SMMPA prevails in key aspects of suit against Rochester

SMMPA prevails in key aspects of suit against Rochester

May 08, 2009

SMMPA today announced that it has received a decision of the Olmsted County District Court in the lawsuit brought by the City of Rochester and Rochester Public Utilities.  SMMPA prevailed on the key aspects of the case.

SMMPA was formed in 1977, and currently consists of 18 member-municipalities throughout the state of Minnesota.  Rochester is one of the founding members of the Agency, and has been receiving the vast majority of its electrical power and energy from SMMPA since 1981. 

In the suit, first filed in 2005, Rochester sought a declaration that Rochester should be excused from paying for the costs of new generating resources added to the SMMPA system after January 1, 2000.  Even though Rochester will continue to take more power and energy from these resources than any other member, Rochester wanted the other 17 members to bear the full cost of the resources.

The Court rejected Rochester's claims, finding that the 1981 Power Sales Contract between Rochester and SMMPA requires Rochester to pay for power and energy taken by Rochester from the Agency, and to pay for such power and energy at the rates set by the SMMPA board, as those rates are currently applied to all members. The SMMPA board is comprised of seven member utilities; RPU has a permanent seat on the board.

Rochester Public Utilities and Rochester claimed that Rochester would receive "no benefit" from resources added to the SMMPA system after 2000.  The 102-page decision of the Court rejected that argument, specifically finding that Rochester and Rochester Public Utilities receive a benefit from new resources added to the system:

Rochester's need for energy is the major force behind SMMPA's load growth and, by reasonable projections of future need, it will continue to drive that growth. If SMMPA needs to acquire new generating resources between now and 2030, those additions will become part of the system. They will provide a benefit to all Members and all Members should, accordingly, share in the cost of acquiring them.

"We are very gratified by the result," Ray Hayward, the Executive Director and CEO of SMMPA said.  "This Agency was founded on the belief that by drawing public power communities together, SMMPA can provide the most economical and reliable power and energy to all its members.  The Court recognized that its result was consistent with SMMPA's governing principle as a system agency with an ‘all for one, one for all' philosophy of operation."

SMMPA is disappointed that one of its members chose to litigate this simple and equitable principle. The SMMPA Litigation Committee commented, "With the court decision behind us, SMMPA and Rochester now can move forward with the constant goal of doing what is best for the Agency and all of its members and their customers."

SMMPA is dedicated to its member communities and takes responsibility for the efficient, cost effective and reliable delivery of electricity and services in an environmentally responsible manner.  "We continue to strive to benefit all members and the members' ultimate customers, in terms of unity, reliability and affordability of power and energy.  The Court's decision enables SMMPA to do that, both now and into the future.