A bill unanimously passed by the Legislature and signed last week by Gov. Jeff Colyer will require growing cities to reimburse electric cooperatives for the revenue and territory lost through municipal annexation of serviced lands.
With no opposition by lawmakers, the bill that was reached through a compromise between Kansas Municipal Utilities and Kansas Electric Cooperatives, which respectively represent the City of Garden City and Wheatland Electric, will require reimbursement to Wheatland when the city annexes any properties in Wheatland’s surrounding service area, even when those properties are completely undeveloped.
Wheatland General Manager Bruce Mueller said the company is pleased by the compromise.
The settlement lowered the 10-year annexation compensation outlined in a previous version of the bill from 15 percent to 8.5 percent of gross revenues from total retail sales on electric utilities generated by new customers in annexed territories where the cooperative’s service rates are terminated.
“We as electric cooperatives want cities to continue to grow, and we want to grow with them,” Mueller said. “As cities grow, we want a chance to serve our designated service territory or to be compensated fairly when we lose that territory due to annexation.”
Mueller said the bill’s passage is a big step forward for Wheatland. He noted that three of the fastest-growing cities in the country — Austin and San Antonio, Texas, and Atlanta — exist alongside three of the fastest-growing co-ops.
“We can grow together, and we look forward to that opportunity in the future with all of the cities in and around our service area,” Mueller said.
All future city annexation would involve a transactional relationship with the Wheatland Electric co-op, which has a franchised service area surrounding Garden City.
City Manager Matt Allen has said the City Commission would make decisions on annexation if and when they present themselves, taking associated costs into consideration, as well as the degree to which those costs would be borne by new customers or absorbed by the city’s electric utility as a whole.
During a Legislative Coffee event at St. Catherine Hospital in February, Rep. John Wheeler, R-Garden City, who was lobbied by agencies negotiating the provisions of the bill, said he was pleased that the involved parties reached a settlement, “even though I do understand that nobody is happy.”
Rep. Russ Jennings, R-Lakin, has said that the dispute represented the southwest Kansas version of urban vs. rural.
“We have in our part of the state dedicated territories to electric cooperatives to provide services,” Jennings said at February’s Legislative Coffee. “If Garden City would quit growing, it wouldn’t be a problem, but we want Garden City to continue to grow and be a growth community. And what happens is when Garden City grows, it encroaches into what currently exists as a franchised, dedicated service area for Wheatland Electric.”
Jennings said he believes the compromise reached avoids greater potential harm for both parties.
At the same event, Sen. John Doll, I-Garden City, said the bill is “everything that’s wrong with government.”
He said he understands the desire among electric companies to recoup money for infrastructural investments, as they have in the past, but he said to do so in the case of new customers and developments on annexed “bare ground” creates a “horrible issue.”
Doll also noted that surrounding communities stand to benefit from the bill. Because companies like Wheatland can charge Garden City more than what they were making on the annexed land, Doll said, customers outside of city limits could actually see a reduction to their electric bill.
Still, Doll expressed doubts about the implications of the bill and the method by which co-ops are given service jurisdictions.
“I don’t know how this is not a monopoly,” Doll said. “I don’t know how this doesn’t violate the antitrust laws. If we’re going to be a republic, then competition should drive the market. And we can’t compete.”
Correction: A previous version of this story incorrectly attributed a prepared statement from Wheatland Electric. The statements should be attributed to Wheatland General Manager Bruce Mueller.