boston globe

Utility board under fire for refusing to sell assets

By John Laidler |  GLOBE CORRESPONDENT    
FEBRUARY 02, 2012

The Reading Municipal Light Department board’s decision to retire its renewable energy certificates, rather than sell them, has drawn fire from some local officials and residents.

The decision, which the board approved by a 3-2 vote Jan. 5, will deprive the municipal utility of nearly $32 million in revenues it would otherwise receive over the next 14 years, critics said.

The utility serves about 28,500 customers in Reading, North Reading, Wilmington, and Lynnfield center.

“I believe we should be putting some money into renewable energy,’’ said Marsie West, who chairs the Reading Finance Committee and is running for a seat on the light board, in part over the issue. “But I strongly oppose not selling an asset that could offset that cost, particularly since there is no financial benefit gained to holding that asset.’’

In view of the objections, which also have been made by North Reading selectmen, the municipal light board last week agreed to put off until mid-June retiring the first of the renewable energy certificates, which will expire at the end of June.

“This is a controversy in which one side says you can’t honestly say you are green unless you have a certificate. The other says you are green: The benefit of your investment was made the moment you signed the contract,’’ said John Arena, a Reading Town Meeting representative and Finance Committee member.

“We think it’s socially and environmentally responsible to add a small piece of renewable power to our portfolio, and the board voted unanimously to do that,’’ said Richard Hahn, chairman of the municipal light board. “My view is we should stay that way now and not sell it.’’

When producers of renewable energy sell their power, they can include renewable energy certificates, which represent the environmental benefits of one megawatt hour of renewable energy generation. Once acquired, the RECs can be sold to investor-owned utilities to help them comply with state rules requiring a minimum portion of their power to come from green energy sources.

If the certificates are retired by the utility - effectively removed from the market - or expire on their own, they cannot be sold, and the utility can count the renewable energy as part of its portfolio.

The Reading Municipal Light Department is acquiring its RECs from 15-year contracts it signed last year to purchase hydroelectric power from Swift River LLC in Western Massachusetts, and biomass - or wood-burning energy - from Concord Steam LLC, in Concord, N.H. The RECs are provided as power is generated.

The Jan. 5 vote by the municipal light board was to retire the RECs as they become due over the life of the two contracts, according to Vincent Cameron, the department’s general manager.

State law requiring investor-owned utilities to include a minimum amount of renewable power in their energy mix does not apply to municipal utilities.

“In order to make sure that we bought renewable energy, we also purchased the RECs,’’ Hahn said, noting that under state law, energy is not defined as renewable unless accompanied by a REC. “So if we surrender those RECs or sell them, we will no longer have renewable power. It’s as simple as that.’’

Hahn said that with or without the RECs, the department plans to purchase the hydro and biomass power for the life of the contracts. “If you were to sell the RECs and claim you were renewable, I believe at the very least that would be misleading and perhaps worse,’’ he said. “And since we started out on this adventure several years ago seeking renewable energy . . . I think we should keep them.’’

The vote to retire the certificates by the board of light commissioners - all of whom are elected in Reading - came after its advisory board, which includes representatives from the four towns, took the same position in a 4-1 vote that night.

It went against the recommendation of Cameron, however, who said he believed the RECs should be sold.

Unlike investor-owned utilities, Cameron said, municipal utilities do not have to retire the RECs they acquire. Proceeds from REC sales could be put toward rate relief for the department’s customers, he said.

Cameron said other municipal utilities have sold their RECs.

Both the hydro power, which the light company is contracted to purchase for 9.5 cents a kilowatt hour, and the biomass power, which it buys at 12 cents per kilowatt hour, are more expensive than fossil fuel energy, which costs 5 to 6 cents per kilowatt hour, according to Cameron.

All five members of the North Reading Board of Selectmen attended last week’s meeting of the light board to voice concern with the decision, and object to not having more opportunity to provide input prior to the Jan. 5 vote, according to Robert J. Mauceri, chairman of the North Reading selectmen.

“We are looking out for the ratepayers of our community,’’ Mauceri said. “One of the questions I asked is what is the financial downside of selling these and no one could come up with anything.’’

John Laidler can be reached at