snl power daily northeast
Monday 15 August 2005
Power Daily NORTHEAST Covering New York, New England and the mid-Atlantic
Massachusetts bill would ease creation of municipal utilities

By Kelly Harrington

A proposal under consideration by Massachusetts lawmakers would make it easier for municipalities to form their own utility companies.

State Rep. Jay Kaufman, primary sponsor of H.B. 3294, said there are a number of communities that might be interested in forming municipal or regional electric utilities.
"There's a great deal of consumer unrest about the monopoly that the major power suppliers now have," he said.

Municipal districts that currently exist, Kaufman said, were created during or before the 1920s. The legislation seeks to change that by amending existing law to allow a municipality to appeal to the Department of Telecommunications and Energy to set a purchase price for equipment should the community and a distribution company not reach an agreement.

"Given the movement toward a deregulated marketplace, the encouragement of municipal options seems to me to be consistent with that trend," he said.

While having the ability to enhance competition in the state, the legislation's main benefit is merely offering a choice to customers, Kaufman said. "In simply offering choice there is the prospect of less expensive electricity and better service," he said.

Although the legislation, likely up for a September hearing before the Joint Committee on Telecommunication, Utilities and Energy, is intended to spur the creation of municipal utilities, Kaufman urges caution. Creating a municipal utility, he said, requires due diligence.

The bill, sponsored by about 40 lawmakers, is being supported by the Massachusetts Alliance for Municipal Electric Choice. The group, which supports efforts to ease the creation of municipal utilities, said on its Web site that current law is outdated, vague and needs to be clarified.

The proposal, while gaining positive reviews from several lawmakers and communities, he said, has also earned the "attention and enmity" of investor-owned utilities.

NSTAR, according to spokesman Mike Durand, advises caution to any community considering the creation of its own power district. There are a large number of considerations that must be looked at by any city or town that is thinking of taking over a local utility, many of which are financial, he said.

"Given that no municipal electric company has been established in the state for over 75 years, it seems like an idea whose time has long since passed," Durand said.

However, Kaufman said while he understands the concern about a municipality's ability to handle the financial burden and responsibility of providing electric services, communities still have a right to make an informed choice.

"I hope they don't fault me or those promoting this bill for trying to save ratepayers and taxpayers some money," he said.