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Muni-choice bill would make it easier for cities, towns to start utility

By Michael Hartwell,

BOSTON -- Activists say lobbying from the utility companies has historically blocked a bill intended to cap the infrastructure costs a municipality would have to pay when starting its own utility company.

Rep. Stephen DiNatale, D-Fitchburg, co-sponsor of the "muni choice" legislation and a member of the Joint Committee on Telecommunications, Utilities and Energy, said the bill would allow municipal governments to purchase the infrastructure of private companies, such as the electrical line system, for a price determined by the state's Department of Public Utilities instead of a price haggled between the company and municipal government.

The bill's public hearing will be at 10 a.m. June 8 at the Joint Committee on Telecommunications, Utilities and Energy on Beacon Hill.

Fitchburg Mayor Lisa Wong plans to testify in favor of the bill.

DiNatale said this would make it easier for a town or city to establish a regional municipal-run utility, or "muni." Under the bill, the investor-owned utility that owns the electric infrastructure would not be able to hold out for a higher price and must sell its property for the assessed value.

"It's a significant piece of legislation that's going to change the landscape," DiNatale said.

There are currently 41 munis in the state and the last one was formed in 1926.

"Most communities are not in a position to establish a muni," said DiNatale. He said most municipal governments don't even bother to apply for a muni because they expect the utility companies to turn down any offer.

DiNatale said he believes this is the third time this bill with the same wording has been filed, but it usually dies in committee.

That's because of lobbying, according to Patrick Mehr of Massachusetts Alliance for Municipal Electric Choice, a private group that supports the bill and munis.

"They are, in our view, desperately trying to protect their monopoly," said Mehr. His group's website shows figures from the state's Public Records Division that the Unitil, National Grid and NStar utilities spent more than $100,000 on lobbying against last year's version of the bill.

The website compares that to $3,000 spent by the Massachusetts Municipal Association to lobby in support of the bill.

Alex O'Meara, spokesman for Unitil, the power company that serves Fitchburg, Lunenburg, Townsend and Ashby, said his company has been consistently neutral on the bill each year and does not plan to speak at the public hearing.
(Note by MAMEC: this is incorrect; in Jan-June 2010, lobbying firm O'Neill & Associates opposed the bill, then called HB3087, on behalf of Unitil as one can see here by searching for HB3087)

O'Meara said Unitil has not received any offers from municipal governments and that as a publicly traded company, it would have to meet and vote on any offer for the sale of infrastructure.

"If that's correct, why do they fight this so much?" said Mehr. He and DiNatale said muni rates are lower, on average, by about $30 a month for each customer.

O'Meara endorsed a report the state's Department of Energy Resources released in January 2010 on municipal utilities. The report said that the lower rates may or may not happen for some time, because the municipal will have to pay off the cost of the infrastructure.

DiNatale said while he believes lobbying plays a role in all legislation, he thinks this bill has had so much trouble in the past because the wording needs to be precise.

He said a lot of potential side-effects from the bill need to be considered, such as whether the value of the loss of future business should be included in the infrastructure cost assessment.