Joint development agreement with NSTAR reduces project cost and debt service to ratepayers
By Staff reports
Belmont Citizen-Herald Posted Jun 14, 2013
Belmont, Mass. — Belmont Light has announced that electric ratepayers in Belmont will see a 6% rate hike beginning June 15, 2013. The bulk of the increased cost is necessary to cover debt service on the critical new substation and transmission line project approved by Town Meeting in February, 2012. The expected rate increase of 14% when approved at Town Meeting has been significantly reduced due to the decision to sign a Joint Development Agreement with NSTAR that drastically reduces the previously estimated cost of the project.
The capacity of Belmont’s current electric delivery system is maxed out. Further, the current system suffers from significant power quality issues, and its distribution infrastructure is antiquated and needs a technological and physical upgrade. To address these critical issues, in February 2012, Town Meeting approved borrowing up to $53.7 million for construction of a new sub-station and transmission line into Belmont. At the same time, the Board of Selectmen was assigned the responsibility of thoroughly investigating and analyzing all feasible options for future transmission needs before settling on the best solution.
20 Flanders Road was chosen as the site for the Municipal Light Department Substation. Wicked Local photo by Christine Kenney
After a year of intensive analysis of various voltage and configuration options that included direct and in depth consultation with NSTAR, the Belmont Light Board, the Municipal Light Advisory Board and Belmont Light have determined that the construction of a 115 kV single-loop transmission line is the least costly and most efficient option for the future of reliable delivery of power to Belmont. In addition to its technical reliability and efficiency advantages, the cost studies performed by both Belmont Light and NSTAR concur that while the 13.8 kV transmission option would cost Belmont $58.9 million, the 115 kV option would have a maximum cost of $53.7 million.
Additionally, Belmont Light and NSTAR have signed a Joint Development Agreement (JDA) that describes ownership issues within the new project. Under this agreement, Belmont will finance the construction of the 115 kV line and then sell it to NSTAR at a cost of approximately $30 million. While this agreement allows NSTAR to own the transmission line in their transmission territory, the benefits of this ownership agreement for Belmont are substantial. Under this agreement NSTAR will own the transmission assets, but the Independent System Operator – New England (ISO-NE) will operate the line. Thus, for the first time in its history, Belmont ratepayers will be fully integrated onto the New England Grid without having to pay an intermediary for connections. Belmont Light will continue to be responsible for distribution, will build a new, state-of-the-art sub-station to serve the town, and will retire the present substations. Upon selling the transmission line back to NSTAR, Belmont’s debt service on the total project will be cut from $53.7 million to approximately $23 million. Rate increases to Belmont ratepayers of 14% anticipated in February 2012 to meet the cost of this important project will now be set at 6%.
“While we all realized that we had no choice but to immediately address the limits of our electric infrastructure here in Belmont,” said Selectman and Belmont Light Board Chairman Mark Paolillo, “we will now be able to do so at a much more affordable cost.”
Municipal Light Advisory Board (MLAB) Chairman Ashley Brown added, “While no one wants to see an increase in electric rates, without a timely solution Belmont would soon be in the position of being unable to provide affordable and efficient electricity to our citizens, businesses and municipal users. This is a tremendous solution for our future energy needs and our ability to significantly reduce the cost of the project and future service means the anticipated rate hike is less than half of the original estimates.”
Belmont Light General Manager Jim Palmer credited the strong leadership throughout Belmont in helping to bring the best project to Belmont. “We brought a strong solution to Town Meeting in 2012,” said Palmer, “and over the past year we have continued to refine the project responsibilities and ownership agreements under the strong guidance of the Light Board, MLAB and other Town Leaders. I would like to thank the Belmont Light project team in addition to these Town Leaders in delivering the least costly and most efficient solution to the residents of Belmont.”
The rate increase will take effect on June 15, 2013.
For questions about the rate increase or details of the new substation and 115 kV transmission line project, please call Belmont Light at 617-993-2800.