A controversial bill that was originally intended to let communities own their own electric plants could cost existing municipal plants millions of dollars a year, or force them to sell to National Grid, NStar and other investor-owned utilities, some plant managers say.
The original bill was filed as a result of all the problems communities have had with the large utility companies, including the prolonged loss of power after several major storms. The intent was to allow for the establishment of new municipally owned electric companies. Most of the munis, as they are commonly called, are about 100 years old. The last one was started in the early 1920s.
The redrafted bill, House 3896, which recently came out of the Joint Committee on Telecommunications, Utilities and Energy, some observers say, will make it too costly for communities to start an electric company.
But the main concern for municipal utilities is the sections that were added without their knowledge that would require the current 40 municipal electric plants to send money into the state Renewable Energy Trust Fund to pay for renewable-energy and energy-efficiency programs that they are already doing on their own. Customers of the major utility customers pay a small amount on their monthly bills to the state trust.
The bill would allow communities with municipal utilities to become green communities under the Green Communities Act of 2008. About $10 million in grants is available annually to green communities for energy-efficient projects. Muni communities are currently exempt from the 2008 act.
Muni managers estimate the passage of the bill in its current form would cost their local ratepayers $12 million in the first year.
“The biggest concern for us is the assault on local control … under the guise of creating new municipal light departments,” Gregory DeStasi, manager of the Paxton Municipal Light Department, said. “The heart of the municipal light department is they’re owned by the folks they serve. Every single ratepayer can speak with the manager and the board and have an effect on every issue they feel is important, something they cannot have with investor-owned utilities.”
Many munis already exceed the renewable efforts that the state and federal governments mandate, said Brian Allen, manager of Princeton’s municipal electric department. Among the ones in Princeton are two wind turbines on the western slope of Mount Wachusett.
“Why do they have to mandate something that we’re already doing?” Mr. Allen asked. “It’s just a case of government coming in and saying, ‘We’re going to take over and mandate.’ We don’t need more rules. We just need a level playing field.”
James Kane, chairman of the Shrewsbury Board of Selectmen, said the bill is poorly written and would cost the town’s ratepayers about $1.9 million a year. Mr. Kane said many of the statewide programs the money would fund are already being provided by Shrewsbury Electric Light and Cable Co., including energy conservation, solar panels on homes and buildings, and rebates on energy efficiency appliances. SELCO also helped the town apply for a $150,000 grant for energy conservation upgrades at Coolidge Elementary School.
The Shrewsbury utility, along with munis in Ashburnham, Paxton, Holden, Sterling, Templeton, Boylston, West Boylston, Peabody, Groton, Hull, Wakefield, Marblehead and Ipswich, built the $60 million, 10-turbine, 15-megawatt wind farm on Brodie Mountain in the Berkshires, which went on line last May. It’s the largest wind farm in the state.
Mr. Kane said the chance of getting a grant through the Green Communities Act is not worth the certainty of rate hikes for SELCO customers.
“I see this bill as an attempt to reach into the muni systems and fund the commonwealth’s green energy programs that have done nothing to address our chief economic competitiveness issue: the price of electricity,” he said. “This is an example of a bill that got hijacked in committee and deserves to be sent to study.”
The bill is currently in the House Ways and Means Committee.
State Sens. Jennifer L. Flanagan, D-Leominster, and James B. Eldridge, D-Acton, are members of the Joint Committee on Telecommunications, Utilities and Energy. Both have munis in their districts. Ms. Flanagan said the intent of the committee was to draft a cohesive energy plan. She also said she has heard from constituents in the north central part of Worcester County, which sustained some of the longest power outages during storms, who want to be able to have municipal light departments.
Mr. Eldridge, who co-sponsored the original bill with state Rep. Jay R. Kaufman, D-Lexington, said he didn’t vote for the redraft, because he opposes the changes that were made. He represents Hudson and Littleton, which have municipal light plants.
“I share the managers’ concerns. I do agree there needs to be some provisions taken out of the redrafted bill,” he said. “But, just looking beyond the managers, I do get calls from constituents who are served by munis that want to become green communities. I hope there can be a process by which we can reach a compromise.”
Yakov D. Levin, manager of Hudson Light and Power, said the bill would cost the plant’s 12,500 customers about $2.7 million the first year and $4 million by 2020.
He said even those large rate increases would not be sufficient, resulting in reduced services and an erosion of the system’s reliability.
“I really think this could be the end of public power in Massachusetts,” he said. “The only advantage for us to exist is good service and low rates. If those two disappear, the residents who own us may be look to improve and sell light departments to the large investor-owned utilities that will have all the resources to take over.”
Mr. Levin said the bill would also have the opposite effect of what was intended, because most communities lack money to buy distribution systems to start municipal electric plants, pay operational and maintenance expenses and pay into the state-mandated programs.
Rep. John D. Keenan, D-Salem, co-chairman of the joint committee, said he understands some of the concerns about the impact of the bill. He said he probably should have had more discussions with muni managers before the bill was reported out of committee. He said legislators thought it would be worthwhile to rewrite the bill to make the munis subject to the Green Communities Act.
Soon after the bill’s passage, Mr. Keenan said, he told some managers of municipal electric plants that he would be more than happy to meet with them to continue to work on the bill. He said the discussion will include the renewable-energy and energy-efficiency efforts munis are already making.
“Every bill is an evolution. It’s part of the process. I look forward to having a discussion with them,” Mr. Keenan said in an interview Friday. “This was certainly not intended to surprise them in any way or otherwise be an affront.”
He said legislators are also aware that the bill in its current form might make starting an electric plant too expensive for most communities.
“Probably a handful of communities would think about it. But, I don’t know how many at the end of the day would be able to pull the trigger, based on the cost,” he said.