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City prods electric suppliers to reach service agreement

Posted 4/17/13 (Wed)

By Neal A. Shipman
Farmer Editor

After Watford City’s Franchise Committee told Montana-Dakota Utilities (MDU) and McKenzie Electric Cooperative (MEC) on March 6 that they had 30 days to come up with an area service agreement, both  providers were back in front of the committee again last Wednesday.
The only problem was that the two providers of electrical service to Watford City and its surrounding area had not reached an agreement. And with building season soon to move into full gear around the city and residential and commercial developers wanting to know who their power supplier is going to be, the lack of an agreed-upon area service agreement didn’t set too well with the Franchise Committee.
“The city expected to receive an agreed-upon area service agreement last Monday (March 8),” stated Doug Bolken, chairman of the Franchise Committee. “We were hoping to review the map at this meeting and then be able to take it to the full city council at our May meeting.”
According to Bolken, the committee was encouraged that there was an agreed upon map last week. But now he now understand that there are still two areas (one on the north side of the city and one in the southeast corner of the city) that are in question.
But according to John Skurupey, CEO of McKenzie Electric, some of the cooperative’s concerns are beyond the area service agreement.
“We are in favor of a service area agreement provided it takes into consideration who can provide the service the best,” stated Skurupey. “We offer lower rates, a fully redundant power system and have installed a new electrical system around Watford City.”
According to Skurupey, the cooperative has met with MDU several times but has failed to reach an agreement.
“McKenzie Electric is focused on what is right for the consumer,” stated Skurupey. “We are requesting that we have an equivalent franchise agreement and we encourage MDU to engage in a meaningful discussion.”
When Wyatt Voll, city attorney, asked Skurupey if the cooperative was requesting a full franchise, Dennis Johnson, cooperative attorney, responded by saying, “we’re requesting the Franchise
Committee put us on a level playing field so we can work with developers now.”
But according to Jacob Zettel, electrical superintendent with MDU, the publicly-owned utility has been willing to share the growth of Watford City with McKenzie Electric.
“We believe it is our right, based on our franchise, to serve the annexed areas,” stated Zettel. “And we’re willing to share that growth 50-50 with the cooperative.”
According to Zettel, MDU and MEC have had three meetings in which they discussed which newly-annexed areas into the city limits of Watford City would be served by the two electrical providers.
“After the third meeting, McKenzie Electric asked for more territory without maintaining the 50-50 split,” stated Zettel. “We (MDU) agreed to some concessions and I felt we had an agreement when we left that meeting.”
But Zettel said that he then found out that the McKenzie Electric Cooperative’s Board of Directors had voted that agreement down.
Zettel noted that MDU believes that area service agreements are in the best interest of the city and the consumer and that MDU has created such agreements with electric cooperatives in Williston, Kenmare, Dickinson, Mandan and Bismarck.
However, he did not believe that granting McKenzie Electric a full franchise was in the best interest of the city.
“I think an unlimited franchise to both would hinder the process,” stated Zettel. “It would result in a duplication of service and would require both companies to have systems across the city.”
MEC has a limited franchise with the city which will expire in November of 2013, while MDU has an unlimited franchise that expires in July of 2014.
Under the city’s current franchise agreement, MDU’s unlimited franchise provides that the company has the right to provide service in all of Watford City, as well as within areas that are annexed into the city limits. MEC’s limited franchise, on the other hand, allows that the cooperative can continue to provide electricity to its existing customers in the city limits.
While the two utilities appeared to be at an impasse, Bolken was firm that the city wanted an area service agreement. And the new deadline for the Franchise Committee to receive it was going to be April 24.
“You’ve had great discussions,” stated Bolken. “We’re encouraged. But our goal is to a have an area service agreement to take to the May 6 city council meeting. I’m looking forward to the April 24 meeting.”