High cost for school power
By Matt Lynch/Daily News staff
Sun Jan 20, 2008
Towns relying upon NStar for electricity often pay at least twice as much as towns with municipal electric utilities, according to a recent study by Lexington officials, a fact advocates of municipal utilities say underscores the need for state reform.
Several MetroWest legislators, including state Sen. Pam Resor, D-Acton, and state Rep. John Fernandes, D-Milford, have signed on as co-sponsors for legislation that would make it easier for communities to start municipal utilities.
A study by the Lexington Electric Utility Ad-hoc Committee shows high schools using NStar generally pay between 17 and 19 cents per kilowatt-hour for electricity, compared to 9 to 10 cents per kilowatt hour for power from municipal utilities.
"In Lexington, we're sick and tired of getting hammered," said Patrick Mehr, a member of the ad-hoc utility committee.
A survey of MetroWest schools shows similar results, with schools using NStar paying as much as 23.3 cents per kilowatt-hour compared to a high of 15 cents per kilowatt-hour for municipal power.
Companies such as NStar only deliver the electricity through the wires on their respective grids, so the cost to towns also includes the purchasing of the power itself from its original source, such as Constellation Energy Group or TransCanada.
"Towns have better service and less expensive service if they have municipal power," said Resor. "And they can respond quicker to local priorities."
The number of towns using municipal power in Massachusetts, however, is not likely to increase beyond the current 41 unless the Legislature changes the process for switching, advocates say. It has been more than 80 years since a town began a municipal utility in the state, officials said. Among the locally owned utilities are Hudson Light & Power Department; Shrewsbury Electric and Cable Operations; the Concord Municipal Light Plant; Norwood Municipal Light Department; and the Wellesley Municipal Light Plant.
For a town to start its own municipal utility, it must first buy all of the equipment from the existing company, an enormously expensive task. Resor said the proposed legislation would put a cap on how much the companies could charge for the equipment.
NStar officials argue the process is slow for a reason, given the massive investment and risk a town takes when it starts its own municipal utility.
"Proponents seek to speed up the process, but the flaw is that the existing law works because it is a long and deliberative process," said Mike Durand, an NStar spokesman.
"That's by design because of the potential for financial risk. The costs of starting one now, with all of the financial challenges facing towns, would be prohibitive."
Durand also said one of the reasons NStar bills are higher is because the company's rates subsidize energy efficiency programs, fund research for renewable energy and green power, and assist low-income families.
"The benefits are large, but there is a cost involved," said Durand. "For example, it allows us to offer subsidized rates to low-income families and only fools would say that's anything but a good idea."
Resor said she does not expect the bill will make it into law. "There are strong forces in opposition," she said. "I don't think it's likely to be passed."
Some area communities are seeking other ways to lower the cost of electricity.
Marlborough, for instance, has switched to an aggregate system for residents and small businesses in which customers can opt out of National Grid service in favor of a Community Choice Power Supply Program. The delivery is still handled by National Grid but the city purchases the power in bulk directly from a provider.
"(National Grid) doesn't make money on the supply, only on the delivery," said Brian Murphy, president of the Colonial Power Group, which runs the system. "National Grid only delivers power like a mailman only delivers mail. They don't care how we get it or how we pay for it."
Still, most communities likely lack the resources to start an aggregation program, Murphy said.
"It's simple in execution but the design of the program is where it's difficult," he said. "Most communities don't have the resources and the personnel to pick someone on staff and say, 'Your job is to design, implement, and administer a plan for electricity."'
Matt Lynch can be reached at 508-490-7453 or email@example.com