Mass. Market
An inside look at the Massachusetts business scene
Boulder’s analysis of starting a municipal utility could be instructive for Massachusetts
2011 November 8
by Jon Chesto
New Englanders who are frustrated by the delays in power restoration during this year’s big storms might be able to look to Boulder, Colo., to study a possible solution to their own community’s woes.
Last week, that city’s residents narrowly voted to move forward with the process of divesting its power lines, poles and transformers from Xcel Energy and establishing a municipal electric system. This process could take years, and Boulder has plenty of room to back out if it looks like the costs would be too high.
Boulder’s motivation seems to be primarily about protecting the environment (Xcel apparently isn’t moving fast enough with reducing greenhouse gas emissions). But the recent discussions around Massachusetts show that city and town officials here would be motivated by the simple desire to keep the lights on in a storm – or to get them back on quickly if the power goes out.
Boulder’s actions could still be instructive for Massachusetts, even if the motivation is different and the laws and regulations governing this complex process aren’t quite the same. That’s because it’s quite unusual for a new municipality to be born these days in this country – and it essentially never happens with communities that are as big as Boulder, which has a population of nearly 100,000.
The number of municipal systems in Massachusetts has remained stable for decades, at 41. Proponents of the shift have been pushing for state legislation that would make it easier for cities and towns to set up one of their own electric utilities. Current state law, they say, essentially gives the incumbent utility company too much control over whether to sell its wires and related equipment to a city or town.
But the bigger obstacle to forming a municipal utility these days might be the cost. Boulder officials say the price tag should be under $300 million, while Xcel says it should be paid close to $1.2 billion. With a nearly $1 billion divide between the two, you can bet that both sides’ lawyers are going to be quite busy before a final price is ever reached.
The bill circulating on Beacon Hill is partly aimed at keeping a lid on these upfront costs. But it’s reasonable to assume that the initial price might not be cheap.
Municipal systems around here certainly have proven themselves to be more reliable during and after a storm. And they tend to be less expensive, at least here in Massachusetts, than NStar or National Grid. But those enviable electric rates are available in muni systems where the actual poles and wires were paid off a long time ago – not ones where a utility company needs to be paid hundreds of millions of dollars today.