41 munis, but no new ones since the 1920s

BY: Gabrielle Gurley
Issue: Energy and the environment

July 27, 2010

THERE ARE 41 MUNICIPAL electric companies scattered across Massachusetts that charge, on average, 21 percent less for their power than the four investor-owned utilities that serve the rest of the state. But no munis have been established since the 1920s.

The reason utilities like National Grid and NStar have a lock on the business is because they can reject municipal attempts to purchase their assets in a town even after the Department of Public Utilities sets a reasonable price for them. Legislation filed by Sen. Robert O’Leary, a Barnstable Democrat, and Rep. Jay Kaufman, a Lexington Democrat, would change that, requiring a utility to sell its assets in a community if the DPU sets a price and a town agrees to pay it.

“The point of this legislation is to create competition so that the large investor-owned utilities don’t consider their service areas as God-given monopolies,” says Patrick Mehr, the statewide coordinator for the Massachusetts Alliance for Electric Choice, a group pushing for the change.

Even if the bill passes, few expect a stampede of municipal takeovers. A state study of the issue found that municipalities trying to break into the power business now would incur heavy debt burdens, exorbitant startup costs, and probably end up charging higher rates. “The idea of putting enormous new burdens on the cities and towns’ balance sheets…is not to be done lightly,” says Philip Giudice, the Department of Energy Resources commissioner.