Integrity Fund Assists With Sunflower State Territorial Win

Kansas Electric Cooperatives (KEC), the Topeka-based statewide association for 28 Sunflower State distribution cooperatives and three generation and transmission cooperatives, recently received a Cooperative System Integrity Fund grant to help cover costs of a successful legislative push earlier this year that greatly strengthened the hand of electric cooperatives in municipal annexation discussions.

“In 2002, all utilities in the state reached an agreement to amend our 1976 territorial integrity law that required municipalities to consider nine factors when determining which electric provider—the incumbent utility or the muni—would serve land annexed by a city” explains Bruce Graham, KEC CEO. “The intent was for municipals to engage in negotiations that would allow an electric cooperative, for example, to continue to serve the affected consumers.”

He adds, “While the understanding was recognized by most municipalities, a few began aggressively exploiting loopholes to bypass or shortcut the envisioned process. Prior to introducing legislation, we attempted to work with Kansas Municipal Utilities, the trade group for municipal electric systems in our state, to correct those abuses. Unfortunately, that effort was unsuccessful.”

Kansas Co-ops Seek Legislative Solutions to Annexations

In response, KEC members authorized a legislative initiative to fix the situation. The goal: Enhance opportunities for Kansas cooperatives and investor-owned utilities to maintain service areas being annexed by a municipality and implement an improved compensation formula for lost territory and service rights. 

“We fully expected the effort would take more than one session of the Kansas legislature,” Graham notes. “But when the bill was introduced, legislative leaders encouraged both groups to find a compromise. We worked hard to incorporate provisions that were critical to our cooperatives and we achieved those goals, a testament to the power of our grassroots cooperative network and the strength of arguments made in our discussions with lawmakers.”

Wheatland Electric Cooperative Sees Consumer Bills Rise

Bruce W. Mueller, general manager of Scott City, Kansas-based Wheatland Electric Cooperative, which serves 23,500 consumers across 15 western and central Kansas counties as well as two in eastern Colorado, reports that his cooperative has lost approximately 35 MW of potential load over the past 15 years due to erosion of its franchised service territory.

“That has resulted in every member paying an extra $9 per month, or $108 more each year, which doesn’t include any margins we would earn on that power to allocate as capital credits or reduce rates. We want our municipalities to continue to grow and electric cooperatives with them. This new law is good for all of the electric cooperatives in Kansas, not just a few.”

Fund Is Great Example of Cooperatives Looking Out for Cooperatives

Since its creation in 1986, the Integrity Fund—administered by CFC with decisions made by a five-member committee composed of CFC, NRECA and Rural Electric Statewide Managers Association representatives—has awarded nearly $28 million in grants to 287 cooperatives in 43 states to fight takeover and annexation bids by investor-owned utilities and municipal electric systems; preserve rights to offer non-electric energy services; and resist regulatory, judicial or legislative actions that threaten the cooperative business model.

“Integrity Fund grants are funded exclusively by the rural electric network, for the rural electric network,” says CFC Senior Vice President of Strategic Services Steve Kettler, a member of the Integrity Fund Committee.

For questions about the Integrity Fund, contact Kettler at steve.kettler@nrucfc.coop or Donna Goff at donna.goff@nrucfc.coop.