Re-volting cost sparks debate
The power struggle is on.
By Sarah Andrews/ Chronicle Staff
Thursday, February 2, 2006
On the issue of whether Cambridge should operate its own electricity company, some city councilors objected this week to City Manager Bob Healy’s recommendation that doing so would be too expensive.
"We’ve created authorities before ... our well-being in this community depends on the ability to deliver products," said City Councilor Michael Sullivan. "And frankly, NSTAR does not do that."
It could cost Cambridge between $115 million and $170 million to acquire its own electric company, or "muni" as they’re sometimes called, according to a report commissioned by Healy.
In addition to the purchase price, consultants Camp Dresser McKee estimated that Cambridge could expect a total investment of $200 million to $250 million over the first three years, once decommissioning costs, additional equipment and yearly maintenance are factored in.
After that, maintenance could run between $35 million and $40 million per year.
Because of the exorbitant costs, the city’s current debt and project wish-list, Healy said he didn’t recommend pursuing a "muni."
"The capital expenditure required ... would greatly impact the city’s capacity to continue or commence other necessary capital projects and would, in all likelihood, have a negative impact on the city’s bond rating," he wrote in a letter included with the report.
But some councilors and members of the public questioned the report, which was compiled from data collected through the Department of Transportation and Energy.
"[The report’s] contents, I think, could use some more digestion, but also greater depth," said Sullivan.
Sullivan referred to the city’s other successes in creating its own Water Department, which now provides water at a cheaper rate than the state authority, and the recent purchase of street lamps from NSTAR, which allows the city to repair broken lights at a faster pace.
City Councilor Anthony Galluccio said he wanted to see costs factored out over the next 50 to 100 years and called for "more review."
According to data from the Massachusetts Alliance for Municipal Electric Choice, residents in towns with a "muni" pay 24 percent less for electricity than do customers of large energy providers, while commercial properties pay about 10 percent less.
There are 41 "munis" in the state, including Belmont, Concord and Braintree. Energy costs vary from town to town.
Patrick Mehr, a member of Lexington’s Electric Utility Committee and head of MAMEC, disputed findings in the report, including an estimation that it would cost Cambridge 10 percent more to run an electric company than it would NSTAR.
"The report is full of inaccuracies, and the report simply looked at the metrics around how NSTAR operates," he said.
In Cambridge last year, Mehr said residents paid an average of $71 per month for electricity, about 33 percent more than residents in Peabody, Taunton, Reading and Chicopee, who all have "munis."
But Mayor Ken Reeves said he thought the report was a good starting point. "[The $250 million figure] is a ballpark idea if we wanted to go in that direction," he said. "Now, can we accommodate that number and do everything else we want to do? I think the answer to that is no."
Currently, a bill at the State House, which is endorsed by Cambridge and state reps. Alice Wolf, Anne Paulsen and Tim Toomey, would make the creation of "munis" easier by mandating sales once an agreement on an infrastructure’s value is reached between a municipality and utility company.
While it’s legal to create "munis" now, MAMEC says the current law is too difficult. A new "muni" hasn’t been created in the state since the 1920s.
Last year, city councilors asked Healy to research creating a "muni" in Cambridge, saying NSTAR’s rates were too high and their service too slow.
City Councilor Henrietta Davis, the chairwoman of the public utilities committee, sided with other councilors in saying the issue needed more attention.
"It’s not just a financial matter," she said. "It’s also a question of how we’re going to proceed over the next century as we look at renewable energy."
Contact Sarah Andrews at firstname.lastname@example.org