By Jeffrey Pieters
jpieters@postbulletin.com
Rochester Public Utilities will pay $459,000 to a neighboring electric utility as compensation for 30 acres of service territory taken in 2000.
The land, since developed as the Celestica factory, was part of People's Cooperative Service's territory until the city of Rochester annexed it. RPU took over serving the property coincident with the annexation.
The RPU Board voted Tuesday to approve the payment, ordered last month by the Minnesota Public Utilities Commission.
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RPU will pay at a rate of 13.7 mills -- or 1.37 cents per kilowatt-hour of electricity Celestica consumed starting in January 2001.
The amount owed, as of May, was about $459,000. RPU's payment obligation continues, however, through 2010.
The most recent meter reading, July 21, showed Celestica consumed 634,000 kilowatt-hours of electricity. The corresponding payment is about $8,700.
RPU pays People's for 10 years of lost revenues every time it cuts into the rural utility's territory.
The usual rate, however is 8.5 mills, or about 60 percent of the amount the Public Utilities Commission ordered.
RPU and People's tried to negotiate compensation but were unable to settle. They sought resolution from an administrative-law judge before the Public Utilities Commission took up the matter.
Frank Welter, People's President and CEO, said his utility had litigation expenses of more than $150,000 from the dispute. He said he believed RPU spent even more.
Walt Lorber, RPU's director of operations, said an exact tally of RPU's litigation expense was not readily available, but said RPU's litigation expenses were "in the same ballpark" as People's.
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RPU infrequently resorts to litigation in settlement negotiations, Lorber said, but attempts to do so periodically to set precedents that have long-term benefits for Rochester rate-payers.
RPU was dissatisfied with the outcome of this litigation, Lorber said. The rate ordered by the Public Utilities Commission appears to have simply split the difference between the two sides' competing claims, he said.
A report from the Public Utilities Commission indicates RPU was seeking a rate of 5.5 mills, and People's wanted 23.4 mills. Officials from RPU and People's will soon begin negotiations for compensation for 2,000 acres annexed during 2001 and 2002, officials said.
