HomeMy WebLinkAbout3.c. Territory Annexation with MVEC in Jackson Township 3.c
SHAKOPEE PUBLIC UTILITIES
MEMORANDUM
TO: John Crooks, Utilities Manager
FROM: Joseph D. Adams, Planning & Engineering Director �,•
•
SUBJECT: Electric Service Territory Acquisition Potential
DATE: October 5, 2012
ISSUE
This memo is a brief summary of the status of electric service territory issues and the potential for any
acquisition of additional territory.
BACKGROUND
MN Statutes allow for a municipal electric utility to acquire /purchase the service territory of an
investor owned electric utility e.g. Xcel Energy or an electric cooperative utility e.g. Minnesota Valley
Electric Cooperative if the area in question is within the municipal city limits.
There are a number of factors that affect the ultimate cost to acquire another utility's service territory.
These costs include loss of revenue for existing and future customers for some period usually 10 years
after acquisition, the value of the facilities within the acquired area, the re- integration costs if any to
replace the facilities acquired if needed to serve non - acquired customers, and other factors.
Shakopee Public Utilities had acquired service territory of MVEC in the past that had been annexed
into the City of Shakopee from Eagle Creek Township. There were approximately 500 existing
customers within the area annexed back in 1992. The utility was able to pay the acquisition costs via a
favorable rate differential and forgoing contribution to the City of Shakopee for acquired area
customers' revenues until the acquisition costs were fully paid. Since then however customers in the
acquired area have had the same electric rates as other customers and are figured in the contribution to
the City of Shakopee.
DISCUSSION
Currently, there are 80 residential customers located in the Stone Meadows development on the west
end of town that are served by MVEC. Under an agreement after the 1992 acquisition SPUC was not
able to acquire these customers until sometime after 1997. The Utilities Commission may want to
proceed to enter into discussions regarding these 80 customers with MVEC prior to any other potential
area of Jackson Township being annexed into the City of Shakopee. An agreement regarding these 80
customers may lead to a template for future annexations areas.