Debating how to replace Unitil
By Damien Fisher
Posted: 01/11/2009
Getting rid of Unitil following the December power outages will be easier said than done, State Rep. Stephen DiNatale, D-Fitchburg, said this week.
DiNatale said all of the options under consideration will cost cities and towns a lot of money.
"That's the reality of it," DiNatale said. "You simply can't take over a company."
Leaders in the four Massachusetts cities and towns served by the Hampton, N.H.-based utility are all working to get rid of the company.
Townsend and Lunenburg are forming committees to study the feasibility of either starting a municipal utility or finding another alternative to Unitil.
Ashby selectmen want to push the state Legislature to allow for competition between utility companies and two Fitchburg city councilors are pushing an effort to take the city's electrical system from Unitil by eminent domain.
All four communities lost 100 percent power during the Dec. 11 ice storm. It took more than two weeks in some cases before the power was completely restored, prompting complaints about Unitil's response to the crisis.
The Massachusetts Department of Public Utilities formally opened its investigation into Unitil's response this week.
The DPU will hold its first hearing at the Memorial Middle School in Fitchburg at 4 p.m. on Jan. 27.
Representatives with National Grid and Unitil declined to comment on the efforts to remove Unitil from the area.
State Sen. Jennifer Flanagan, D-Leominster, is not sure what will happen, but she knows it will not be an easy process.
"To believe we are just going to be able to push Unitil out of this service area is a little unrealistic," she said.
Fitchburg City Councilor at-large Dean Tran does not hold out hope the hearing will change anything.
That's why Tran and fellow at-large Councilor Marcus DiNatale have started a petition in the city to look into taking Unitil's Fitchburg assets by eminent domain.
"I drafted that petition because I have very little confidence in the Department of Public Utilities to take any action against Unitil for their poor performance in the ice storm," Tran said.
Tran thinks the city can take the infrastructure of the old Fitchburg Gas & Electric Company and run the utility as a city department, or bring in a different utility company, like National Grid, to manage the department.
Tran sees this as the best way to get rid of Unitil.
"We need a solid solution in ridding our city of Unitil," Tran said.
Fitchburg would pay Unitil for the assets in the city and for one year of profit the company generates from those assets, under eminent domain law, according to Tran.
Tran would not estimate a cost for the taking of the property. Unitil Senior Vice President George Gantz has said the company invested more than $10 million a year in the Fitchburg area during the past 10 years.
Tran sees hope in getting the assets at a fair price by working with the company and the state to determine the actual market value.
"Unitil would have to provide proof of the value," Tran said.
Tran said it is too early to determine how the city would pay for taking the Unitil property. Operating the utility should not be a problem for the city, as it will be generating money, he said.
"Once you assume the gas and electric infrastructure, you assume the distribution and you start generating revenue," Tran said.
Marcus DiNatale thinks the city will have an advantage once all the information about Unitil's response comes out in the DPU investigation.
"I would like to first see the outcome of the investigation," Marcus DiNatale said. "The city would be in a better position to move forward."
Marcus DiNatale thinks taking the assets by eminent domain is the city's best option to get Unitil out of the area. He is willing to make this a long-term priority.
"It's not going to be easy and I'm not making any promises," he said. "We can't just pay lip service to this."
Townsend Town Administrator Greg Barnes said a committee to investigate forming a municipal utility and other viable options will be formed in the coming weeks.
"It creates options for the community," Barnes said.
Since Unitil is a private company, Townsend cannot compel the utility to sell, he said.
Pursuing the committee will give the town more leverage in finding alternatives to the company, he said.
No town has been able to form a municipal utility since 1926 because of the legal hurdles currently in place, according to Barnes.
He wants to work with legislators to make the process easier for towns to break away from utilities.
While individuals can opt out of utility service, entire communities are legally barred from switching utility companies, Barnes said.
That leaves purchasing as the most viable option, he said.
"You don't fire them, you buy them, if they want to sell," Barnes said.
Lunenburg Selectman Tom Alonzo said the town is looking at all legal options available to get rid of Unitil.
"We need facts on the alternatives," Alonzo said.
Putting together a regional effort to get rid of Unitil is one of the options Alonzo wants to explore.
"At some point in the near future, the committee will work on a joint effort," he said.
Alonzo wants all of the Unitil communities to take part in the hearings for the DPU investigation.
"There has to be a unified front," he said.
Ashby Selectman Geoff Woollacott wants to push legislators to make it legally viable to have competing electric utilities in the same community.
Flanagan said there are many unknowns when looking at the proposed paths to get rid of Unitil.
"I don't think there's a clear-cut answer," she said.
Stephen DiNatale sees the issues boiling down to money. Buying Unitil, either though a sale to set up a municipal utility, or through the eminent domain process, will take a substantial about of money, he said.
"You need the resources," Stephen DiNatale said.
Flanagan wants to focus on the DPU investigation and the testimony that is expected to come out. The DPU will look into the performance of Unitil and National Grid during the ice storm and subsequent power outages.
Flanagan hopes to see the DPU fine Unitil for the company's poor response.
DPU Spokesman Tim Shevlin would not comment on the possible outcomes of the investigations, but said the investigation will be thorough.
"We're going to do a very detailed look into their entire process," Shevlin said.
Flanagan thinks all communities with Unitil service will benefit from greater state scrutiny of the company.
"We're not going to forget this," Flanagan said. "We have to work to make sure people have service."