Background

Depending on the city or town in Massachusetts, electricity distribution is done by

> an
investor-owned utility (or IOU), NStar, National Grid, Western Mass Electric or Unitil; IOUs serve 85% of the Massachusetts population.
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> or a
municipal electric utility (or muni), in yellow on the map; 41 munis – including Braintree, Norwood, Peabody, Danvers, Ipswich, Reading, Wellesley, Belmont, Concord, Shrewsbury, Holyoke, Westfield or Taunton – serve 15% of the Massachusetts population.

Here is a map of Massachusetts cities and towns served by IOUs or munis.

Since restructuring in 1997, Massachusetts
IOUs no longer generate electricity and, just like munis, only distribute to end-users electricity purchased wholesale from power plants.

A
white paper presented to Governor Deval Patrick's transition team in December 2006 explains that, compared with IOUs, munis offer:

>
lower electricity rates

>
improved reliability (fewer and shorter outages, for example in Shrewsbury or Groton), perhaps because munis have 47% more linemen than NStar, National Grid and Unitil, amounting to hundreds more linemen than IOUs for the same territory served; perhaps NStar does not do enough preventive maintenance because it spends millions of dollars instead on its top executives' compensation.

> responsiveness to
local priorities (green energy, energy efficiency, placing wires underground).
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The Marblehead Muni placed utility wires underground (Left: before - Right: after)

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NStar breaks the State law when double poles remain in place for more than 90 days

An
analysis of electricity distribution costs shows that IOUs spend more to distribute electricity in suburban areas (where electricity consumption per mile of wires is low) than in urban areas; therefore, an IOU’s urban customers subsidize that IOU’s suburban customers (since rates are the same across the whole IOU).

State law (MGL Chapter 164) describes the process a city or town must follow to create a muni by acquiring the distribution equipment from the incumbent IOU at a fair price, set by the State. But Chapter 164 needs to be modernized for that option to be truly feasible: its century-old language effectively gives IOUs a veto over new munis. No community in Massachusetts has formed a muni since 1926 (when Fort Devens closed in the 1990s, the Army-owned distribution system was converted into a partial muni, a special situation).

In 2002, 8 legislators filed bill H1468 to provide the necessary clarification. The Boston Globe called the bill "A promising bill [...that] would restore some power to the consumer". Like most bills in their first legislative session, H1468 was not enacted because it became part of a broader electricity bill which itself did not move forward.

In the 2005-06 legislative session, 40 legislators refiled the legislation as Bill H3294 to clarify our State law, with Representative Jay Kaufman (D-Lexington) as chief sponsor. After a public hearing on September 20, 2005 before the Legislature's Joint Committee on Telecommunications, Utilities and Energy, the Boston Globe wrote "Municipal power companies can and do outperform the big power brokers. [...] local communities should be allowed to seek the best deal for their customers -- the taxpayers". The Joint Committee killed Bill H3294 (and Bill H4204, a Lexington home rule petition similar to H3294) by sending them to "study" in March 2006.

In the 2007-08 legislative session, 53 legislators led by Representative Jay Kaufman, refiled the legislation, as Bill H3319, "an act relative to the establishment of municipal lighting authorities." The legislation was not enacted, but section 107 of the Green Communities Act required DOER to study the fiscal impact, viability, barriers and long-term results of establishing new munis. DOER issued its report in January 2010 (summary here).

In the 2009-10 legislative session, 47 legislators led by Representative Jay Kaufman in the House, and Senators Robert O'Leary and Marc Pacheco in the Senate refiled the legislation, as bills H3087 and S1527.

35 out of 160 Representatives co-sponsored
House bill H3087: Jay Kaufman, Geraldo Alicea, Cory Atkins, Jennifer Benson, William Brownsberger, Jennifer Callahan, Steven D'Amico, Viriato deMacedo, Stephen DiNatale, Sean Garballey, Anne Gobi, Denis Guyer, Robert Hargraves, Jonathan Hecht, Louis Kafka, Kay Khan, Robert Koczera, Stephen Kulik, Timothy Madden, Paul McMurtry, Charles Murphy, Matthew Patrick, Sarah Peake, Denise Provost, Robert Rice, Jr., Richard Ross, John Scibak, Frank Smizik, Christopher Speranzo, Thomas Stanley, Ellen Story, Timothy Toomey, Jr., Cleon Turner, Martha Walz and Alice Wolf.

12 out of 40 Senators co-sponsored
Senate bill S1527: Robert O'Leary, Marc Pacheco, Cynthia Creem, James Eldridge, Susan Fargo, Jennifer Flanagan, Anthony Galluccio, Patricia Jehlen, Brian Joyce, Michael Knapik, Anthony Petruccelli and Bruce Tarr.

In June 2010, the Joint Committee on Telecommunications, Utilities and Energy sent the Muni-Choice Bill, redrafted as Bill H4792 to the House Ways & Means Committee chaired by Representative Charles Murphy. Despite the MMA's strong support, Chairman Murphy did not release H4792 before July 31, 2010, killing it for the 2009-10 session.

In the 2011-12 legislative session, the Muni-Choice Bill H869 was refiled by Representatives Jay Kaufman (15th Middlesex), Stephen Kulik (1st Franklin), Ellen Story (3rd Hampshire), Thomas Stanley (9th Middlesex), Ruth Balser (12th Middlesex), Thomas Conroy (13th Middlesex), Cory Atkins (14th Middlesex), William Brownsberger (24th Middlesex), James Dwyer (30th Middlesex), Jason Lewis (31st Middlesex), Jennifer Benson (37th Middlesex), Frank Smizik (15th Norfolk), Martha Walz (8th Suffolk), Richard Bastien (2nd Worcester), Stephen DiNatale (3rd Worcester), Dennis Rosa (4th Worcester) and Senators Gale Candaras (First Hampden & Hampshire), James Eldridge (Middlesex & Worcester), Karen Spilka (Second Middlesex & Norfolk), Jennifer Flanagan (Worcester & Middlesex).

The Joint Committee on Telecommunications, Utilities and Energy held a public hearing on June 8, 2011 at which we testified, and favorably reported H869 out as H3896 on January 24, 2012, with language valuing IOU assets at “50 percent of the net book value, plus 50 percent of the reproduction cost new less depreciation”, well above “unamortized investment” which State law uses for streetlights. As bill H3896 was in the House Committee on Ways and Means, we worked to get its IOU asset valuation language reverted to “unamortized investment” – ratepayers have already paid anything above that to the IOU.

But the Muni-Choice Bill was killed on June 27, 2012 when 14 Representatives led by Rep Jay Kaufman filed the Muni-Choice bill with improved language as amendment #15 to bill H4198 (also known as S2214) “relative to competitively priced electricity in the Commonwealth”. During debate of S2214 on the House floor, Rep Winslow offered a substantially similar amendment, which Rep O’Day claimed to be beyond the scope of S2214. House Speaker Pro Tempore Haddad ruled so, even though new munis would put downward pressure on IOU electricity prices and amendment #38 about the IOUs’ vegetation management practices – something that has almost nothing to do with “competitively priced electricity” – was allowed (malegislature.gov/Bills/187/House/H04198, Amendments tab, #15 and #38). A roll-call vote (119 Yeas, 34 Nays) affirmed the ruling, killing the amendment. You can watch the proceedings here, in Part 2, from 47:14 until 64:25. On July 10, 2012, Rep Jay Kaufman learned that House Speaker DeLeo and House Ways & Means Chair Dempsey would not allow the Muni-Choice bill to come up for a vote before the session ends on July 31, 2012.

* * *

Several organizations (including the Massachusetts Municipal Association, Environment Massachusetts, Mass Energy Consumers Alliance, MASSPIRG, the Mass Climate Action Network, and the Cape Light Compact) have endorsed this legislation.

The
legislation is also endorsed by 145 of Massachusetts' 351 cities and towns (directly, or through the Cape Light Compact or the Franklin Regional Council of Governments) representing 63% of the population served by IOUs in Massachusetts. By individual IOU, these 143 cities and towns account for 90% of the population served by NStar, 44% of the population served by National Grid, 40% of the population served by Western Mass Electric and 100% of the population served by Unitil in Massachusetts.

The legislation gives the option to form up to 3 munis per year, creating for the first time in Massachusetts a form of competition in the distribution of electricity. This will lead IOUs to improve their service, lower their rates and become more responsive to local needs all across the State, even if very few new munis are created. As a result, all Massachusetts residents and businesses will benefit.