Bill may ease way for town light plant
Law would force utilities to sell distribution setup
By Denise Dube, Globe Correspondent, 12/25/2003
Officials in Lexington are closely watching state legislation that could pave the way for Lexington to set up its own power company.
A State House hearing is expected in the next few weeks on bill H1468, which would force utility companies to sell wires, poles, and other infrastructure to any community looking to take over its own electricity distribution.
In Lexington, the town-appointed Electric Utility Ad Hoc Committee has spent the last year supporting the bill and researching a town-run power station, but would like to see it pass before starting a company, said the committee's chairman, Paul Chernick.
Acquiring the infrastructure, which in Lexington's case would be purchased from NStar, would be crucial to starting a municipal power company. "This legislation removes the ambiguity in the current law which allows investor-owned utilities like NStar to, in effect, veto the formation by a town of its own municipal utility," said committee member Patrick Mehr.
State Representative Dan Bosley, the North Adams Democrat who introduced the legislation in January 2002, said, "We're going to try and help Lexington out. They have clearly done a lot of work. They have done a lot of homework. I'm sympathetic to them."
But Bosley added that the pending legislation is "not going to go as far as the communities want." He said legislators are trying to strike a balance between public safety and what municipalities are seeking.
The bill's language, Bosley said, will probably prevent communities from owning substations and generating power, and may only allow buying and reselling power as Concord and Belmont currently do. The bill also will include language that promises the utility companies a fair price for their equipment.
The legislation has substantial support around the state. According to Mehr, 106 municipalities and organizations have endorsed the bill, and Arlington's selectmen were expected on Tuesday to become number 107.
Lexington's state representative, Democrat Jay Kaufman, said he expects the bill to reach the House floor next month, or February at the latest.
Kaufman, one of the bill's lead sponsors, said the legislation would empower communities and their citizens to take utility issues into their own hands and look for more cost-effective ways of operating. But, "there, precisely, is the rub," Kaufman said. "The big utility industry stands to lose if this passes and they are not without resources and influence in the Legislature. They are not going to go silently as we try to move into their territory."
Kaufman said there would be substantial savings to residents and better service, "because we'd be dealing with our own local people, not some anonymous corporation."
In Concord, which had had its own power company since 1898, "our rates are 25 percent below NStar's," Concord Municipal Light director Dan Sack said in a recent interview.
NStar spokesman Mike Durand said the company does not support the legislation. "Decisions to take over an electric system will have enormous economic, societal, and reliability consequences, and cannot be taken lightly," he said.
Durand noted that investor-owned utilities currently maintain the national economic grid, and he wondered how separate, town-owned entities would take care of anything outside of their towns. He added that "NStar pays more than $82 million a year in taxes to the cities and towns we serve. . . . Government-owned utilities do not pay taxes. We all know those tax revenues are critical to funding schools, fire, and police departments."
Passage of the bill would be just a first step toward a municipal light company in Lexington. According to Mehr, it will cost about $10 million to buy the infrastructure, which, he said, is in poor condition, and another $2.5 million for start-up costs such as trucks and staff.
If, further down the road, the town decides to start its own power generating company, that would require even more money, a location for a power plant, and a company willing to build and generate electricity. Chernick sees that as totally different from a town-owned municipal light company that buys and distributes rather than generates power.
"Many of the [state's] 43 municipal light plants don't own any generation," he said. "You don't have to be a power plant to be a light plant."
"Just setting up a municipal agency that buys power and maintains the distribution system and reads the meters and sends bills -- that's enough to keep the town busy for a couple of years," Chernick said.