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Power companies reach agreement on service areas

Posted 5/01/13 (Wed)

By Neal A. Shipman
Farmer Editor

The battle over whether Montana-Dakota Utilities Co. (MDU) or McKenzie Electric Cooperative (MEC) would be better able to serve the new growth areas of Watford City has finally been settled.
And in this battle for more power sales in the future, there are not going to be any winners or losers as both power suppliers agreed to share in the growth equally.
That is the type of agreement which the Watford City Franchise Committee was hoping for when they asked the two power suppliers to come up with a mutually agreeable area service map. But the development of that map was a slow moving task. The Franchise Committee had initially set March 8 as the date when the two utilities were to have had the agreement in place. But when that date was not met, the Franchise Committee gave the utility companies until Wednesday, April 24 to produce the map.
“We have an agreement in concept,” stated Jacob Zettel, electrical superintendent with MDU. “But it will still take a while for the attorneys from both utility companies to work out the details.”
Based upon the area service map that both utilities agreed to, MDU will continue to serve the core service area of Watford City, while the two utility companies divided up the newly-annexed areas with the city’s ETA.
According to Wyatt Voll, city attorney, the franchise agreements will be amended to reflect that neither company will be allowed to serve electricity to areas outside of their designated areas of service without consent from the other company, the City of Watford City, and any necessary state regulatory agencies.
While the two utility companies have drawn their new service area boundaries, the process of reaching a final agreement still has several steps to go through.
“Once the agreement is finalized and the city recognizes that agreement, there has to be a joint filing with the North Dakota Public Service Commission (PSC),” stated Zettel. “But until that time, both parties have agreed to abide by what we have delineated on the map.”
According to Zettel, it could take six to eight weeks for the PSC to approve the map.
While the cooperative is agreeable to working solely on the map until the formal process is completed, John Skurupey, MEC CEO, stressed to the Franchise Committee that the agreement is a “package deal.”
“We thought that the franchise agreements are tied to the area service map,” stated Skurupey. “We thought we both would have an opportunity to review the franchise agreement.”
According to Voll, the city council will hold its first reading of the franchise agreement during a special meeting on Thursday, April 25 and that the final reading of the agreement would be held during the council’s regular meeting on May 6.
Key components of the franchise agreement to both parties is whether they would be issued unlimited or limited franchises, as well as the length of the franchise agreements.
According to Doug Bolken, chairman of the Franchise Committee, the area service map will have a term of 20 years. However, the city has not yet determined the length of time for the individual franchise agreements.
“We will be negotiating limited franchise agreements with both power suppliers,” stated Bolken. “As for the length of each franchise, the city believes that the franchise lengths will have to be long enough to allow both utility companies time to make the necessary financial investments.”
For Bolken, the cooperation between MDU and MEC in reaching this agreement will ensure that developers in the future will know who their power suppliers are and make development projects move forward.
And he knows that it was a give and take process between MDU and MEC to reach the agreement.
“The city didn’t dictate to either party in their reaching this agreement,” stated Bolken. “We encouraged them to come to the agreement. We are very happy where it is, and at the end of the day, we got what we were looking for - reliable power.”