The entrance to the utah Supreme Court is pictured at the Capitol in Salt Lake City on Tuesday, Jan. 19, 2021. The Supreme Court ruled in favor of three Utah cities in a dispute over rights to provide electricity in a ruling published on Thursday. (Kristin Murphy, Deseret News)
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SALT LAKE CITY — The Utah Supreme Court has ruled in favor of three Utah County cities in a dispute over rights to provide electrical services to residents in annexed portions of Payson, Spanish Fork and Salem.
This ruling, issued Thursday, clarifies that these three cities have the ability to serve all of their residents with power, even those in recently annexed areas. However, there are still key issues being addressed in the courts between the cities and the other party, the South Utah Valley Electric Service District.
David Tuckett, Payson’s city manager, said that there are maybe seven or eight customers within Payson who are currently receiving electricity from the district, but there are also new annexes of Payson being served by the district that would be transferred over to electrical service form Payson, according to the Supreme Court’s interpretation of state law procedures.
“We have a desire to serve all of our residents as our city expands to new areas,” Tuckett said.
Payson has had its own power company since the late 1800s and has continuously served its residents with power, Tuckett said. He said they have always felt the city has the right to serve customers who are residents of Payson.
Chief Justice Matthew Durrant issued the court’s opinion, affirming a ruling previously delivered in a state district court that sided with cities’ rights to provide power to new areas that become part of those cities.
The opinion explained that South Utah Valley Electric Service District was established in 1985 as a way to provide affordable electricity for rural areas in the south of Utah County; however, as the cities have expanded, they have grown to include those previous rural areas that were served by the district.
The service district is concerned that losing customers to the city will make it impossible to provide affordable service to its remaining customers, the filing said.
The Supreme Court’s ruling explained that this debate is not new; the courts handled a separate case between the district and Spanish Fork in 1996. At that time, they ruled that Spanish Fork could provide electricity to customers in similar areas, but that they would have to pay the fair market value of facilities dedicated to providing electrical service in the area to the district.
The ruling said that before the current lawsuit was filed, “the cities and the district entered multiple agreements in an attempt to resolve their differences, but those efforts ultimately failed and the parties filed suit against each other in 2018.”
The Supreme Court’s ruling says that the cities argued that there have not been changes to the law since the previous decision and that the same ruling should hold. The Fourth District Court and Utah Supreme Court both agreed.
Mark Morris, an attorney for the South Utah Valley Electric Service District, said the district is still looking at the impacts of the Supreme Court ruling, which was published on Thursday.
“We’re disappointed, but it’s only been a day and so we’re still analyzing its effect on the district and the remaining claims in the case,” he said.
Morris added there are still disagreements about what the compensation from the cities to the district should be, and the district hopes to be compensated for its loss of infrastructure and lost revenue from customers.
“The district wants to be fairly compensated for its electric customers that the cities want to take over from the district because the district has a substantial investment in the infrastructure to serve all of its customers,” he said.
The Fourth District Court in Provo is still considering aspects of the initial lawsuit — specifically, the amount of reimbursement that the cities need to pay to the district power companies under the state statute.
The ruling also explained that the district had argued that the code being considered applies to customers outside city boundaries instead of customers within, and that there is a separate statutory process for the city to begin providing electricity to areas that are part of the district.
Seth Perrins, city manager for Spanish Fork, said that the city was involved in the lawsuit because they are concerned with ensuring that growth in the city is orderly. He used an example of an annex of farms converted into new subdivisions in the city, and in this instance, Spanish Fork would want to have the right to serve the new part of their city.
“As we grow, it’s very important to our municipality that we have uniform services across boundaries,” Perrins said.
In the past, the city has had a single electric provider; and since the provider is the city, residents’ electricity bill is paid to the city along with bills for water, sewage, garbage, electricity and broadband. Spanish Fork residents most often only have a separate utility bill for their natural gas.
“It really actually had nothing to do with finances or budgets,” Perrins said.
He added that they do want to make sure the district is compensated fairly for this adjustment and clarified that they have not had any issues with the service from South Utah Valley Electric Service District.
In the current case, the district court is still considering whether the cities still owe reimbursement money to the district under a 1998 agreement as well, according to Phil Russell, an attorney for the cities.
He said that the cities’ hope is to get the remaining issues resolved now that the major hurdle in the case has been cleared.