S.D. regulator wonders whether wrong process was used to reach a decision in utilities’ dispute

Capitol News Bureau

PIERRE, S.D. (KELO) — South Dakota lawmakers tried a few years ago to solve the turf war between rural electric cooperatives and municipal electrics over territory. They even assigned a special committee to study the topic. Not much came from it, other than harder feelings between some who were involved.

Suddenly the state Public Utilities Commission is in the middle of it, too.

This latest dispute seems minor: Who gets to supply power to 15 sets of new streetlights along the S.D. 50 bypass on the north side of Vermillion.

But the Vermillion question is also part of a much broader feud between the South Dakota Rural Electric Association and the South Dakota Municipal Electric Association.

The friction between them comes when municipalities expand into areas that rural co-ops had successfully served for many decades.

Now one of the PUC’s three elected members is re-thinking whether the commission took the right path this summer in deciding who was right at Vermillion.

The PUC did manage to get the lawyers for the two rival statewide groups to agree on at least one thing. Both Darla Pollman Rogers for the rurals and Bill Van Camp for the munis said the commission mishandled it.

The 15 lights are in territory legally designated for service by Clay-Union Electric Cooperative. But Vermillion’s electric department plans to power them, as part of a recent agreement with the state Department of Transportation.

Clay-Union asked the PUC to review Vermillion’s decision and issue a declaratory ruling. Clay-Union’s general manager, Chris Larson, said in the petition that Vermillion didn’t plan to seek PUC approval.

Larson called on the PUC to order Vermillion to remove the lines to the 15 lights so that Clay-Union could power them instead.

Vermillion’s city attorney, James McCulloch, claimed in a letter to the PUC that Vermillion had the right under a state law that lets municipal lines be extended to power “its own public service facilities such as water and sewage systems, landfills and airports.”

McCulloch said he knew of two other road-lighting cases, one in Charles Mix County and one in Brookings County, where municipalities extended power into rural-electrics’ territories.

Kristen Edwards, a staff attorney for the commission, searched state law further but couldn’t find a definition for ‘public service facility.’ So she looked at a federal definition and concluded that the lights qualify as a public service facility because they promote public safety.

In the meantime, the rurals’ lawyer, Pollman Rogers, had petitioned to intervene. She argued that SDREA’s 28 distribution cooperatives, including Clay-Union, and three generation and transmission cooperatives had something much bigger at stake — “their common interests of protecting the integrity of their assigned
service areas, and to ensure that their assigned service areas cannot be compromised without adherence to the statutory authority granted to this Commission to regulate service territories.”

She added, “As electric service providers whose service areas are regulated by this Commission, every SDREA member company has an interest in and stands to be impacted by a Commission decision on the question raised in Clay-Union’s petition.”

A week later, the municipals’ lawyer, Van Camp, petitioned for his side to intervene on behalf of its 35 members and their citizens. He acknowledged that the commission’s executive director had, a few days earlier, already issued a ruling that said, essentially, SDREA couldn’t intervene.

“The denial of party status in this matter forecloses those parties directly impacted by the relief requested from participating in the docket. The filing positions the Commission to render a determination without consideration of parties having a clear interest in the outcome of this matter,” Van Camp wrote.

The commission made a unanimous decision on August 19 that was expressed in its order: “The streetlights described in the Petition are public service facilities.”

During the public-comment period at the end of the August 19 meeting, both Pollman Rogers and Van Camp had stern responses to the commission’s decision that their groups couldn’t intervene.

The next day, August 20, commissioner Gary Hanson sent an email to the two other commissioners, chairman Chris Nelson and Kristie Fiegen, and to key staff who had been involved in the decision. Hanson said he was uncomfortable with what happened.

Hanson wrote, in part: “I believed the process was legally correct at the time of the decision; however, I have significant doubts as to the appropriateness of the process after listening to the legal arguments expressed during the Public Comment presentations at the end of the meeting. The PUC has a reputation of openness, transparency, and fairness. I am concerned that the decision in docket El21-022 was transparent but not open nor fair to all those it affected. I do not wish to establish this process as a precedent unless there is no alternative for our Declaratory Rulings. I am concerned as to whether it is actually a legitimate process.”

Hanson asked the commission’s staff to prepare a docket to consider the commission’s handling of declaratory rulings. He also said that the Vermillion decision should be reconsidered, if the process was handled incorrectly.

That broader issue of the process came back up Tuesday when the commission met. Hanson said he no longer wanted to reconsider the Vermillion decision because the time was past. He said he also now believed the commission followed the law correctly. But he still wanted to have more information. He said he felt “very uncomfortable” about the vote he had made as he listened later that day to the comments from Pollman Rogers and Van Camp.

“We always have a tremendous reputation in the PUC as having openness, transparency and fairness. And in that particular situation, I just didn’t feel that it was fair to the others that were not able to testify, although it’s completely legal,” Hanson said.

Hanson said he wanted to have a discussion of the appropriateness of the process and invited comments from the commission’s staff, and oral and written testimony from affected parties such as the rural electric cooperatives and the municipal electrics.

“I do not fault anyone for the process we went through because that’s the way it’s written in law. We followed that. However, I would just like to have it examined, so that we can make certain that we don’t set a precedent where we have — where at least we feel it was perhaps not totally fair,” Hanson said.

“I would support Commissioner Hanson’s request that we take a deeper look at this,” Pollman Rogers said, “because, so far, it’s been sort of a one-way street.”

Replied commissioner Nelson, “I’ve done a lot of deep diving since we last discussed this topic, to try to get a better understanding.”

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