Senate Takes Testimony on Provisions of Certain Utility Service Contracts

Posted on March 6, 2014 by Dene Westbrook

Senate Local Government Committee took testimony yesterday on SB 687 sponsored by Senator Darwin Booher (R-Evart). This bill would regulate the provision of utility services (water, sanitary sewers, wastewater treatment, or electricity) provided by certain municipalities to other municipalities. It would prohibit a municipality providing utility service to another municipality from terminating the service, or refusing to renew the existing contract for the service, for any reason other than a lack of physical ability to continue providing that service.

This bill was introduced because of a situation in Senator Booher’s district involving the City of Cadillac and 4 surrounding townships. Cadillac City Manager Marcus Peccia did a terrific job testifying on behalf of the League. He expressed not only the concerns of Cadillac and their specific situation, but also the statewide implications this legislation could have.

The main concerns about this legislation include that it effectively voids any end date or termination clause in a contract our communities may have with a surrounding municipality because this bill would not allow that contract to be terminated and offers guaranteed renewal. Voiding a contracts expiration date does not promote good faith negotiations between parties. Rather, it provides an incentive for the non-providing community not to accept terms of a new contract that may include a higher rate for service because service must continue. Finally, this bill would have a significant impact on future collaboration efforts between communities because of the lack of certainty that would happen at the end of an expiring contract.

The League is opposed to this legislation and is very concerned about the impact of this legislation statewide.

John LaMacchia is a Legislative Associate for the League handling transportation and infrastructure issues. He can be reached at [email protected] or 517-908-0303.

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