Officials say Unitil 'neutral' on current muni-choice bill
By Michael Hartwell, firstname.lastname@example.org
FITCHBURG -- This week, as the state Department of Public Utilities prepares to announce Monday if it will allow the Unitil utility company to raise its rates, Unitil spokesman Alex O'Meara admitted to incorrectly listing the company's stance on muni-choice bills in the recent past.
Currently filed as Bill H869, supporters of the muni-choice bill say the proposed legislation would make it easier for towns and cities to purchase the infrastructure from private companies needed to run its own electric-utility company, known as a "muni," by having the Department of Public Utilities determine a price. Versions of the bill have been proposed in previous years but have not gone further than the Joint Committee on Telecommunications, Utilities and Energy.
In previous interviews, O'Meara said that Unitil has always been neutral on the different versions of the bill. Carol Valianti, Unitil vice president of communications, said that statement was a mistake and the company opposed the version from the 2009 to 2010 legislative session.
"The bill has been very dynamic and has changed over time," said Valianti. She said the previous version of the bill grew to include portions that resembled eminent domain, where a government body chooses a price and forces the owner of private property to sell for that amount, even if the owner doesn't want to sell.
Valianti said Unitil hired the O'Neill and Associates public affairs firm that conducted the lobbying for government relations in general.
The Lobbyist Public Search website of Secretary of State William Francis Galvin lists O'Neill and Associates lobbyist Matthew C. Irish as being paid by Unitil to oppose bill H3807, which was the version of the muni-choice bill in the 2009 to 2010 legislative session.
Valianti described Irish's lobbying efforts against the bill as "hallway conversations" with politicians. She said the company is neutral on the current version of the bill, but is monitoring it for any changes.
Differences between the current version of the bill and the previous version include a different way of determining the value of the utility company. The previous version used the net book value, which is the original price paid adjusted for any changes, while the new bill states it will use the "sale price or the value of the property."
Other changes include a 1 percent compliance penalty on utility companies that fall behind deadlines and a new section for municipal governments to submit a plan giving customers a retail choice.
Valianti said theoretically a municipal government could form a muni now if it wanted to, but Patrick Mehr of Massachusetts Alliance for Municipal Electric Choice, a private group that supports the bill and munis, said it is impossible in practice.
Mehr said a town or city could try to form a muni by purchasing the power lines and infrastructure from an investor-owned utility like Unitil, but said the company could simply reject any price offered and veto the action to avoid being cut out of the market.
Alternatively, the municipal government could install a second set of power lines on the other side of each street, but Mehr said the dual-infrastructure approach would be seen as ridiculous, costly and a waste of a lot of space.
Mehr said the dual-infrastructure model was feasible when the current utility laws were written a century ago and a fraction of buildings were hooked up to a small system. Today utility infrastructures are sprawling and link to every building in each municipality.
There are currently 41 munis in the state and the last one was formed in 1926. Mehr said the intention of the muni-choice bill isn't to actually form new munis, but to allow the threat of forming a muni push investor-owned utilities into keeping costs and rates down.
"If I were running a large investor-owned utility I would support the bill as a way to communicate to the world that I welcome competition," said Mehr.
Unitil is the sole supplier of electricity and natural gas for Fitchburg, Lunenburg, Townsend and Ashby.
Because of the large infrastructure required to operate, the state allows utility companies to operate heavily-regulated monopolies in municipalities and requires permission to raise rates.
O'Meara said a rate increase was filed in January because overall costs have gone up and the company needs to pay for storm-recovery costs following the 2008 ice storm.
"It wasn't the overriding thrust, but it was part of it," he said.
With the proposed rate change, nearly 42 percent of residential customers would see a rate increase between 0.4 and 7.3 percent. The remaining majority of residential customers use less than 600 kilowatt-hours a month and would not see an increase.