Unkept power promises
By Steve Bailey
Globe Columnist / November 9, 2007
Last year NStar ranked 48th out of 49 utilities nationwide in customer satisfaction, according to J.D. Power and Associates' annual survey of residential and business customers.
You decide whether moving up to a tie for 44th place this year constitutes cause for celebration. I'm not applauding yet: The power in my house in Cambridge went out twice last week. On the other hand, NStar did manage to keep the lights on five out of seven days.
Electric deregulation has turned out to be a sorry disappointment. The competition that was supposed to provide better service and lower prices never happened. Just this week The New York Times reported retail electric prices have risen much more in states like Massachusetts that have adopted competitive pricing than in those that have retained traditional rates set by government.
What to do? Competition remains our potential ally - but that is the last thing NStar and the other big utilities want. And the Legislature continues to protect its friends in the utility business, one of the most powerful lobbies on Beacon Hill.
Yesterday the governor and legislative leaders stood together on an ambitious bill to promote energy conservation and innovation. For all the moving parts in the bill there was not a dime available to even study expanding an old-fashioned concept that is working remarkably well at holding down electric prices in 41 Massachusetts communities: That is, creating new municipal electric companies that could light a fire under NStar and other underperforming utilities.
This is not some untested idea. Municipal electric companies, or munis, have been around forever - including in places like Los Angeles and Seattle - and they have an excellent track record of providing good service at good prices. Consider: Over the first nine months of last year, NStar customers paid 68 percent more for the same power than the average Massachusetts muni customer did, according to the Massachusetts Municipal Wholesale Electric Co. That difference was 41 percent the year before and 27 percent the year before that, according to the MMWEC.
There are reasons for the differences, but not enough to explain away the munis' decided advantage. Investor-owned utilities like NStar pay property taxes; munis don't. Munis have the advantage of tax-exempt financing and don't pay into the state's renewable energy trust. Operating in cities like Boston and Cambridge is more expensive than in leafy suburbs like Concord and Wellesley. Then again, munis don't put Whitey Bulger's accomplices on the payroll, and bill the ratepayers as NStar once did.
Lexington and a handful of other communities would like to investigate starting a muni, but have been blocked for years by NStar, which like all monopolies likes things the way they are. To move forward, the communities need legislation that would make it practical to buy the local assets of major utility companies, including the poles, wires, and substations, at fair market value.
Jay Kaufman, a Lexington Democrat who has patiently championed munis for years, says his colleagues have legitimate concerns, among them: How to assess the fair market value of a utility's poles and the like? Do the communities have the expertise the run the systems? Who cleans up the mess if a muni fails?
To answer those questions, Kaufman has crafted a proposal that provides five communities $150,000 each to investigate the feasibility of running their own utility and another $100,000 for state regulators to study the potential and problems. With the exception of the redevelopment of Fort Devens, there hasn't been a local municipal electric company formed in Massachusetts since 1926. Considering how much was promised and how little delivered by deregulation, $850,000 tucked into the Legislature's sweeping new energy bill would seem to be a small price to pay, all things considered.
The line item might read: promises unkept.
Steve Bailey is a Globe columnist. He can be reached at email@example.com or at 617-929-2902.