Senators weigh in on utility territory disputes

The Senate Utilities Committee on Thursday passed a bill that shifts leverage to Indiana’s largest utilities and electric cooperatives in their struggle to keep municipal-owned utilities from taking valuable territory.

Senate Bill 309, authored by Sen. Mike Crider, R-Greenfield, eliminates municipal electric utilities' authority to take territory from rural electric cooperatives and investor-owned utilities. It passed the committee 8-2. Sens. John Broden, D-South Bend, and Randy Head, R-Logansport, voted against the measure.

Under Indiana law, utilities have exclusive service territories, but they can swap by mutual agreement. Municipal utilities are exempt from the mutual-agreement requirement if a city or town is annexing the land, but they have to compensate the losing utility.

The disputed areas often involve commercial land at interstate exchanges, which would likely be the site used by a large energy user. The Indiana Municipal Power Association offered an amendment to SB 309 that would increase the compensation level, but it wasn’t taken up by the committee.

Crider said the bill will force neighboring utilities to negotiate, and that’s the goal. “It doesn’t give anybody a fifth ace to play,” he said.

Head, however, saw the bill as shifting power from the municipalities to the rural coops and investor-owned utilities, and he pleaded with the two sides to reach a compromise, rather than having the Legislature devise it for them.

Sen. Erin Houchin, R-Salem, said she too had encouraged the two sides to work out an agreement, but she voted for the bill out of concern about cost shifting to rural electric customers who aren’t picked up by municipal annexation.   

Several mayors from the 72 cities and towns that have their own electric utilities testified against the bill. They believe neighboring utilities will never consent to give up territory, and that will hamstring cities’ economic development efforts.

Greenfield Mayor Chuck Fewell said the city has attracted 4,000 jobs to its north side near Interstate 70 because of infrastructure investment and because of lower-cost electricity, which is the result of a denser service area.

The bill provides no recourse for customers of annexed areas who want to be served by the municipal utility, but won't be released by their current electric provider, said Peter Prettyman, general counsel at the Indiana Municipal Power Association.

Public relations consultant Bruce Hetrick testified on behalf of Pendleton, where he has lived since late 2012. He said he wants to be a municipal power customer because after a storm last summer, Duke Energy Corp. “butchered” the trees on his property and didn’t respond to his complaints.

“The big issue for us in changing power companies is not the cost. It’s the quality of service.”