Nstar may be MIA
Published on May 14th, 2003
STONEHAM, MA - Town selectman Anthony Kennedy and Stoneham resident Melvin Stone attended a meeting three weeks ago at Lexington High School to endorse legislation that would force utility companies such as NSTAR to sell their assets to municipalities.
Including representatives from Arlington, Bedford, Lexington, and Martha's Vineyard, the group hopes to gather an inter-community lobbying force to appeal to members of the Massachusetts state legislature to support bill H1468. While the bill would allow for the purchase of utility assets, those assets would only include local distribution, not the long distance transmission of energy.
Sponsored by State Representative Daniel Bosley, the bill would allow an arbitrator to step in and decide a fair price for a utility company's assets if a price can not be negotiated between a municipality and electric company. At that point, if a town or municipality decided to purchase the utility for that mediated price, a utility company would be forced to do so. Any decision to move forward from that point would be subject to an appeal.
While towns are allowed to purchase utility companies under current Massachusetts state law, no community has done so since 1926, said Lexington representative Patrick Mayer. In addition, communities that seek to do so often find themselves trapped in a lengthy legal proceeding that forces towns to eventually drop their plans.
"Rather than having to face NSTAR in court for years, it would make a lot more sense to clarify the statute," explained Mayer.
Recognizing the need to further rationalize efforts to purchase a company, the group established three motivations for eliminating the existence of utility services such as NSTAR.
"The consensus of the group was that there were three things we didn't like about NSTAR. The first reason was unreliable service. The second reason was pricing. And the third reason was that the customer service was unacceptable," said Kennedy.
Addressing the first reason for abandoning NSTAR, Kennedy says that as a selectman over the years, he has received an abundance of phone calls from residents suffering from frustrating power outages. Adding those customers in with the handful of residents who may require power to run medical apparatus for an ailing relative or friend, Kennedy says that NSTAR has long run an unreliable service.
"As a selectman, I get calls when the electricity goes out and you get to hear the personal frustration of people. So I know first hand that this makes a hardship on people when you have unreliable service," he commented.
In terms of the second issue, pricing, Mayer estimates that compared to municipalized light services, cities and towns with investor-owned utilities pay much more for their resources.
"Residences experienced rates on average 24 percent lower than NSTAR with a range of 14-35 percent," claimed Mayer. "Overall the savings for Lexington would be $6-8 million per year...So we're talking here of an undertaking that's equal to one to two overrides," he added.
Despite those savings estimates, cities and towns would face several obstacles before moving forward with any plans to purchase its utility company's assets. First and foremost, Lexington officials stated that a town must conduct an initial engineering feasibility study to establish rates, a $150,000 cost after legal fees.
Another formidable barrier to the support of the bill would be found in the representatives of the utility companies, who have a strong lobbying force at the capitol, according to the meeting's participants.
"It became very clear to us that the investor-owned utilities will not be happy about seeing this legislation enforced and they will fight this bill quite strongly," warned Mayer.
Acknowledging that different towns operate under different government forums, Kennedy believes that passing a bid to buy out a utility company at town meeting would provide perhaps the biggest obstacle for Stoneham.
"The challenge in Stoneham is that we'd have to pass this in town meeting. It could be as much as $20-30 million. We'd have to persuade the townspeople to say 'yes, we're going into debt to buy the utilities,'" Kennedy said.
However, some of the meeting's participants argued that towns may not have to follow through with the bill after it has passed. In fact, they claimed that just passing the bill itself could significantly impact electricity rates, because it would force the hand of utility companies in the face of new competitive threats.
For this reason, some towns such as Bedford attended the meeting despite the fact that officials remain unsure as to whether to pursue municipalization or not.
"We believe that competition is a good way to provide citizens and businesses with better services...The reality that exists with investor-owned utilities is that it's a monopoly. We view this bill as a very simple way to create competition," said Mayer.
While Lexington officials view the bill in that manner, Kennedy disagrees, arguing that the very nature of private business versus public businesses will ensure that investor-owned utilities always maintain higher rates.
"When you have a publicly traded company, they're trying to set the rates in the most aggressive way to make a profit. But the municipal sector isn't in it for profit," explained Kennedy.
Yet another problem with the bill can be seen in Reading, where Reading Municipal Light Department Director Len Rucker was fired after being charged with mismanaging funds. According to Reading Selectman George Hines, because the light committee was not constantly under public scrutiny, it made it easier for board members to delegate their tasks to middle management and not pay specific attention to the energy service's finances.
"We had a light board with a number of people who got elected over and over again. I think they just got lax and kind of advocated their power," explained Hines. "In general, my advice would be that the Board of Selectmen be the light commissioners as well. The light board is a single issue and that doesn't get a lot of attention. The board of selectmen does...that would prevent people from lying in the weeds and escaping scrutiny," the six-term selectman added.
While Kennedy acknowledges that questions of government waste and mis-management represents a legitimate concern, he feels that adequate protections can be put in place to prevent a similar incident from occurring.
"You can put controls in place. The records have to be audited and hopefully the audits will pick up whatever isn't supposed to go through...At some point, you have to believe that between the good will of the people running it, and the auditing, that you can control what's going on," he stated.
In any case, Kennedy recognizes that at this stage, the only important issue to focus on is passing the bill. Should the town then decide that it doesn't want to buy out NSTAR, Kennedy and town officials would respect that decision.
"If the bill doesn't pass it's an uphill battle. So there's a tremendous amount of work to do, but we're thinking this is the first big step," he said.
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