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Bill Could Spur Spread of Local Electric Utilities

By Laura Dannen
The Patriot Ledger, September 21, 2005

BOSTON - More than 100 cities and towns have endorsed a bill that would make it easier for them to run their own electric utilities and provide alternatives to NStar and National Grid.

"We have been victims of a monopoly power system that has not served us well," state Rep. Jay Kaufman, a Democrat from Lexington, said at a legislative hearing yesterday.
Kaufman, the lead sponsor of the bill, asked the Legislature's utilities and energy committee to "empower the citizens of our communities" by giving them the choice between public and private companies.

The bill would require investor-owned utilities, such as NStar and Massachusetts Electric's parent company, National Grid, to sell assets, including substations, poles and wires, to interested cities and towns at a fair market price set by the state if the municipalities want to set up their own utilities.

The legislation would allow three municipal electric companies, or "munis," to form every year.

There are already 41 municipal utilities in Massachusetts, including ones in Norwood, Braintree, Hull and Hingham. But no municipality has formed its own utility since 1926, primarily because there is no guarantee that a utility company will sell its assets once a community has undergone the extensive and often costly process of determining its feasibility, Kaufman said.

"Generally, our electrical service is reliable, but expensive," said Sen. Brian Joyce, a Milton Democrat and one of 40 lawmakers co- sponsoring the bill. "This legislation holds the promise of better rates and service."

Although rates charged by the investor-owned companies are regulated by the state, they still tend to be higher than those quoted by municipal utilities. The Massachusetts Alliance for Municipal Electric Choice, which backs the Kaufman bill, says municipalities charge an average of 24 percent less than NStar for residential service and 10 percent less for businesses.

Under the bill, before a city or town can switch to municipal electricity, it must undergo an assessment to see if it can afford the cost and have its plan approved by the state.

Representatives of NStar and Mass. Electric voiced opposition to the legislation.

"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," said Mark Reed, a spokesman for NStar.

But Walter McGrath, former general manager of the Braintree Electric Light Department, told reporters that municipal officials have more knowledge of the area and could respond to outages and other problems more efficiently. "It's all about local control," said McGrath.

"If you had a storm and didn't put the wires back up, the next board meeting, the community would be there."

The State House News Service contributed to this report.