SD House passes HB 1262

Bill to be heard in Senate Commerce and Energy

South Dakota House Bill 1262 was heard on the House floor Wednesday, February 26. Introduced by Representative David Anderson of Hudson and Senator Jack Kolbeck of Sioux Falls, the bill establishes a mandatory process and timeline before a municipality may annex property into its electric service territory.

After more than an hour of floor debate, the bill passed on a vote of 48 in favor and 20 opposed with two excused. After first reading in the Senate, it was assigned to the committee on Commerce and Energy.

It will be heard in committee Thursday, March 5 at 10:00 a.m. in Room 414 of the State Capitol.

South Dakota Public Power and the Coalition to Preserve Consumer Choice strongly oppose HB 1262, citing provisions that exacerbate government red tape and create uncertainty.

“This bill harms private property owners, hinders economic development, creates government bureaucracy and takes away a municipal electric utility’s right to grow,” said Heartland Director of Economic Development and Governmental Affairs Casey Crabtree.

HB 1262 stems from 2019 bill, summer study

HB 1262 is part of an on-going attempt by the state’s rural electric cooperatives to prevent municipal electric utilities from serving in annexed areas. Their first attempt was made during the 2019 Legislative Session when they introduced Senate Bill 66 which would have frozen electric service territory.

Ultimately, SB 66 was amended to establish an interim legislative committee to study issues related to electric services in an annexed area.

The nine-member committee met all day in Pierre on three separate occasions from June-November. After more than 20 hours of meetings, testimony from more than 50 witnesses and review of more than 300 presentation slides, the committee considered nine legislative drafts before concluding a territory freeze was not the solution.

Both municipal and rural electric providers expressed satisfaction with the study’s outcome and pledged to continuing working together towards a solution. Despite efforts, a formal agreement was never established prior to the 2020 legislative session.

“We have been more than willing to sit at the table and discuss reasonable agreements,” said Crabtree. “We will not give up the right to provide electricity within the growing boundaries of our communities, but are willing to negotiate terms around annexation.”

Coalition says bill is bad for South Dakota

Introduced in late January, HB 1262 gives cooperatives the ability to bring annexation issues to the courts, not only for compensation, but also the right to serve.

The Coalition says the bill:

  • Interferes with property owners’ rights
  • Creates a long, unnecessary drawn-out process
  • Effectively kills economic development by creating uncertainty surrounding the development
  • Incentivizes cooperatives to interfere with city functions

The group also says the bill ignores the recommendations put forth by the summer study committee.