Study says municipal utilities charge less for power
By Jack Newsham GLOBE CORRESPONDENT MARCH 26, 2015
Massachusetts’s municipal electric companies have charged far less than private companies such as National Grid and Eversource over the first several months of the year, according to data from a nonprofit that tracks rates.
The Massachusetts Municipal Wholesale Electric Co., a quasi-public company that serves the state’s more than 40 locally-controlled electric companies, said the state’s “munis” charged a typical household that uses 500 kilowatt-hours of electricity $73 to $74 over the first three months of 2015. The state’s investor-owned utilities -- Eversource, Unitil, and National Grid -- charged $121 to $135 for the same amount of electricity, 64 to 83 percent more.
The price gap was less pronounced in other periods. Depending on where they lived, Eversource customers paid 11 to 67 percent more than munis over the past 10 years, while National Grid customers paid from 1 to 33 percent more, according to data collected by Patrick Mehr, who advocates for municipal electric companies.
Investor-owned utility companies said the data provided an incomplete picture. Danielle Williamson, a National Grid spokeswoman, said her company was required to set its rates by a process set by the state. She also said it had to pay for energy efficiency and renewable energy programs that municipal power companies didn’t.
“We provide the infrastructure and it’s the backbone of the grid that we all use,” said Michael Durand, a spokesman for Eversource. “We pay taxes on every single pole, every foot of wire, every single piece of equipment.” The company paid the city of Boston $62 million in taxes in its last fiscal year, he said, about 2 percent of the total city budget.
Municipal electric companies weren’t affected by electricity deregulation in the 1990s, which required the state’s utilities to sell their power plants and purchase electricity for their customers in six-month blocks. Power plants submit bids saying how much electricity they’ll be able to provide at what cost, and utilities pick the lowest bidders and pass those costs on to ratepayers.
Mehr thinks that system should be changed, and said the Legislature should make it easier for municipalities to form their own power companies.
“So-called deregulation aimed only at half the electric bill, the generation, the power plants. Nothing was done to the other half, the distribution costs,” he said. “If municipal utilities are allowed, there will be competition.”
Legislators have sponsored a bill each session for more than a decade to make it easier to form a muni, but it has never been passed. In the current legislative session, 18 representatives are sponsoring a House bill supported by advocates like Mehr.
Jack Newsham can be reached at firstname.lastname@example.org. Follow him on Twitter @TheNewsHam.
patrickmehr 03/26/15 09:19 PM
As often when commenting on municipal utilities, Eversource and National Grid spokespeople raised irrelevant or false issues in this story:
- energy conservation and renewable charges of 0.3 cents per kWh amount to $1.50 for 500 kWh, or 3% of the extra $48 that National Grid now charges above the average muni rate -- I wish Ms. Williamson had told the Globe why National Grid charges the remaining $46.50 above muni rates...
- munis pay out of their rates a transmission charge to the owners of the transmission infrastructure they use, so what Eversource's Mr Durand says about "infrastructure" is irrelevant;
- a 2010 State DOER report on munis found that munis pay more in PILOTs (payments in-lieu of taxes) to their local communities than IOUs pay in local taxes: see item 5 in http://massmunichoice.org/resources/Annotated-summary-of-DOER-muni-report.pdf
The extent by which Massachusetts investor-owned utilities Eversource, National Grid and Unitil have been charging more than municipal utilities since 2003 is documented in the table on http://massmunichoice.org
Massachusetts Alliance for Municipal Electric Choice