Bill on electric territories clears House

GREENFIELD — A bill that put top elected officials in Hancock County at odds is on its way to becoming law.

Senate Bill 309, which removes a city’s ability to take electric territory from private and rural companies during annexations, has passed a final reading in the Indiana House and is expected to be signed into law.

While the measure affects all 72 municipally owned utilities across the state, officials in Hancock County’s two electric companies were particularly interested in its progress through the legislature.

The measure was written by Sen. Mike Crider, R-Greenfield. Greenfield Mayor Chuck Fewell and other city officials testified against it. NineStar Connect CEO Mike Burrow was among those in favor of it.

Monday, the House voted 71-20 in favor of the bill. Earlier this session, the Senate passed the measure 42-7.

The smaller margin was encouraging, said director of Greenfield Utilities Mike Fruth. But overall, he’s disappointed, he said, adding cities will lose leverage in economic development and that future Greenfield residents who are drawn in to city limits will end up paying more for electricity. 

Since the bill received no major amendments — only a change in the effective date to May 19 — Fruth said Crider will likely concur with the measure and send the bill to Gov. Mike Pence for signature.

Crider could not be reached for comment this week.

Currently, cities gain new electric territory during annexations by petitioning the Indiana Utility Regulatory Commission; and the IURC typically rubber-stamps the process. The city must pay the private company or co-op a fee based on what customers currently pay for electricity, plus a percentage on future growth for the following five years.

The bill would mean private companies and rural co-ops can keep their territory or negotiate a deal with the city.

It’s hard to know exactly how the measure will impact the area, since it will affect annexations that happen in the future. Fruth said that in the past few weeks there was discussion about allowing landowners in an annexed area to petition the IURC to change electric service providers.

“It was an effort to keep the interest of citizens at the forefront,” Fruth said. “We don’t think it’s fair that when we annex an area that we serve with our water and our sewer, we cannot serve with our electric. Those people (who) are on other (electric) utilities may be paying as much as 40 percent more.”

Burrow doesn’t argue that rates through NineStar are higher. But that’s because the rural company does not have the density the city has. NineStar covers 243 square miles compared with Greenfield’s 13, and more miles of infrastructure means more cost to the electric provider — cost that is passed on to customers.

Burrow has argued for months it’s only fair that private electric providers and co-ops should be allowed to keep their territories or negotiate with cities.

“Before, the cities could just simply take it, and there was no sitting around the table and negotiating it,” Burrow said.

Under SB 309, Burrow points out, cities and rural electric providers can negotiate land.

But Fruth doesn’t think that’s likely to happen. He says rural electric providers will want to keep their territory.

Both Fruth and Fewell worry that the city will not be able to lure new businesses as easily under the new law because Greenfield Utilities could offer lower rates under annexations. But Burrow said he wants to meet with city officials and see how the electric companies can work together to spur economic growth.

Several other top county officials joined in on the debate: Rep. Bob Cherry, R-Greenfield, became a House sponsor; Cherry’s brother serves on the NineStar Connect board. Retired state Sen. Beverly Gard also serves on the NineStar board and advised Crider on the issue, having worked with utilities in the state Legislature for years.

Both Fruth and Fewell said it’s hard to tell whether the city of Greenfield or the 71 other cities that own electric territories will work to tweak the law in the future.

“Quite frankly, we’re going to have to analyze the bill and sit down and figure out how it’s going to affect us,” Fewell said. “If we can come up with a solution or a plan, we’re going to do that.”