1.1                          A bill for an act 
  1.2             relating to utilities; regulating municipal provision 
  1.3             of telecommunications and other utility services; 
  1.4             amending Laws 1996, chapter 300, section 1, 
  1.5             subdivision 2, as amended; proposing coding for new 
  1.6             law in Minnesota Statutes, chapter 237; repealing 
  1.7             Minnesota Statutes 1996, sections 237.19; and 237.20; 
  1.8             Laws 1996, chapter 300, section 1, subdivision 5, as 
  1.9             added. 
  1.10  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.11     Section 1.  [237.81] [MUNICIPAL PROVISION OF 
  1.12  TELECOMMUNICATIONS SERVICES.] 
  1.13     Subdivision 1.  [MUNICIPALITY DEFINED.] For the purpose of 
  1.14  this section, "municipality" includes a municipal power agency, 
  1.15  municipal utilities commission, statutory or home rule charter 
  1.16  city, town, and county.  
  1.17     Subd. 2.  [TELECOMMUNICATIONS SERVICES DEFINED.] For the 
  1.18  purpose of this section, "telecommunications services" means the 
  1.19  transmission, switching, or provision of voice, video, or data 
  1.20  services, including, without limitation, telephone, cable, and 
  1.21  Internet services. 
  1.22     Subd. 3.  [AUTHORIZATION.] (a) A municipality, upon vote of 
  1.23  its governing body, may provide telecommunications services, 
  1.24  including without limitation the operation of a local exchange.  
  1.25  For the purpose of this section, the governing body for a 
  1.26  statutory or home rule charter city is its city council.  Prior 
  1.27  to voting to provide telecommunications services, the governing 
  2.1   body must:  (1) hold a properly noticed public hearing at which 
  2.2   the issue of the costs and benefits of providing 
  2.3   telecommunications services is discussed and public testimony 
  2.4   allowed; and (2) confer with the incumbent local exchange 
  2.5   provider about desired services that are not available, problems 
  2.6   with existing service options, and other concerns that have 
  2.7   caused the municipality to consider providing telecommunications 
  2.8   services.  A municipality providing service as a telephone 
  2.9   company or telecommunications carrier, except for services 
  2.10  incidental to providing natural gas or electric energy service, 
  2.11  must provide those services subject to this chapter and rules 
  2.12  adopted under this chapter, including, without limitation, the 
  2.13  provisions of section 237.16, subdivision 9, related to the 
  2.14  obligation to serve and participate in a universal service 
  2.15  fund.  A municipality may apply for any license, certification, 
  2.16  or other authorization necessary to provide telecommunications 
  2.17  services. 
  2.18     (b) If a municipality is served by a local exchange 
  2.19  telephone company with less than 50,000 subscribers, the 
  2.20  governing body of a municipality shall, prior to voting to 
  2.21  provide telecommunications services: 
  2.22     (1) comply with paragraph (a); 
  2.23     (2) certify to the public utilities commission the 
  2.24  telephone company has been provided notice and an opportunity to 
  2.25  address the municipality's service concerns and that: 
  2.26     (i) the telephone company is not making adequate 
  2.27  investments in telecommunications infrastructure which are 
  2.28  needed to provide requested services; 
  2.29     (ii) the telephone company is either providing inadequate 
  2.30  service, too expensive service, or is not offering certain 
  2.31  available services or service options requested by the 
  2.32  municipality, its businesses, or its residents; or 
  2.33     (iii) economic development in the municipality has been 
  2.34  hampered due to the lack of adequate telecommunications 
  2.35  infrastructure, services or service options, or due to the high 
  2.36  cost of telecommunications services in the municipality; and 
  3.1      (3) the municipality shall offer local exchange telephone 
  3.2   service throughout the exchange area and all contiguous exchange 
  3.3   areas of the telephone company within 12 months of the date that 
  3.4   the municipality provides service to any customer in such area, 
  3.5   unless resold services or facilities are not available from the 
  3.6   telephone company and cannot be made available at reasonable 
  3.7   costs. 
  3.8      Subd. 4.  [CITY CHARTER.] If a city charter authorizes the 
  3.9   provision of one or more utility services either by the city, an 
  3.10  agency of the city, or a municipal utility commission, the 
  3.11  authorization includes, subject to compliance with this section, 
  3.12  the authority to provide telecommunications services unless the 
  3.13  charter explicitly prohibits the provision of telecommunications 
  3.14  services. 
  3.15     Subd. 5.  [JOINT VENTURES.] A municipality may enter into 
  3.16  joint ventures and other arrangements with public and private 
  3.17  entities to provide telecommunications services.  The 
  3.18  municipality has all powers necessary or appropriate to provide 
  3.19  the telecommunications services authorized by this section, 
  3.20  including but not limited to the expenditure of public funds and 
  3.21  the transfer of real or personal property in accordance with the 
  3.22  terms and conditions of the joint venture and the joint venture 
  3.23  agreement.  The powers conferred by this section are in addition 
  3.24  and supplemental to the powers conferred by any other law or 
  3.25  charter.  If there is a conflict or inconsistency between this 
  3.26  section and any other law or charter provision, this section 
  3.27  prevails.  
  3.28     Subd. 6.  [NONPROFIT OR PROFIT CORPORATION.] A municipality 
  3.29  is explicitly authorized to create a corporation or a limited 
  3.30  liability company, either for profit or not for profit, to 
  3.31  exercise the authority granted to a municipality by this 
  3.32  section.  This subdivision does not limit the other entities a 
  3.33  municipality may create to implement its authority under this 
  3.34  section. 
  3.35     Subd. 7.  [AREA OF SERVICE; CUSTOMERS.] A municipality may 
  3.36  provide telecommunications services to public and private 
  4.1   customers in any geographic area the municipality determines 
  4.2   appropriate. 
  4.3      Subd. 8.  [SEPARATE ACCOUNT; NONSUBSIDIZATION.] Separate 
  4.4   accounts must be maintained by the municipality for its 
  4.5   operations related to providing telephone services.  A 
  4.6   municipality may not subsidize the rates for its 
  4.7   telecommunications services from any monopoly utility operation. 
  4.8   A municipality may invest in or loan sums for capital 
  4.9   improvements or investments between or among its 
  4.10  telecommunications operations and its other utility service 
  4.11  operations, provided the rates of return for these loans or 
  4.12  investments are commercially reasonable.  A municipality may 
  4.13  enter into arrangements for the allocation of costs or 
  4.14  cost-sharing agreements between or among its telecommunications 
  4.15  operations and its other utility service operations, provided 
  4.16  these allocations or agreements are commercially reasonable and 
  4.17  reflect the reasonable value of the benefits provided to each 
  4.18  utility service operation. 
  4.19     Subd. 9.  [NO MONOPOLY GRANTED.] This section does not 
  4.20  grant a monopoly to a municipality for the provision of 
  4.21  telecommunications services. 
  4.22     Subd. 10.  [LOCAL EXCHANGE OPERATION; ELECTION REQUIRED.] A 
  4.23  statutory or home rule charter city or county may not operate a 
  4.24  local exchange under the authority granted by this section 
  4.25  unless it is authorized to do so by a majority of the electors 
  4.26  voting upon the proposition at a general election or special 
  4.27  election called for that purpose. 
  4.28     Sec. 2.  Laws 1996, chapter 300, section 1, subdivision 2, 
  4.29  as amended by Laws 1997, chapter 232, section 1, subdivision 2, 
  4.30  is amended to read: 
  4.31     Subd. 2.  [POWERS.] (a) A joint venture under this section 
  4.32  has the powers, privileges, responsibilities, and duties of the 
  4.33  separate utilities entering into the joint venture as the joint 
  4.34  venture agreement may provide, and the powers provided under 
  4.35  paragraph (b), except that the joint venture, with respect to 
  4.36  retail electric utility services, may not enlarge the service 
  5.1   territory served by the joint venture under Minnesota Statutes, 
  5.2   sections 216B.44 and 216B.47, unless it receives the written 
  5.3   consent of the retail electric utility serving the area under 
  5.4   consideration. 
  5.5      (b) Such powers include, but are not limited to, the 
  5.6   authority to: 
  5.7      (1) finance, acquire, own, construct, and operate 
  5.8   facilities necessary for the provision of electric power to 
  5.9   wholesale or retail customers, including generation, 
  5.10  transmission, and distribution facilities; 
  5.11     (2) combine retail electric service territories, in whole 
  5.12  or in part, upon notice and hearing to do so with the public 
  5.13  utilities commission; 
  5.14     (3) serve electric customers in the two utilities' retail 
  5.15  electric service territories or in the combined service 
  5.16  territory and as provided in Minnesota Statutes, chapter 216B; 
  5.17     (4) combine, share, or employ administrative, managerial, 
  5.18  operational, or other staff which combining or sharing will not 
  5.19  degrade safety, reliability, or customer service standards; 
  5.20     (5) provide for joint administrative functions, such as 
  5.21  meter reading and billing; 
  5.22     (6) purchase or sell utility services at wholesale for 
  5.23  resale to customers; 
  5.24     (7) provide energy conservation programs, other utility 
  5.25  programs, and public interest programs, such as cold weather 
  5.26  shutoff protection, and energy conservation spending programs as 
  5.27  required by law and rule; and 
  5.28     (8) participate as the parties deem necessary or 
  5.29  appropriate in the provision of utility services with other 
  5.30  municipal utilities, cooperative associations, investor-owned 
  5.31  utilities, or other entities, public or private. 
  5.32     In the exercise of its powers, a joint venture under this 
  5.33  section may enter into additional joint ventures and other 
  5.34  arrangements with any public or private entity. 
  5.35     Sec. 3.  [REPEALER.] 
  5.36     Minnesota Statutes 1996, sections 237.19; and 237.20; and 
  6.1   Laws 1996, chapter 300, section 1, subdivision 5, as added by 
  6.2   Laws 1997, chapter 232, section 1, subdivision 5, are repealed.