Concord Monitor

Municipal power gains currency
More towns turning to public ownership

The Associated Press
October 09. 2005

BELMONT, Mass. - Nearly a century ago, incensed residents voted overwhemingly to buy the power lines, poles and street lights in their town and take control of their utility system from the unreliable Somerville Electric Light Co.

That vote paved the way for creation of the Belmont Municipal Light Department. Now, some lawmakers and consumer advocates want to make it easier for other cities and towns to do the same.

Legislation spearheaded by Rep. Jay Kaufman, a Lexington Democrat, would remove from state law a clause that defends utilities from municipal takeover. If it passes, power companies would have no choice but to sell local assets to cities and towns for a price arbitrated by the state Department of Telecommunications and Energy.

It's been nearly 80 years since a Massachusetts community purchased the power lines, transformers and substations that light up homes and businesses and turned them into a public utility.

For Ron Lunt, manager of Belmont's power company, there's more of a spark to the municipal utility than just the juice coursing to the town's 10,500 homes and businesses.

There's the lower bills and quick response times when lines go down and lights go out.

There's also something a little less tangible: he answers to the residents of this suburb northwest of Boston, not to shareholders and far-off corporate executives.

"If there's something you want to talk about," he says, "my door is always open."

Private, investor-owned utilities have pledged to fight the bill. They say they won't get a fair price for their assets, and towns can't do the job on their own. A takeover would unfairly shift costs to customers, they argue.

"Things have changed in the electric industry and in the world market that have made it so that it's just not in the best interest of towns and cities," NStar spokeswoman Caroline Allen said.

But Patrick Mehr, a member of a committee that wants to create a municipal power provider in Lexington, dismisses that complaint. Towns are more than capable of doing the job, he said - and doing it better.

He compares NStar's service in his town to nearby Concord, Mass., which manages its own power supply. In Concord, the light department was able to bury power lines in the historic downtown, something Lexington has been unable to force NStar to do. A chief argument from supporters is lower costs. According to the Massachusetts Alliance for Municipal Electric Choice, municipal rates are 24 percent lower on average than private utilities, a number the companies don't dispute.

Even if no cities and towns actually create "munis," Mehr said, the very threat of municipal takeovers would jumpstart better service by NStar and the state's other private electric distributors.

"People are just getting totally sick and tired of NStar," he said. "It's just unacceptable."

Munis peaked in popularity a century ago, when there was barely a market for electricty and cities and towns wanted to replace unreliable gas street lights with electric ones.

Back then, it wasn't a matter of choice, according to David Schap, a Holy Cross professor and author of a 1985 book on municipal power companies.

"The dominant reason for entering into municipal electric light companies before 1900 was just to get service - of any kind," Schap said. "It was either do that or not have service at all."

But after a brief resurgence during the New Deal era, few municipal electric companies have formed across the nation. In Massachusetts, the last one created was in 1926 in the western Massachusetts hamlet of Chester, which has just 625 meters today.

Forty-one of the state's 351 cities and towns have municipal electric companies, serving about 15 percent of the population. They range from tiny Russell in Western Massachusetts, which has 450 meters, to Taunton, with more than 34,000. Nationwide, there are about 2,000, the largest being Los Angeles.

Ursula Schryver, a spokeswoman for the American Public Power Association, said about 20 munis have formed in the last decade, and the 2000 power crisis in California piqued interest. A desire for lower energy costs drives much of the interest, she said, but the biggest factor is local control.

"They do it to address what issues are important to their community, whether that be lower rates or higher reliability," she said.

Jim Owen, spokesman for the Edison Electric Institute, a national industry group, admitted that private utilities don't like to lose customers and can have higher costs. But he said the disadvantages of local control can overshadow the benefits, such as taking on debt, inexperience, and unseen perils in the energy markets.

"The issue of lower cost may in fact be a mirage," he said. "I might be willing to concede that there could be slightly lower costs in the short term, but those potential modest savings could easily be completely canceled out by some of the other risks."

Marilyn Rapa, a lifelong Belmont resident, said she's always been pleased with her service.

"They come right out if there's a storm," she said.