Unitil Customers Mull Their Options

By Livia Gershon
Worcester Business Journal Staff Writer

“Beloved utility company” may be an oxymoron in some circles, but for residents of four North Central Massachusetts towns, grumbling about New Hampshire-based Unitil Corp. is something of an art form.

Residents of Fitchburg, Townsend, Lunenburg and Ashby blame the company’s rates, which are higher than those National Grid offers in neighboring towns, for keeping businesses away. They grumble about tree trimming disputes and “blue sky” outages. Most of all, they show no signs of wanting to forgive the company for its response to the December 2008 ice storm that left many in the area without power for as long as two weeks.

Yet what to do about the situation remains an open question. The Massachusetts Department of Public Utilities recently issued an order calling on the company to resolve a number of issues that contributed to the inadequate response to the storm, and Unitil said it’s already well on its way to making the improvements on its own initiative. The state also recently passed a new law, widely known as the “Unitil bill” that would allow officials to levy heavy fines against any company that failed to respond appropriately to a natural disaster, or even place the company in receivership for up to a year.

Official Sanctions

To some locals, though, it’s nowhere near enough.

“From a moral standpoint I’d like to see them out of business,” said Cathy Clark, a Lunenburg resident who has been organizing against the company since the ice storm with the group known as Get Rid of Until.

Clark and others in the area say they’re disappointed that the DPU did not follow the Attorney General’s recommendation to fine Unitil $4.6 million for its ice storm response. The department said it doesn’t have the power to issue such a fine. In a separate case, the DPU did order the company to pay its natural gas customers $4.6 million that it says it overcharged them. The department also promises to take the problems it found with Unitil into consideration when the company brings forward its case for a rate increase to cover the costs of storm recovery.

Unitil spokesman Wes Eberle said it’s too early to speculate on what a rate case, which has not been scheduled yet, might bring. He noted that the company decided not to pursue a case to recover the costs immediately.

“The company did not think now was the time, in 2009, to expose rate payers to higher costs during what is already difficult times,” he said.

Thinking Local

Meanwhile, local residents, town officials, and the state legislative delegation from the area are pursuing several other courses of action. A class action suit concerning the utility’s response to the ice storm is now moving forward in Worcester Superior Court. And local politicians are trying to find a way to let individual communities dump the company in favor of a municipal utility.

A process to convert to a “muni” is already on the books, but advocates say it’s impractical. Under the current law, communities can only buy out their local system if their current investor-owned utility agrees to sell. If it doesn’t, their only option is to construct a whole new infrastructure to compete with it.

Legislators from Unitil’s coverage area are supporting a bill, first introduced a few years back, that would require utilities to sell if the local community demanded it. But Fitchburg State Rep. Stephen DiNatale, who serves on the Joint Committee on Telecommunications, Utilities and Energy, said there are concerns from the state Senate about how to accurately assess a utility’s assets to determine a fair price.

“We’re at the very, very beginning of the discussion on this,” he said.

Local officials in Lunenburg don’t want to wait. A utility task force that the town formed after the ice storm is now trying to create a process that would let the town use established eminent domain law to take over the utility.

Chairman Bill Gustus said the proposal would let the town go through a process to determine the value of the utility’s business in town and then decide whether to buy it out. To get the process started, local voters must authorize the town to file legislation, which the state Legislature must then vote on. The local vote is scheduled for a Dec. 1 special town meeting.

Gustus said the Lunenburg-specific initiative might be easier for the legislature to pass than one that would affect the whole state.

“That’s a bigger issue, and I think it’s a very difficult bill to get passed because it affects all utilities, even the ones that are providing relatively good service,” he said.

Of course the question of whether Unitil is, or could soon be, providing good service is a matter of debate. Eberle said the company has already spent millions of dollars addressing service issues brought to the fore by the ice storm. He said it’s also put lots of staff resources into the process, with efforts like a recent company-wide emergency drill.

To some, though, even if all the problems raised by the ice storm were fixed, the relatively high cost of Unitil services remains troubling.

In contrast, in some of the communities that Unitil serves in New Hampshire, price may be less of an issue. Howard Altschiller, executive editor of the Seacoast Media Group, which publishes papers in Hampton, Exeter and Portsmouth, said Unitil customers there had many of the same reactions to the storm as those in Massachusetts. But he said they aren’t particularly worried about the company’s rates.

“Overall New Hampshire energy costs are pretty high,” he said. “I don’t think Unitil is out of line with the other companies in the area.”

Altschiller said locals considered Unitil’s reaction to the storm a “mess,” and faulted the company more than other utilities in the area, but he said the company is on a better foot now.

“I think Unitil has acknowledged a lot of the problems, and they’ve got a better plan going forward,” he said.

In Massachusetts, at least some Unitil customers are less willing to give the company the benefit of the doubt.