's seeing to it that the city got safe, reliable,
neighbors in the River Electric Association. inexpensive electric power. That was our f
In the course of the association's goal, to run this as a business and mesh it
intervention with the Federal Power effectively with city operations."
Commission appealing NSP's rate increase, Shakopee threatened to acquire NSP's lines
Shakopee's attorneys discovered that NSP the city through the use of its eminent
was charging Midland Glass in Sha domain powers. In the midst of E
less at retail than it was charging Shakopee negotiations, NSP in January 1974 raised
at wholesale, explained Bill Fahey. Now a wholesale prices by 15 percent. NSP 1
Minneapolis at financial advisor, Fahey was followed that with a 16 percent increase in
hired as Shakopee's city administrator in the January 1975. After fruitless negotiations
fall of 1973. with the Minneapolis utility, Bishop and his
When SPU found out that NSP was giving fellow Commissioners convinced the City to
preferential rates to its own customers sue NSP for anti- competitive actions (known
within the city, it brought to the Utilities as "price squeeze ") in early 1976.
24
Before litigation could be heard before a obvious to NSP's battery of courtroom
judge, Lee Monnens died of a fatal heart attorneys that Lord was inclined to see the
attack in March 1976. A Shakopee resident anti- competitive case as one of the big
his entire life and 25 -year veteran of utility corporation against the little guys from
work in his hometown, Monnens had Shakopee. On the first day of hearings in
worked his way up from the line crew to the Lord's courtroom, the flinty judge mused
superintendent's position in 1965, and his out loud that if he didn't hear any good
title changed to manager in 1971. Monnens' reasons to the contrary, he would likely rule
sudden death put the lawsuit on hold for six in favor of SPU and order NSP to pay $1
months. million in damages.
Ed Leaveck, the superintendent, served as "That afternoon, NSP said, 'Let's settle,'"
interim manager until Lou Van Hout, joined Fahey recalled. NSP began serious
SPU in the fall of 1976. A Michigan native negotiations with Shakopee in early January
and engineering graduate of the University 1977. The Minneapolis utility agreed to
of Detroit, Van Hout had worked for the reimburse Shakopee $50,000 for legal fees.
City of Detroit's Public Lighting Department Shakopee arranged to purchase a
since 1968. distribution line within the city limits from
"The first couple of days I was in the office," NSP for $11,000. Most importantly, NSP
Van Hout recalled, "all the files were on the agreed to let Shakopee have a second point
floor with attorneys going through them." of service from the Blue Lake Substation,
which would allow SPU to serve customers
When the price squeeze lawsuit against NSP in future years in the Valley Industrial Park.
finally did get to court, it appeared on the
docket of U.S. District Court Judge Miles "We did settle on a positive note," Van Hout
Lord. One of Minnesota's most populist said. Shakopee got everything it wanted,
judges, Lord had made his reputation Fahey echoed.
fighting for the interests of little people SPU's 1977 settlement with NSP laid to rest
against big corporations. He had garnered one of the two major legal issues that the
national publicity in the contentious Reserve Utilities Commission dealt with during the
Mining Company litigation in northern 1970s. The second, territorial dispute with a
Minnesota, ruling in no uncertain terms that rural electric cooperative neighbor would
the North Shore taconite mining company take more than two decades to resolve.
was polluting Lake Superior.
Fahey, who had watched with interest the
City's case after he left the job of Shakopee
City Administrator, said it quickly became
25
CHAPTER 6 - The Territorial Imperative
In 1971, the City of Shakopee "We had an old A -frame on the back of a ,.
annexed a large portion of the largely rural utility truck and used that to decorate the
Eagle Creek Township immediately to the town Christmas tree," Pass said. "The
east of the city limits. Overnight, the service man drove a 1970 half -ton Chevrolet
physical size of Shakopee grew from just with a ladder mounted on a pedestal in the
over 4 square miles to nearly 30 square bed and a 1968 Chevrolet pickup." Line
miles. By 1973, the service territory of SPU, crews also had the use of a wood chipper,
which included rural areas outside the air compressors and an R -30 DitchWitch for
annexed property, was 48 square miles. digging trenches.
The increased workload to serve the rapidly "In 1972," Pass said, "the town pretty much
growing areas to the north and east of ended at Shakopee Avenue. I guess 10th
Shakopee meant hiring more people to staff and Marschall was about as far out as it
the utility. At the time of the annexation, went back then. Everything south of there
SPU was operating with essentially the same has gone in since 1972 — Meadow's
size work force it had employed since the Addition, Eagle Bluff, East View — that's all
formation of the Utilities Commission 20 new"
years before. Superintendent Lee Monnens, Much of the development south of Shakopee
Barbara Menden and Nancy Huth made up would come in the 1980s. In 1972, the Cit
the office staff. Line crew foreman Ed
immediate concern was to expand service
Leaveck had one crew, consisting of John north and east of old Shakopee. Because of
Dellwo, Ray Friedges, Joe Hunterman and
Ray Lebens. John Pumper answered service the underlying geologic strata, that was
often a difficult proposition.
calls, and Ray Friedges doubled as the shop
foreman. "Everything north of Fourth Street is
limestone," Pass explained. "We spent a lot
When Gene Pass joined the line crew in the of time jackhammering. In 1974, when we
spring of 1972, SPUC was gearing up to built the line to the industrial park, we
serve the anticipated growth in the city The worked shifts from early morning to late at
24- year -old Pass, who grew up on a farm night. We would keep the jackhammer
south of Shakopee, was working at the Rock going 12 -14 hours a day. We would go
Springs Bottling Company when the job on down the top couple of feet and then hit
the line crew was posted. Pass recalled that limerock. It looked like chalk."
SPU at the time had only a single hydraulic
bucket truck, but had purchased a digger- John Dellwo preceded Pass as a line crew
derrick truck the previous year member by two years. A Shakopee native,
26
Dellwo joined SPU in 1970. One of his (MVEC). Formed in the late 1930s as part of
worst memories of nearly 30 years with the President Franklin D. Roosevelt's initiative
utility was restoring power following ice to bring electric power to the farm, Jordan -
storms, which usually occurred in based MVEC served customers in Scott,
November and March. Carver, LeSueur and Sibley counties. At the
"The ice storms were miserable/' Dellwo time of the 1971 annexation, MVEC had
recalled. "They were always a problem. We approximately 500 customers in the annexed
would be beating wires with insulated area. But the area also contained prime land
fiberglass poles to knock the ice off because for both industrial and residential
the wind was causing them to gallop out of development.
control. The ice would build up about an At first, it appeared that negotiations
inch thick, and it would just keep adding between SPU and the cooperative would
on." proceed quickly and amicably.
Ice storms became less of a threat to Superintendent Lee Monnens worked with
Shakopee's distribution system after 1974. the MVEC board in 1972 and 1973 to come
SPU, like many utilities in Minnesota, began to an equitable split of the annexed property
installing underground distribution cable to "Lee and MVEC reached the agreement,"
serve the new subdivisions and recalled Bill Fahey, the Shakopee city
developments surrounding the city administrator at the time. "They had it all
Undergrounding distribution solved two done and ready to sign when the Legislature
problems. It lessened the danger to the passed the Service Territory law. After that,
system from the weather. And it reduced the MVEC attorney said, 'Let's wait.'"
the visual impact of overhead electric wires. The Minnesota General Assembly passed
"Undergrounding was perhaps the biggest the Service Territory act during the 1974
change I saw during my career," Gene Pass session. Municipal utilities and rural electric
said. "After the mid- 1970s, everything went cooperatives had been fighting for years
underground." about who would serve fast - growing rural
"Going from all overhead to underground territory surrounding small towns. In
was the biggest change," John Dellwo Shakopee's case, the legislation would solve
added. "It was all aerial back then. And nothing. It would take nearly 20 years and
probably an even bigger change was getting another court case before Shakopee and the
the equipment to handle that kind of electric cooperative finally agreed to a
underground operation." settlement.
For Shakopee, the objective of annexing the
township east of town was to gain access to
Expansion North and East industrial customers in what had become
known as the Valley Green Industrial Park.
Wally Bishop, who served on the Utilities
The expansion of Shakopee's city limits in Commission at the time, remembered that
the early 1970s created another problem for Valley Green was a metaphorical line in the
the utility. Much of the rural area east and sand for SPU.
north of Shakopee was served by the
Minnesota Valley Electric Cooperative "Lee Monnens and I negotiated the territory
27
{{
`s A S
4 R t , 4T ' " We got a level playing field,"
r ' ; R r � ' `' Fahey said "Building that
„ ' '' 1 �� � '� _ N g l gave SPU a major
• 1•. i . > ..y -r
R, . _ 1 ? foothold in the Valley Green
`'' '' ." Industrial Park." For
40 F r-
Shakopee, the new line was
V ../
i," / ` � ` an accomplished fact in its
-. ;i v dispute wth MVEC over he
i
' annexed service territory,
although negotiations and
Ti,
court cases would continue
for another 17 years before an
agreement was finally signed
in 1991.
Canterbury Park
Negotiations continued
throughout the mid -1970s 2 :
exchange with MVEC," he said. "We said, until Shakopee sued the electric cooperative -,
'Valley Green is Shakopee's'. We said that in condemnation proceedings in 1978.
any new industries that come into the park, Under Minnesota law, cities have the power l
we want to serve them." to take land at appraised value if that land is
needed for municipal improvements. The
Bishop, Monnens and Fahey came up with p p
an audacious plan to lay claim to the next year, the Minnesota Supreme Court
industrial park. In the spring of 1974, SPU ruled in Shakopee's favor, asserting that the
crews began building a distribution line municipal utility had the right to serve the 8 -'
from the Shakopee Substation to the park. square miles north and east of Shakopee
The line paralleled MVEC and NSP lines. served by MVEC. _°
The crews built the distribution line from Shakopee wasn't the only municipal utility
March -May 1974. The new Service Territory in Minnesota waging service territory battles
law did not take effect until July 1974, and during the 1970s and 1980s. Municipal -
SPU energized the new line in mid -June. utilities in Olivia and St. Peter both
contested service territory issues with
"NSP was furious that we built the line," electric cooperatives during the period. And
Fahey said. The Minneapolis utility NSP, Moorhead Public Service and Cass
complained to the Minnesota Public Utilities County Rural Electric Cooperative engaged
Commission (MPUC) that SPU had not ,-
in a three -way fight over serving a shopping
finished the line before the new law went center near Moorhead.
into effect. But SPU was deadly serious '
about laying claim to the industrial park. In
1975, Fahey, who doubled as the City's Negotiating a Fair Price
Economic Development Director, met with
the developer building a facility for
Kawasaki Motors Corp. and pitched SPU's The Utilities Commission spent much of the
industrial rates to the new tenant. 1980s negotiating an equitable price for the
28
the exchange to take place. And we knew "very time consuming. It was tough to
we had to get it done because of the make it equitable with the existing
projected growth. We knew the growth was customers. We spent a lot of time adjusting
coming. There were already discussions the rates. I remember that being the hardest
taking place about the new bridge (over the part, plus all the money we had to spend -
Minnesota River), and that was going to $2 million and change to build the
make it a whole new ball game." infrastructure to serve the new customers.
MVEC's rates in 1983 were 40 percent higher But the hardest part was getting those rates
than those charged Shakopee. b Y Shako ee. There fair.
were approximately 500 residential Twin Cities attorney Andy Shea was SPU's
customers involved in the annexed area. lead counsel in the MVEC negotiations.
After the Minnesota Supreme Court ruled in
"We met with the board of MVEC" in 1984, Shakopee's favor, the matter had gone to the
Kirchmeier said. "We made a proposal face- Minnesota Public Utilities Commission to
to -face in Jordan. We approached them not determine compensation.
as adversaries. We told them we'd pay a
fair, reasonable price. It was an honest, fair "We went through hearings before an
approach." administrative law judge," Shea explained.
Shakopee also offered to exchange a rural "Two- thirds of the way through the case, the
line that served farmers from Shakopee to parties decided to settle. We filed the
Prior Lake. The line had been built by a settlement, and the MPUC approved.
group of Prior Lake farmers in the 1950s, The agreement that SPU eventually signed
and SPU had provided the approximately 50 with MVEC in 1990 provided that the
farms along the line with electric power municipal utility pay the electric cooperative
since then. the value of the lines acquired plus an
allowance for loss of revenue to the
Jim Kephart joined Kirchmeier and Jim cooperative for the existing customers in the
Cook on the Utilities Commission in 1985. acquired area, plus all new customers added
Kephart, a Richfield native who had moved over the next 10 years.
to Shakopee in 1972, had helped inventory
the annexed land in the early 1970s when he Shakopee agreed to buy power from
was working for a Twin Cities engineering Cooperative Power for the annexed area for
firm, 12 years. SPU's new customers in the
"I got to know the people at SPU fairly well annexed area would pay rates 20 percent
lower than what they had been paying — but
back in the early 1970s," Kephart said. still 20 percent higher than existing SPU
"They were a well -run organization. _ They
�� customers paid — for four years to help pay
were small, but they had good employees. for the settlement.
Kephart remembered that the negotiations "They knew we were sincere," Kirchmeier
with MVEC in the mid- to late -1980s were
30
described the negotiations with MVEC to operating revenues of nearly $6.3 million.
the Minnesota Municipal Utility Association . Retained earnings in 1990 had climbed to
in 1991. "They recognized our right to take $6.44 million.
the territory over; we recognized their right Since its inception, the Utilities Commission
to a fair settlement. I am very pleased we had returned a portion of its revenues each
reached a negotiated settlement." year to the City's General Fund. In 1983, a
Kirchmeier also stressed the urgency of year in which the municipal utility had
getting the negotiations completed because reported operating income of just under
of the "fast growth phase" the city was $365,000, the Utilities Commission returned
anticipating. "The longer we waited, the $266,058 to the City of Shakopee. That same
more expensive it would get," he said. year, the value of free street lighting service
For Kephart, settlement of the dispute with to the City was $26,093, and the municipal
MVEC was the cap to a fulfilling term as a utility also provided $10,000 worth of
Commissioner. "My last act as president of maintenance for the street lighting service.
the Utilities Commission was to sign the The growth of Shakopee and its municipal
agreement with MVEC," he said, "having utility in the 1990s would make those
worked on the inventory of the annexed revenue and retained earnings seem paltry
area 20 years previous." by comparison as the decade wore on.
Into the 1990s
With the NSP and MVEC settlements finally
behind them, the Utilities 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 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. The utility also
reported 1980 retained earnings of $1.82
million dollars.
By 1985, the utility's operating revenue had
increased to $4.6 million. Retained earnings
had more than doubled, to more than $3.96
million. In 1990, the utility reported
31
t k t
t ! Q
CHAPTER 7 - Keeping Up With Growth
Shakopee in 1985 was a community roller coaster with 2,800 feet of track and a
poised for tremendous growth. After 70 -foot drop on the first hill.
registering a slow but steady population Eight years later, in March 1984, Shakopee
increase from 1950 to the late 1970s, the was chosen as the site of Canterbury Downs,
city's population passed the 11,000 mark in Minnesota's first horse racing track.
the 1980 census. Minnesota Racetrack, Inc., the developers,
The community's industrial and economic located the $70 million horse racing facility
base was evolving rapidly in the mid- to late near the Valley Green Industrial Park.
1980s. Rahr Malting, the city's mainstay Racing at the track began in the spring of
employer during the 1940s, 1950s and 1960s 1985.
was no longer competitive with newer At about the same time, the Mdewakanton
malting facilities elsewhere. By 1985, the Band of Lakota opened the Little 6 Bingo
firm employed only 85 people. Midland
Parlor in nearby Prior Lake, which was later
Glass, SPU's adversary in the industrial park converted into a full-scale gambling casino.
dispute with NSP, had a work force of more
The entertainment dollar flowing into Scott
than 400 people in 1985. Certain -Teed County after the mid -1970s further
Products Corporation, which made roofing diversified the regional economy and
shingles at its plant in the Valley Green provided a strong boost to retail
Industrial Park, employed more than 200
development in Shakopee.
people.
Shakopee at the time was experiencing a
diversification of its economy that would Joint Action for the Minnesota Valley
continue through the next 15 years. In 1984,
the giant retailer K -Mart had begun
When Jim Cook was appointed a
construction of a major distribution center pP
on County Road 83 that would contain 23 Commissioner in 1983, Shakopee was poised
acres under roof by 1990. The city also was for rapid growth. Cook, an Indiana native,
becoming the focus of a major entertainment had done his undergraduate work at the
{ and recreational industry for nearby University of Wisconsin and had come to
Minneapolis -St. Paul. Shakopee in 1971 to work for the Gedney
Company. Cook noted that he and fellow
In May 1976, Valleyfair opened just outside Commissioners Barry Kirchmeier and Wally
Shakopee. The amusement park boasted the Bishop were anticipating rapid growth after
largest ferris wheel in the Midwest, and a
the mid- 1980s.
32
Minnesota Municipal Poiiiiia Agency
Through most of the period from 1973 to the
early 1990s, the Utilities Commission was
primarily concerned with settling SPU's Minnesota were beginning to band together
disputes with NSP and MVEC. Cook to find a more competitive power supply. In
recalled that he spent the majority of his 1992, eight Minnesota municipal utilities —
time during his first two terms in office Anoka, Arlington, Brownton, Chaska,
negotiating the agreement with MVEC: LeSeuer, North St. Paul, Olivia, and
Without the service territory eventually Winthrop — created the Minnesota Municipal
transferred to SPU in 1992, "this utility Power Agency (MMPA) to keep energy
would have been a small island," Cook said. supply costs low for their residents. MMPA
"We did everything through consultants. It was an outgrowth of the River Electric
was very cordial, very slow and very Association (REA), which had been formed
methodical. But it became increasingly in 1977 to protest wholesale rate increases
important for us." and to help its members negotiate power
supply contracts with NSP.
When the agreement was signed with
MVEC, Shakopee faced a major decision on Shakopee had belonged to the River Electric
its power supply. As part of the agreement, Association since its establishment. Unlike
SPU had contracted to buy electric power REA, however, MMPA was a full- fledged
for the acquired territory from Cooperative Joint Action Agency, which meant it had the
Power Association (CPA), MVEC's power authority to negotiate power supply
supplier. contracts for its members with other power
suppliers, or even to own partial shares of
Meanwhile, the environment was changing electric power plants itself.
in the electric utility industry. In 1992,
President George H.W. Bush signed the That ownership obligation concerned SPU.
Energy Policy Act, one of the first major Chaska, Shakopee's neighbor, was the
restructuring initiatives in the electric utility spearhead behind the formation of MMPA.
industry in decades. The act expanded the David Pokorney, Chaska's city
authority of the Federal Energy Regulatory administrator, served as the first chairman of
Commission (FERC) to order transmission the new power agency.
sellers to provide transmission services to "Chaska basically formed MMPA," said Jim
customers. Cook. "Shakopee declined to be a full
Municipal utilities had long argued that member of MMPA, but we said we'd be a
investor -owned utilities, which owned most customer."
of the transmission grid in Minnesota and MMPA planned to purchase the bulk of its
the nation, would not allow their high- power supply from Rochester Public
voltage transmission network to be used for Utilities' Silver Lake plant. The power
wheeling power supplies from competing agency would supplement its 100 - megawatt
utilities. The Energy Policy Act of 1992 was purchase from Rochester with 30 megawatts
the first federal legislation to begin of power from United Power Association's
encouraging competition in the wholesale (UPA) Coal Creek plant and with surplus
electric power market. power purchases from members of the Mid -
At the same time, municipal utilities in Continent Area Power Pool (MAPP).
33
1 A
_ 2
� t
"It was a major change for Shakopee," Van
Hout recalled. "SPU decided to become a
customer of MMPA with the stipulation that
we would be served by UPA in case of
problems."
"It was a tough decision," Jim Cook said,
"but it was a very big dollar savings on our
part."
UPA agreed to stand behind the MMPA
contract, and MMPA guaranteed Shakopee
that rates would be capped at 95 percent or
W
less than the wholesale power rate offered
v
by NSP.
Coal Creek Plant "That 5 percent difference between the
MMPA rate and the NSP rate was the
A New Power Supply Contract number we were happy with," Van Hout
said. "Chaska is a full member of MMPA,
and they have had about 10 percent lower
By 1992, Shakopee had been a wholesale wholesale power costs than SPU, but
power supply customer of NSP and its Chaska took a risk. SPU is more
predecessors for nearly 80 years. The NSP conservative. But our rates have been
contract was up for renewal that year, and cheaper than those offered by NSP, so that
MMPA was offering SPU lower rates. was a good business decision."
Although the relationship with NSP had The Utilities Commission signed a contract
been rocky since the mid- 1970s, the with MMPA in July 1995. The contract runs
Minneapolis utility had been an extremely through December 31, 2005.
reliable power supplier for decades. The 1991 agreement with MVEC required
"We had gotten power from NSP for many, SPUC to buy electric power for the
many years," Cook explained. "It was a "acquired area" from MVEC's supplier,
comfortable relationship," Lou Van Hout Cooperative Power Association, until 2003.
added. In 1997 Cooperative Power merged with
Still, the opportunity to purchase electric United Power Association to form Great
power at a lower rate from MMPA was an River Energy. The generation and
attractive option. Van Hout and his staff put transmission cooperative supplied all of
a lot of effort into investigating the offer in SPU's wholesale power needs by 1998.
1992. Eventually, Van Hout recommended However, under the terms of another 1991
that SPU consider entering into a contract agreement, this one with NSP, SPU will
with MMPA to purchase power, but not to revert back to NSP, now XCEL Energy, as its
become a full member of the Joint Action power supplier for the "acquired area" for a
Agency. six -year period beginning in 2003.
34
t ,
Ete6ritosilh
taNA
b
side of Shakopee. The new substation was
initially planned for a site m southern "n �` " Shakopee on Scott County Road 78 between
� County Roads 17 and 79. At first, the
Lou Van Hout, Utilities Manager Utilities Commission had considered
locating the substation m or adjacent to the
megawatts. But even then, the utility was Valley Green Industrial Park, but
experiencing kilowatt -hour growth in excess Commissioner Barry Kirchmeier explained
of 12 percent. that locating the substation near the
"I think back to my interview with Lou," industrial park "would be too far away from
Adams said. "He gave me the then current our present circuits, and greatly increase the
Electric System Study to review. I made the costs."
comment after the interview that I'd look Commissioner Jim Cook noted that the new
forward to coming here because it would be substation would increase reliability. "Once
a varied and dynamic work environment. It it is built," Cook said in the spring of 1994,
shows you how naive we all were, because I "the entire City of Shakopee can be
don't think the projections of growth in that supported by two substations, which means
study were half of what they actually turned we won't have the power outages we've had
out to be." in the past. Any two of the three should be
One reason Adams was hired was to oversee able to support Shakopee's entire load for a
expansion of SPU's electric and water short period of time."
infrastructure in anticipation of the expected After public hearings in the fall of 1995, the
growth of the system. Preparation was new substation was sited on Country Road
already underway in 1992 for the 79, just over a half -mile south of Country
construction of the Bloomington Ferry Road 78. SPU took great care to get
Bridge over the Minnesota River, as well as landowner input in the siting process, and
improvements to turn Highway 169 into a the Utilities Commission made every
four -lane freeway connecting Shakopee to attempt to minimize noise and appearance
Minneapolis. impacts. "It won't be an eyesore," Van Hout
"Two of the first things I worked on when I assured local residents.
started here was to arrange to have a fourth Land purchases for the new South Shakopee
bay put in at the original Shakopee Substation were completed in August 1996.
Substation and to work with NSP to actively R.W. Beck, a national engineering consulting
energize a second circuit out of the Blue firm with close ties to public power utilities,
Lake Substation," Adams said. designed the substation. Delta Star, Inc. of
By 1994, SPU had decided to build a third Belmont, California was awarded the bid for
substation on the rapidly growing south providing the new substation's transformer.
36
Construction began in the fall of 1996, and a 'It Means Access'
crane lowered the new transformer into
place in early March 1997. By June 1997, the
substation was operational. On October 6, 1995, the Minnesota
"The existing substations are just about fully Department of Transportation officially
loaded now," Van Hout said in the spring of dedicated the Bloomington Ferry Bridge
1997. "With the new substation, we have over the Minnesota River at Shakopee. The
room to grow." new four -lane freeway bridge spanned the
full expanse of the river and opened
While construction was underway on the Shakopee to a quick commute to
South Shakopee Substation, SPU crews Minneapolis -St. Paul, Bloomington, Eden
upgraded circuits and lines to meet the city's Prairie and other suburbs south and west of
growing needs. Throughout the summers of the Twin Cities.
1996 and 1997, line crews worked on a
number of overhead and underground The $42 million bridge made Shakopee a
distribution line projects. natural candidate for the suburban
expansion that had been pushing south and
They relocated and rebuilt feeder circuits west of Minneapolis for decades. The $35
along Scott County Roads Number 16, 77, million Shakopee Bypass, which opened in
42,15 and 78. Crews built new facilities for the late summer of 1996, served to expedite
feeder circuits across the Shakopee Bypass at the flow of traffic across the river between
County Roads Number 18,16,17, 79, 77 and Shakopee and its urban neighbor to the
15, as well as in the Valley Green Industrial northeast.
Park. In a cooperative agreement with the
City of Shakopee and downtown businesses, "It means access," said Shakopee Mayor
the line crews began a major project of Gary Laurent. "And access means
undergrounding circuits within an eight- everything. The area businesses will have a
block area of downtown Shakopee. whole new market."
"We went from four substation exit circuits Minnesota DFL State Representative Becky
in 1992 to six exit circuits in 1994 to 10 exit Kelso noted that the lack of easy access
circuits in 1997," Joseph Adams said. "In between Scott County and the Twin Cities
1992, we had three circuits at the Shakopee had long been "an impediment to economic
Substation. Now we have four. We had one development."
circuit at the Blue Lake Substation. Now we With the new bridge and bypass, that would
have two. And the new South Shakopee no longer be the case. From 1997 to 2002,
Substation added four circuits." Shakopee experienced more growth than it
SPU's aggressive initiative to upgrade the had in the half- century since World War II.
City's electric infrastructure in the mid -1990s SPU was ready to serve that growth.
was about to pay huge dividends.
37
CHAPTER 8 ® IKee inq Up With Growth
The opening of the Bloomington and the mayor and city council took great
Ferry Bridge in October 1995 and the pains in the latter half of the 1990s to retain
improvements made to the Shakopee Bypass the small-town character of the community.
in the following year created all of the SPU worked closely with city planners to
elements necessary for sustained economic redevelop the city's downtown, completing
development in Shakopee and surrounding a major project in 1995 -1996 that replaced all
townships of Scott County. of the overhead distribution lines serving
The transportation enhancements coincided downtown with underground cable.
with a booming Minnesota and U.S. Population growth went hand -in -hand with
economy and placed Shakopee squarely in economic development after 1995. The city's
the path of the suburban development population swelled to an just over 20,500
pushing outward from Minneapolis. people by the time of the 2000 federal
"We experienced explosive growth," census, with even more explosive
explained Joseph Adams, SPU's population growth predicted for the first
Administrative Assistant. It really pumped decade of the 21st century
up in the space of five years' time. It is all "We have nearly doubled our population in
related to the growth of the Twin Cities." the last 10 years," Adams said. "And we are
Shakopee was never a Minneapolis suburb, told it will nearly double again in the next 10
years. "
In 1995, SPU served just over
6,500 electric meters. By 2002,
when the city celebrated 100
years of ownership of the
municipal utility, SPU served
j slightly over 12,000 electric
tito 111 514, meters. The utility's summer
4. peak load in the mid -1990s
F14 mai a* am ail
;y — 0, averaged about 25 megawatts.
By the summer of 2002, the
forecast peak load was 70
,., megawatts.
N Much of the new residential
Downtown Shakopee Beautification Project development took place in the
38
service territory SPU acquired from MVEC east to west, the business park became one
in 1992. Seemingly overnight, tracts of land of the hottest development sites in the Twin
that had been farm fields for generations Cities during the second half of the 1990s.
blossomed with new houses. In 1999, A 1997 study by the Metropolitan Council in
developers built 500 new homes in one Minneapolis found that the average
Shakopee subdivision alone. commute time in the Twin Cities was 22
minutes. Valley Green boasted that the
`The Grass IS Getting Greener' average commute to the business park from
Bloomington was eight minutes, 10 -12
minutes from Richfield and Edina, 15 -18
With the population growth came new minutes from South Minneapolis and 20 -22
business development. Much of that minutes from Minnetonka and Plymouth.
economic expansion was centered in and The result of the increased access to the
around the Valley Green Business Park. south and west suburban Twin Cities was a
Because SPU had negotiated the agreement steady expression of interest in the business
with NSP to serve new tenants of the park. Valley Green Project Director Jon
business park, and the new service territory Albinson pointed out that access wasn't the
law, most of the development after 1993 only factor attracting new businesses to
meant that new industrial customers were Shakopee.
served by SPU. "At the heart of it, companies don't
Even before the dedication of the new necessarily buy a site," Albinson said.
bridge and freeway, SPU's industrial and "They buy a location: the amenities of an
commercial load was growing. In 1993, the entire community; availability of work force;
Minnesota Women's Correctional Facility — roadways; moderate taxes; and easy access
an SPU customer — doubled its bed capacity. to suppliers and customers." The business
St. Francis Regional Medical Center, another park began advertising that "the grass really
SPU customer, in 1994 announced is greener on our side of the river."
\construction of a new medical complex on Developers from the Twin Cities and
the south side of Shakopee. That same year, Midwest quickly began erecting speculative
Opus Corporation, a major Twin Cities buildings in the business park, most
developer, completed construction of a designed to attract local businesses from the
300,000- square -foot facility for American seven - county metropolitan area interested in
National Can Company. expanding or relocating. The majority of the
By the summer of 1995, Valley Green new speculative buildings were 60,000 to
Business Park was the largest planned 150,000 square - foot facilities that were
business environment in the Twin Cities suitable for light industrial or distribution
metropolitan area. Stretching nearly 2 miles purposes.
south of the Minnesota River and 3 miles
39
ADC and Seagate
In the fall of 1995, ADC ;,, � ' V '
T announced the �, ,,0 „ � - C 0. w
purchase of 8.26 acres of land in Valley 'ti° t "", ,1- te 't
Green Business Park. The Eden Prairi -Ai "" ���
.tom �,
manufacturer and distributor of broadband - }
f �"
telecommunications networks and 0 , , , _`�
equipment announced plans to build a E
90,000- square -foot distribution facility in y
the business park. 8
: h Q
ADC's interest in Shakopee was an ADC Facility, Shakopee
indication of the changing nature of
economic development in Scott County. For Less than a year after ADC opened its new
much of the city's history, Shakopee had facility, Seagate Technology broke ground in
been a manufacturing center. But during the June 1998 on a 280,000- square -foot
1990s, the Twin Cities began to establish a manufacturing and research and
reputation for high technology development building in the business park.
manufacturing and distribution. A California -based Seagate, the world's largest
biomedical corridor developed along U.S. producer of computer disk drives,
Highway 52 between Minneapolis and consolidated the operations of several of its
Rochester, and a high technology plastics Twin Cities operations under one roof in
manufacturing industry located along Valley Green. Seagate's new High
`
Interstate 94 between St. Paul and Performance Products Group headquarters
Menomonie, Wisconsin. opened in August 1999. Also, ADC
expanded several times and then bought the
In 1997 and 1998, that high technology building next door and filled it with
growth came to Shakopee. Shortly after manufacturing and office facilities.
opening its new facility in Valley Green
Business Park, ADC Telecommunications For SPU, the ADC and Seagate Technology
purchased an adjacent 22.5 acre parcel and expansions at Valley Green meant the
began immediate construction on a 345,000- addition of large industrial loads to the
square -foot office, manufacturing, and utility's system. Each ADC plant consumes
research and development facility about four megawatts of electric power;
Seagate Technology's disk drive
Rick Palmer, the company's director of manufacturing facility consumes five
corporate facilities, noted that "in addition to megawatts. By 2000, tenants of Valley
the developability of the land and good soil Green Business Park were consuming nearly
that is environmentally clean, Valley Green 40 megawatts of power, nearly equivalent to
fits our existing shipping patterns, including SPU's entire electric power load in 1995.
ease of access to southwestern truck routes
and close proximity to the airport.”
40
Dean Lake Sub
, di ngle
The spectacular growth of electric 1 isiveralft, fa. .
power demand in Shakopee , S g
averaged 13 percent annually from rt E f
1992 to 2002, more than double the
increase in the Twin Cities and
nearly three times the average rate •
of kilowatt -hour growth nationally. f
, I it , [LI
The spike in demand meant that z r`
SPU needed to build a new
substation. In the late summer of ,
1998, about the time that
construction of the new Seagate Seagate Facility, Shakopee
Technology plant at Valley Green
Business Park got underway, SPU dedication.
announced the planned construction of While the Dean Lake Substation was under
Dean Lake Substation. Located south of the construction, SPU crews continued to
Shakopee Bypass, west of Scott County Road rebuild and upgrade the city's distribution
83, and just north of and adjacent to County system. Electric projects underway in the
Road 16, Dean Lake Substation would be the late 1990s and early 2000s included
fourth on the Shakopee electric grid. upgrading power lines in the older part of
"There's just been tremendous growth in the city from 4,160 volts to 12,470 volts,
this city," Lou Van Hout explained the need upgrading circuitry serving Valley Green,
for the new substation. "We at SPU have to and improving circuits and switches for the
stretch ourselves to keep up with it. We new residential developments east of old
have to do that as part of a growing Shakopee.
community" "We always think we're providing a little
Ground was broken for the Dean Lake breathing room," said Joseph Adams, "and
Substation in the late summer of 1999. The then the growth just ramps up again."
$2 million facility, which stepped down
electricity from the adjacent 115,000 -volt
transmission line to a more usable 13,800 Financing Growth
volts for distribution to residential and
industrial customers in east Shakopee, was For 25 years, from 1968 to 1993, Shakopee
energized and placed in service on May 19, paid for improvements to its electric and
2000.
water system from the utility's retained
"I'm certainly pleased to have this in place earnings. "The bond issue in 1968 was the
for this summer and beyond to meet the last bond issue before 1993," said Lou Van
growth of this area," Utilities Manager Van Hout. "We financed all of our
Hout said at the new substation's improvements internally."
41
The utility issued $4.25 million in bonds in "Everybody shared duties," Fox explained.
August 1993 to pay for construction of the "We spent a lot of time just giving people
South Shakopee Substation and related titles, duties and responsibilities. I worked
electric system improvements. SPU went to for much of my first year implementing a
the bond markets again in late 1999 to raise new billing accounting system."
another nearly $10 million to pay for the With annual revenues approaching $20
Dean Lake Substation, as well as electric million, SPU has the financial cushion to
improvements and two new water storage institute change to keep up with the growth
facilities. of its host community. Fox noted that the
The increasing complexity of the utility's Commission's investment in future
financial affairs necessitated revamping the computerization will pay definite dividends.
way SPU did business. In 1999, the "We need to make major strides in office
Commission asked a Madison, Wisconsin technology," Fox said. "That will be one of
utility consultant to recommend ways SPU my big projects down the road."
could become more efficient. One of the first
recommendations made by the consultant Commissioner Dave Thompson said he
was that the utility hire a finance manager. agreed with Fox's assessment of the
necessity for computerization of the utility.
Jerry Fox joined SPU in the newly- created "Computers are scary when you've done
position in the spring of 2000. A Decorah, „
Iowa native, Fox worked for 22 years in the everything manually for years, he said.
"But right now, everything is designed to
finance department of Muscatine Power & keep up with growth. We're in a change
Water, a municipal utility in Iowa. mode. Change is coming to an organization
"It was a brand new position here when I that has been doing things the same way for
started," Fox said. "But growth has made 30 years yet the people who work for this
this a much bigger utility. We're getting utility have adapted to that change."
close to being the second largest municipal
utility in Minnesota."
Working with the utility's staff, Fox set
A 21st Century Water System
about to reorganize most of SPU's front
office functions. The utility's accounting The untimely deaths of Art Young in
system had not been updated since 1989. December 1995 and Ken Menden in
Meter readers were still posting their January 2001 robbed SPU of nearly 40
readings in a ledger book. A local certified years' experience in maintaining the
public accountant did the utility's monthly town's water system.
bookkeeping.
44
Water revenues account for approximately South Bridge commercial area and the
15 percent of SPU's income, but without adjacent residential development. The city
adequate supply of clean, potable water, also committed to $1.5 million for interior
Shakopee's growth would evaporate and exterior painting of SPU's existing water
overnight. SPU has long factored water into towers.
its planning decisions, understanding that The improvement of Shakopee's water
the city's water supply is absolutely essential system will continue as long as Shakopee
to sustain both industrial expansion and keeps growing. Water Superintendent John
population increase. Crooks, a Rockford, Illinois native who
For nearly 100 years, the utility's water worked for Rockford's municipal water
system operator had to manually monitor system for 20 years, said that planning for
the gauges on the wells and pumps to the water system's future is well underway.
ensure that water was flowing through the "We have had comprehensive studies done
mains. on the water system throughout the 1990s,"
As part of the 1993 and 1999 bond issues, said Crooks, who arrived in Shakopee as
SPU installed a sophisticated Supervisory SPU's water system supervisor in March
Control And Data Acquisition (SCADA) 2001. "The last one was done in 1999. We're
network for its water supply system. trying to update everything every two or
"SCADA involves telemetry at every well," three years."
said Joe Hillstrom, a Champlin native who Growth. Planning. Improvement.
joined SPU as a water system operator in Shakopee's future will be determined by
1996. "There's a central processing unit at how well SPU meets the challenges of each.
the SPU offices where we can monitor
flowage rates and tower levels. That was a
big addition right there."
Since 1998, SPU has been involved in a
major upgrade of the water supply system.
Besides replacing mains and hydrants
throughout the city, the utility plans for the
construction of two new water storage
facilities. A new, $1 million tower was
recently built on the bluff above St. Francis
Regional Medical Center. A 5- million-
gallon water reservoir is planned on the east
edge of Shakopee to provide water to the
45
CHAPTER 9 - SPU: A Second Century of Service
Change is perhaps the only conservation are all issu tha SPU will
constant in the utility industry. As SPU confront in the decade a head. T he
celebrates the beginning of its second challenges faced by SPU and it peo ple in
century of service, it must address the same the 21st century are complex. But they are
types of change that faced past generations no more difficult than the challenges faced
of SPU Commissioners and staff. by the utility during the past 100 years.
SPU's century long adherence to the The first generation of utility managers
principles of public power has ensured faced the sometimes intractable problem of
residents that the community is making the providing Shakopee's residents with an
critical decisions about utility electric power supply that was both reliable
infrastructure, service and rates. Electric and affordable. In the years after World
and water utility payments don't go to a War II, the community wrestled with utility
corporate office in Minneapolis, Denver or governance issues that led to the creation of
New York. The money stays in Shakopee the Shakopee Public Utilities Commission
and is reinvested for the betterment of all. in 1951. During the 1970s and 1980s, the
Deregulation, the efficient use of electric Commission grappled with power supply
power, continued growth of electric and and service territory issues that dictated the
water infrastructure, and water direction SPU would take in the 1990s.
d run
i
Joan Lynch Mark Miller David Thompson
2001 SPU Commission
46
In the decade just past, SPU became g
the fastest growing municipal utility
in the Midwest, with demand for
water and electric power fueled by
t
the industrial and population growlli �' o e. ..,, ,
of Shakopee. That demand is likely T�a t�;�
to continue surging through the next j
10 to 20 years. i ` ``i�
How SPU reacts to the changes
taking place at the dawn of its second Shakopee Public Utilities Employees, 100th Anniversary
generation of operations will
determine the utility's future success. If the growth of SPU's physical assets has been
philosophies expressed by Commission even more dramatic. In 2001, the utility
members and staff regarding change are reported total assets of $63.3 million, up
any indication, then SPU's achievements at nearly $19 million from the $44.6 million
the start of its second century of operations reported at the end of 2000. The 42 percent
should equal or exceed those of the first 100 gain in asset value was the greatest one -
years. year increase in the utility's history.
"I happen to like change," said From 1996 to 2001, SPU added 4,400
j customers and in the first year of its second
Commissioner Joan Lynch. It doesn't
scare me because I know that we have an century of operations is serving nearly
incredibly dedicated staff, and they work 12,000 customers. The continuing torrid
hard." growth pace means that no sooner than one
electric or water infrastructure
improvement is completed than another
Growth, Growth, Growth improvement begins.
In May 2000, SPU placed Dean Lake
Substation into operation. Almost
SPU reported revenues of more than $20.5 immediately, utility planners began to map
million in 2001, its centennial year of out improvements to the substation,
operation. Revenues increased 13 percent Shakopee's fourth. During the fall of 2001,
over the $18 million reported in 2000, crews and electrical engineering
making Shakopee one of the financially consultants began adding a second
healthiest municipal utilities in Minnesota. transformer and erecting a second
"We're getting close to being the second switchgear building. The improvement
biggest municipal utility in Minnesota," work doubled the capacity of Dean Lake
said Jerry Fox, SPU's finance manager. Substation when it was completed in the
"Rochester is the biggest, but I think we are summer of 2002.
now one of the five largest in the state." Continued growth of Shakopee also has
Retained earnings of $26.2 million grew affected the water system. In the summer
nearly 25 percent from 2000 to 2001. The of 2002, crews installed and painted the
47
,
,1-\ a ..�
A
� ,� a � _a. ' c.
_ ( h a
,
�l si i ` � !4 some of the more draconian steps taken by
j_ "� y municipal water suppliers in Prior Lake,
1 f7q, I _ n Minnetonka and St. Louis Park.
�,, , w . „_ Y "A lot of communities had outright water
�i� ' , 8 - , < -; bans in 2001," Crooks said "Fortunately
n , we didn't, although we did have odd -even
i +t 9
ti F , 47 4 { " .. i watering restrictions. We were able to fill
°I our towers every day. In this business, you
never plan on rain."
,M . 1 11 ,- - , .i ' '.,.. 'm '
z }{ -- I Once Well No. 13 starts flowing, SPU has
3 lans to build three more wells to serve the
---, city by 2006. Shakopee already has • ` ' . - , i i i ' 4 - purchased property for a water storage
Tie. facility south of the city, and current
Map of SPUC Service Territory blueprints call for the creation of a future
well field in the vicinity of the new City
city's fourth water tower. The 500,000- Soccer Complex east of Sunpath
gallon tower was built on a four -acre site Elementary School.
south of Valley View Road, Shakopee's first
high - elevation service district. "Because of the growth," Crooks said, •_
"we're accelerating our schedule of putting
The site also contains Wells No. 12 and 13, wells in."
as well as Pump House No. 12. Well No. 12
began flowing in the late spring of 2002, Commissioner Dave Thompson, a sales
and Well No. 13 was drilled and will begin executive for Shakopee Valley Printing who
i
was appointed to the Commission in 1997, .
flowing in late 2002. pp Q
has closely followed water issues during
"We needed these new wells, the pump
his five -year tenure. He pointed out that
house and water tower in addition to Minnesota Department of Natural
promoting consrvation because Shakopee is
Resources regulation of the state's water
still growing by leaps and bounds," said supply has become steadily more stringent 4
John Crooks, water system supervisor. "We during his two terms on the Commission.
need to be able to supply the demands of But he added that Shakopee's escalating
our customers and try to avoid having to
impose further restrictions on water use or expansion dictates a constant search for
new water supplies. f$
outright water bans. With proper planning `
on our part, we hope to stay ahead of "We always need to stay one well ahead of 4
Shakopee's growth rate — which is almost what we need," Thompson noted.
10 percent annually, and it won't stop for
awhile. There's a lot of planning involved
P Supply and Deregulation ,
for the anticipated growth." pp y g ,
Shakopee experienced two dry summers in z$
2000 and 2001, but through careful In the fall of 2001, the Minnesota Public
n
conservation measures, Shakopee avoided Utilities Commission (MPUC) issued the,
48 `°
have to make in the near future concerns Spring and Summer 2002 revelations that
power supply. SPU's contract with MMPA many energy trading companies have been
expires in 2005, and the city is obligated to padding their financial results caused
notify the power agency of its intentions legislators in many states to re -visit the
three years prior to expiration of the wisdom of electric utility deregulation.
contract. "We don't know the answer to
"We have to notify MMPA by the end of deregulation," SPU's Lynch said. "Nobody
2002 what we intend to do in the 2005 does. But I will venture to say that people
renegotiations," said Commissioner Dave will take a second look at it because they
Thompson. "That's a big decision. In fact, just don't understand deregulation that
it's a $150 million decision over 10 years." well."
Complicating the contract discussions with Shakopee's innate conservatism has served
the power agency is the issue of the community well during a century of
deregulation. Spurred by calls for more utility ownership. Five generations of
competition in the wholesale and retail Shakopee residents have benefited from
electric power industry, the federal 100 years of energy independence brought
government since 1992 has deregulated about when the city council and electric
much of the high - voltage electric light committee decided to build an electric
transmission grid serving the United light plant at the foot of Lewis Street on the
States. Most of the nation's investor- river bank in 1901. Generations to come
owned utilities have sold or leased their will continue to benefit from municipal
high- voltage transmission networks to ownership of Shakopee's critically
Regional Transmission Organizations important electric power and water supply.
(RTOs), which now control the flow of
electric power across the continent.
In addition, some states have required
electric utilities to sell generating plant
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 anticipation that private - -
power marketers could sell electric power
cheaper than regulated electric utilities
evaporated with the California power crisis
in 2000 -2001 and the Enron collapse in
2002.
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 Minnesota's
regulated electric utility industry. The
50
8 I 7 I 6 I 5 1 1. 4 I 3 I 2 I 1
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8 I 7 I 6 I 5 J* 4 I 3 I 2 I 1
MINUTES
3 OF THE
SHAKOPEE PUBLIC UTILITIES COMMISSION
(Joint Meeting with City Council)
Mayor John J. Schmitt called the joint meeting of the Shakopee Public Utilities Commission
and the City Council to order at the Shakopee Public Utilities meeting room at 6:45 P.M.,
September 10, 2007.
MEMBERS PRESENT: Commissioners McGowan, Mars, Miller, and Braun. Also present
Mayor John J. Schmitt, Councilors Steve Menden and Matt Lehman, City Administrator Mark
McNeill and Manager Van Rout.
Mgr. Van Flout reviewed some examples of Utilities /City cooperative efforts, one of which
was the Utilities 2007 commercial energy audit program now being applied at several city
buildings. Other conservation programs offered by the Utilities for commercial customers were
noted, along with residential.
The infrastructure financing needs for future expansion of the electric and water systems, and
the benefits of coordinating City and Utilities bond sales, were discussed.
Mgr. Van Rout detailed how the cost of power is determined. Electric rates for
commercial /industrial and residential customers were discussed.
Motion by Mender, seconded by Lehman, to take a brief recess. Motion carried.
Mayor Schmitt reconvened the joint meeting, and called for action on some city only
business, which was a cooperative agreement with MnDot for a CR 77 pedestrian bridge. A
resolution was offered and passed by the City Council.
The Utilities Trunk Water Charge and the city's Trunk Sewer Charge were discussed. The
consensus was there was sufficient reason for the applications to differ. -
The possibility of the city exercising its franchise authority and implementing a franchise fee
ordinance was discussed.
Motion by Menden, seconded by Lehman to adjourn to the September 18, 2007 Shakopee
City Council meeting. Motion carried.
Motion by Miller, seconded by Braun to adjourn to the September 17, 2007 Shakopee Public
Utilities Commission meeting. Motion carried.
Gel 7 J(
Commission Secretary: Louis Van Hout
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OFFICIAL PROCEEDINGS OF THE CITY COUNCIL
ADJ. REGULAR SESSION SHAKOPEE, MINNESOTA SEPTEMBER 10, 2007
Mayor Schmitt called the meeting to order at 6:45 p.m. with Council members Steve Menden
and Matt Lehman present. Absent were Cncl. Terry Joos and Steve Clay. Also present were
Mark McNeill, City Administrator; R. Michael Leek, Community Development Director; Bruce
Loney, Public Works Director /City Engineer; Gregg Voxland, Finance Director; and Judith S.
Cox, City Clerk.
The meeting was held at the Shakopee Public Utilities office, 255 Sarazin St., Shakopee. Present
from Shakopee Public Utilities were Lou Van Hout, Utilities Manager; Joe Adams, Planning and
Engineering Director; Mary Athmann, Line Superintendent; John Crooks, Water Superintendent;
Shakopee Public Utility Members Bryan McGowan, Eric Braun, Bill Mars, and Mark Miller.
John Engler was absent.
Mr. McNeill began the meeting stating that the Shakopee City Council asked for a joint meeting
with. the Shakopee Public Utilities Commission (SPUC). Mr. McNeill stated that the agenda
items to be discussed were SPUC -City Partnership, Energy Cost and Pricing, Large Customer,
Franchise Fee Discussion and Infrastructure Financing Needs.
Mr. Van Hout discussed several joint cooperative projects with the City of Shakopee. Mr. Van
flout talked about SPUC's Energy Efficiency Audits at eight city buildings. Mr. Van Hout
stated that Bruce Stahlberg, Energy Conservation Specialist, has been working with Duane
Toenyan, Building Maintenance, to identify various energy efficiency projects at each of the
eight buildings.
Mr. McNeill stated that 550,000 was in the City's preliminary budget for energy conservation
efforts in 2008.
Mr. Van Hout also discussed several rebates the City has received as a result of replacement and
enhancements of energy equipment.
Mr. Joe Adams also highlighted other joint projects between SPUC and the City. Some
examples Mr. Adams discussed were Huber Park overhead to underground electrical line
relocation and water main looping, several overhead to underground electrical line relocations,
and several city -wide street reconstructions including water main replacement.
Mr. Van Hout then discussed the Electrical Rate Update Report. Mr. Van Hout stated that R.W.
Beck was hired to conduct the report. R. W. Beck's study examined the revenue requirements
for Shakopee's elethic utility. To remain financially sound, Shakopee's electric utilitymust
produce sufficient revenues through its retail rates to cover its revenue requirements. Mr. Van
Hout stated that R.W. Beck designed new electrical rates that reflect the results of the analyses.
Mr. Van Haut stated that the overall revenues from the Residential rate class have been kept the
same but the monthly customer charge was increased to better reflect unbundled costs. The
energy rate was adjusted to account for the increased customer charge. The Senior Citizen rate
class has been kept the same too.
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Official Proceedings of the September 10, 2007
Shakopee City Council Page -2-
Mr. Van Hout stated that the Power Cost Adjustment (PCA) base rate was changed to adjust for
the full estimated cost of power being included in the retail energy rate. The existing PCA base
rate is $0.0421. The proposed PCA base rate is $0.0635.
Mr. Van Hout then discussed the rate analysis in comparison with other surrounding utility
providers such as Chaska, Xcel, MVEC and Dakota. Overall Shakopee residential rates are
$0.0914 (per KwH), $7.00 service charge, a Power Cost Adjustment, and a conservation charge.
Mr. Van Hout also outlined the Commercial and Industrial rates.
Mayor Schmitt discussed having a clearer vision of power costs for market purposes to promote
the City of Shakopee. Commissioner McGowan stated that the Shakopee Public Utility
Commission has worked hard to give Shakopee residents and commercial residents the best rate
possible.
Menden/Lehman moved for a recess. Motion carried 3 -0.
Mayor Schmitt re- convened the meeting at 9:10 p.m.
Bruce Loney presented Council with the Approval of Resolution Requesting Funding from
Mn/DOT through the "Metro Municipal Agreement Program 2009 ".
Mr. Loney stated that a resolution requesting funding is required for a cooperative agreement
proposal with Mn/DOT for potential bridge funding on the C.R. 77/Fuller Street Bridge over
T.H. 169.
Lehman/Menden offered Resolution No. 6655, A Resolution Requesting Funding from Mn/DOT
through the "Metro Municipal Agreement Program 2009 ", and moved its adoption. Discussion
followed.
Cncl. Lehman asked Mr. Loney if the funding was going to be taken from the CIP funding along
with Scott County and the School District contributing to the cost of the pedestrian bridge. Mr.
Loney stated that the School District and Scott County have both agreed to contribute to the cost.
Mayor Schmitt asked for a vote on the motion. Motion carried 3 -0.
Mr. Van Hout discussed the charges for trunk water and connection fees in rural residential
settings such as Becic ich Park Estates which will be connecting to City sewer and water.
Mr. Adams explained the 1980 Trunk Water Policy which calculates rates which include right of
way, out lot areas and park areas. In contrast, Mr. Loney explained how rates for trunk sanitary
sewer are calculated.
Mr. McNeill then discussed franchise fees. Mr. McNeill stated that in 2000 the City of Shakopee
held a public information meeting regarding the possible implementation of a franchise fee
which would be applied to all utilities operating within the City.
Official Proceedings of the September 10, 2007
Shakopee City Council Page -3-
i
Mr. McNeill stated that if a franchise fee had been enacted, SPUC would have had to reduce
their rates so that there would be no net change on SPUC users. was not able to make that __ f
commitment at that time. Mr. McNeill explained that the Council chose not to enact franchise
fees.
Mr. McNeill stated that it is seven years later and questioned if it is time to relook at franchise
fees. He noted that there would be two ways to enact a franchise fee; a meter fee which is a
fixed charge per residential customer, and a higher flat rate fee for commercial industrial users.
The other option is a percent of gross revenue, typically 1% or 2 %.
Commission Miller stated that he was in favor of further pursuing the concept of franchise fees.
Commission Mars stated he would like more information regarding franchise fees before
committing to it. Councilor Menden stated that he would be able to consider franchise fees with
additional information. Mayor Schmitt stated that franchise fees are worth looking at and that an
organization needs to be formed to look at it.
Mr. McNeill stated that he will get information from other cities and then there can be further
discussion.
Menden/Lehman moved to adjourn to Tuesday, September 18, 2007 at 7:00 p.m. Motion carried
3 -0.
The Council meeting ended at 10:15 p.m. on September 10, 2007.
Judith S. Cox
City Clerk
Kim Weckinan
Recording Secretary