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State lawmakers, Fitchburg mayor make case for 'muni' bill at Statehouse

By Chris Camire,

BOSTON -- Fed up with soaring electricity costs, lawmakers from North Central Massachusetts made a push at the Statehouse Wednesday to give cities and towns the tools to form their own utilities.

The legislation could lead to the creation of the state's first municipal electric utility in 85 years, which lawmakers say would result in better service and prices.

"If we can get it to the floor of the House for a vote, most people would agree it makes sense," said state Rep. Stephen DiNatale, D-Fitchburg, the bill's co-sponsor. "It's cost neutral and very simple. It provides a choice and an option to communities that they don't have today."

For nearly a century, utility companies have been given veto power over cities and towns efforts to purchase poles and wires from the existing utility and establish their own light authority. This bill would remove that veto power.

The legislation was introduced nearly a decade ago. Last year it gained more traction than ever before, making it out of committee, but failing to reach the House floor for a vote.

It remains to be seen whether the Committee on Telecommunications, Utilities and Energy will recommend the bill this year. The committee's co-chairman, Rep. John Keenan, D-Salem, said Thursday he plans to have his research staff examine how other states handle the issue, with a decision on whether to recommend the bill coming in the next few months.

"We have heard a great deal of support for the bill, but we have also heard testimony from those who are against it," said Keenan. "It's questionable whether the present structure works."

Fitchburg Mayor Lisa Wong said her city has suffered "extensive harm" because of the lack of choice.

Despite having one of the lowest per capital incomes in the state, Wong said Fitchburg is forced to pay the highest utility rates in Massachusetts, and one of the highest in the country. Fitchburg residents receive their electricity from Unitil, along with Lunenburg, Townsend and Ashby.

Numerous businesses have closed in Fitchburg due to high utility prices, said Wong, including Munksjo Paper, which resulted in the loss of more than 100 jobs. This week, Wong said she has heard from two businesses that may close due to high utility costs, one employing two people, the other 100.

"One would assume that a company that has acted with impunity would reform," Wong testified at Wednesday's hearing. "However that has not been the case. Instead, Unitil has continued to put companies out of business, and force residents to choose between paying their mortgage and their utility bills."

According to a 2010 state Department of Energy Resources report, electricity rates at municipal light departments is significantly lower than at investor-owned utilities.

In fact, in 2006, rates offered by the state's 41 so-called "munis" were 30 percent less.

Unitil charges significantly more than other investor-owned utilities in the state, according to the Massachusetts Alliance For Municipal Electric Choice, a private group that supports the bill and munis.

For example, Unitil charged $95 per 500 kilowatts from January to March this year, compared to $85 for NStar, $78 for WMECO, $73 for National Grid, and $70 for munis.

Calls to cut ties with Unitil were amplified after the major power outages in the Fitchburg area during the ice storms in 2008.

"Five days into the ice storm there was very little restoration happening," said state Rep. Jennifer Benson, D-Lunenburg, who said National Grid had to come in to restore power. "Their (Unitil's) communication with public safety officials was deplorable."

Still, Benson is concerned that if one community decides to end its relationship with Unitil, it could lead to the company increasing prices in surrounding towns to make up for lost profits.

"If Fitchburg chose to pull out, but the other three towns didn't, there would be a cost shifting to the other three towns, because costs would have to be distributed," said Benson.

Under the legislation, once the Department of Public Utilities determines the value of poles, wires and other equipment in a community, the utility would be required to sell the infrastructure if the municipality wants to form its own utility.

It would likely cost million of dollars to purchase this equipment which would prevent many communities from rushing to form their own utilities, said DiNatale.