PIERRE, S.D. (KELO) — South Dakota lawmakers offered a possible way Wednesday to handle some future disputes over who gets to provide electricity service in rural areas being added into communities.
The concept would be allowed when a municipality decides to formally annex an adjacent spot that’s already served by a rural electric cooperative.
The proposal being considered would let either side ask the state Public Utilities Commission for a hearing to settle the compensation amount.
That concept now will be passed up to the Legislature’s Executive Board.
The disagreements can be intense because jobs are at stake: A municipality wants to add a business and often can offer an incentive of electricity at a lower price, while a rural co-op sees its investment stranded — albeit with compensation from the municipality — and a potential new member gone.
The state commission regulates rates charged by investor-owned utilities but doesn’t set prices for municipalities or rural co-ops. The commission however does oversee quality levels by all electricity, natural gas and telecommunications providers.
The decision to potentially use the commission for the disputes came in the closing minutes of the fourth and final scheduled meeting Wednesday by the special committee.
The Legislature last session created the panel through Senate Bill 66 specifically to study electric service in annexed territory.
Senator Alan Solano, a Rapid City Republican, suggested the idea of using the commission. Lawmakers voted 8-1 for it Wednesday, after Solano told the sides he expected them to keep negotiating toward a more-refined version.
He chaired the special committee. His goal is legislation acceptable to all sides for the 2020 session that opens January 14.
“I do have confidence. I’ve worked with all the parties,” Solano said.
He previously announced he will resign from his Senate seat November 30 to focus more on his job.
Ed Anderson, general manager for the South Dakota Rural Electric Association, pledged to the committee Wednesday his group would keep working on the commission concept.
Anderson said Solano attempted a similar compromise during the 2019 session but the commission wasn’t willing to do it.
Chris Nelson, an elected member of the commission, said Wednesday several changes would be necessary in Solano’s current proposal.
Those include adding criteria for decisions, removing a 10 percent adjustment limit, and providing at least one year rather than 60 days that Solano suggested for the commission to complete a case.
Drew Duncan, a lawyer representing Heartland Consumers Power District, opposed Solano’s plan Wednesday. Duncan called it “largely unworkable” but acknowledged it was “well-intentioned.”
“To me,” Duncan testified, “it’s devoid of real meaning and specificity.”
Solano in turn offered to make changes to satisfy at least some concerns from the commission. But he also asked whether municipal providers would keep talking to the rural co-ops about putting the commission in charge of deciding territory disputes.
Duncan said he needed to check with the municipal-electric people, whose representatives and lobbyists filled nearly every chair on the right half of the large room.
Thirty-five municipalities provide electricity services in South Dakota, including larger ones such as Watertown, Brookings, Pierre and Madison.
After a 10-minute break, a deal was done:
— Duncan said the municipal providers would stay in discussions.
— Representative Thomas Brunner, a Nisland Republican, withdrew his proposal for settling disputes through arbitration.
— Solano withdrew his proposal to have a municipal provider potentially pay a rural cooperative longer after annexing an area without a customer.
The nay on the final roll call came from Senator Lee Schoenbeck, a Watertown Republican. He made his position clear earlier in the meeting when he opposed another plan from Brunner that clearly favored co-ops.
“Make no mistake — this is about taking jobs away from my community,” Schoenbeck said.