- Rural electric cooperatives and some investor-owned utilities (IOUs) are incurring animosity from the 72 municipally owned electric utilities (munis) in Indiana for blocking their growth, the Fort Wayne Journal-Gazette reports.
- A 2002 change in law allowed the munis, which have 7% of Indiana's electricity customers, to ask the Indiana Utility Regulatory Commission for service territory in land annexed into their communities. Cooperatives grew 14% from 2001 through 2012 and munis grew only 2.8%. 28 communities out of 72 served by munis have since sought territory changes for purposes of annexation.
- Cities that annex territory must compensate the existing provider, buy the infrastructure, and compensate for five years of growth. Indiana legislators are looking for a new formula to compensate existing providers because the takeover provision discourages coops and IOUs from investing in infrastructure in undeveloped areas.
Cooperatives are member owned, provide electricity to rural consumers, and control about 80% of Indiana’s electric customers. For-profit, investor-owned utilities like Duke Energy, AEP, and NIPSCO control most of the rest.
Many cities expect to obtain electricity more reliably and at a lower cost through a municipally-owned provider. They also accuse the cooperatives and IOUs of taking a “monopolistic” approach by attempting to control customers who otherwise would join them.
Last year, State Sen. Mike Crider (R-Greenfield) proposed a bill to address the annexation issue, but it was never taken up. He told the Journal-Gazette he will try again in 2015.
“I think what we are seeing is really a result of tax caps,” Crider told the local paper. “Cities are looking to improve their tax base, so they seek to annex, and electric service is a result of that. I think the annexations have happened enough that if you are a rural electric or investor-owned, it’s a concern. They feel like if they don’t do something, it could get out of hand.”
The Journal-Gazette reports Crider has not settled on final language for the bill, but that it likely will involve ending annexation or devising a new formula to compensate existing electric providers.