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Bill would make town 'munis' easier

By Cyndi Roy/ State House News Service
Thursday, September 22, 2005

Saying they want the option of better service at a lower price, more than 100 cities and towns are supporting legislation that would make it easier for municipalities to establish their own electric companies.

A bill (H 3294) sponsored by Rep. Jay Kaufman, D-Lexington, and 40 co-sponsors would require investor-owned utility companies like NSTAR and Massachusetts Electric to sell their assets - poles, wires, and substations - to interested cities and towns once state regulators determine a fair market price. Municipalities could then run their own municipal electric companies, or "munis."

Testifying on the bill before the Committee on Telecommunications, Utilities, and Energy Tuesday, supporters said allowing cities and towns to control their own electric power will lead to better rates and improved service, and will increase pressure on utility companies to lower their own prices.

"There is tremendous dissatisfaction with the poor service utilities in general provide," said Patrick Mehr, a member of the Electric Utility Committee in Lexington, a town that does not have a muni. "The key purpose of this bill is not much to see new munis formed, but to create a new form of competition."

The possibility of switching to a muni would be a valuable bargaining chip for every city and town, Rep. Tom Stanley, D-Waltham, said.

"One of the most important functions of this bill would be to force NStar to come to the table, and to provide more prompt attention to service calls," said Stanley, who represents Lexington and Waltham in the House of Representatives.

Last spring, Lexington Town Meeting unanimously approved bill H 3294.

Across the state, 41 cities and towns have established munis. Residents in those communities pay an average of 24 percent less than residents who get their electricity from NSTAR, according the Massachusetts Alliance for Municipal Electric Choice.

The bill requires cities and towns to undergo an extensive assessment to determine whether they can afford to establish their own electric company, and subjects the plans to state review. The bill also limits to three the number of munis that can be established each year.

But no municipality has formed a new muni since 1926, primarily because there is no guarantee a utility company will sell its assets once a community has undergone the extensive, and often costly, process of determining its feasibility, Kaufman said.

"There's a lack of clarity in the language of the state law," he said. "Nothing says the purchase has to go through. Utilities can take us through the theater of negotiations, but it's just theater."

NSTAR and Massachusetts Electric oppose the bill, and say current law prevents rash takeovers by cities and towns that may not be prepared to run their own electric companies.

"Energy markets are no-play spaces for consultants or government employees who have no experience with the many risks involved," said NSTAR Public Affairs Director Mark Reed. "The consequences of rashness or incompetence are tremendous, and present enormous exposure for customers of government-run distribution systems. Public officials who are not energy experts may make serious and costly mistakes that will be paid for by local consumers in the form of higher rates or higher taxes."

The companies also say that the current system allows costs to be spread equally between affluent and lower income communities. If more wealthy communities begin establishing munis, the costs will be shifted to poorer residents.

"Wealthier communities may be able to finance the acquisition of a distribution company's infrastructure but the customers in the remaining communities will face additional costs since the fixed costs of services like metering, billing, and customer service will be spread on the remaining customers," said Joseph Newman, vice president and Director of Public Affairs for Massachusetts Electric.

Gary Sullivan, president of the Utility Workers Local 369, spoke against the bill, saying it would make it too easy for cities and town to get in over their heads. "If you make it too easy to do, then you rush into it," Sullivan said.

He said some munis do not adequately maintain equipment, creating problems for neighboring towns in distribution networks that often cross town lines.

However, officials from Concord, one of 41 municipalities statewide that have munis, say the town is satisfied, and is doing better than neighbor Lexington, which uses NStar. Kaufman agreed.

"We have been the victims of a utility service that has not served us well," said Kaufman. "They want the right to be at the table so they can actually have a meaningful conversation with their investor-owned utilities."

Staff Writer Galen Moore contributed to this report.