NEW STATE LAW: LEGISLATION IMPACTS MUNICIPAL UTILITIES

Missouri Gov. John Ashcroft on Thursday signed legislation that will affect the ability of cities with municipal utilities to provide service to areas they annex.

The measure, Senate Bill 221, also could thwart any attempt by municipalities and other governmental entities to form their own municipal utilities.

The bill was a rewrite of several utility regulations and the state's "flip-flop" law.

That law prohibited utility companies from providing electric service to any user who is already served by another utility, unless service had been discontinued for at least 60 days prior to the switch.

But municipalities and other governmental entities were exempt from the "flip-flop" law. Senate Bill 221, signed into law Thursday, will close that loophole.

Several local officials had urged Ashcroft to veto the measure, which they claim will limit competitive options for customers seeking utility service.

Alan Maki, director of the Southeast Missouri Regional Port, was one of the measure's most vocal critics. He said Thursday that he was "disappointed" the governor signed the bill.

"The primary burden of this bill is going to fall upon residential consumers and businesses in the state of Missouri, and I personally don't feel that they have had adequate information or opportunity to fully explore the impact of this bill in the light of day," Maki said.

"At this point, my only hope is that possibly some corrective legislation can be enacted in the future that will lessen the negative impact of this bill."

Jackson City Administrator Carl Talley also said he was disappointed at the governor's action Thursday.

The city of Jackson last year won a lawsuit against Union Electric over the "flip-flop" law after the city annexed land previously serviced by UE. When Jackson tried to extend utilities to some property owners in the area, UE objected, invoking the law.

The courts held that the "flip-flop" law did not apply to municipal utilities or other suppliers of electricity.

But Talley said the new law now will make it essentially impossible for cities to provide utilities to annexed customers who already are served by a utility company.

"I felt pretty strongly about it," Talley said. "It will only penalize the people that are out there. We'll just have to work through the system and see what turns out."

Under the law, municipal utilities could be required to pay compensation of up to 400 percent of each customer's annual bill that they take from a cooperative or investor-owned utility.

Cape Girardeau officials have said the law likely will prohibit the city from ever being able to replace Union Electric with a municipally operated service.

Cape Girardeau City Manager J. Ronald Fischer said Thursday that one of the reasons Senate Bill 221 received as much support in the legislature as it did, is because few cities currently are directly affected by the measure.

"There are not enough municipalities that are affected by the law at this time," Fischer said. "It won't really affect Cape Girardeau because we don't have our own utility system. A lot of cities are in the same boat.

"But it could affect us later on. It makes it harder for municipalities like Cape, if they decide to go into municipal utilities, it makes it harder for them to do that."

But supporters of the bill have said it would justly compensate companies for the loss of customers in annexed areas. The measure also will protect any capital investment utility companies might make to provide service to those customers.

Virgil Chirnside, superintendent of operations for UE's Southeast Missouri District, said the utility company was pleased with the law.

"We're pleased from the standpoint that when there is annexation of territory that the utility already has their investment in, it does allow for a means of recovering your costs and investment for future development," he said.

Rep. Joe Driskill, D-Doniphan, chairman of the House Commerce Committee and the lawmaker who handled the bill in the House, has said concerns about the measure's impact on municipal utilities are not justified.

He contended the bill contained no provisions that preclude the formation of municipal utilities.