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Advocacy Letters to State Leaders MMA letter to Telecommunications, Utilities and Energy Committee supporting bills to establish municipal lighting authorities
The Honorable Barry Finegold, House Chair
The Honorable Michael Morrissey, Senate Chair
Joint Committee on Telecommunications, Utilities and Energy
State House, Boston
Re: Bills H. 3087 & S. 1527 - Establishment of Municipal Lighting Authorities
Dear Representative Finegold and Senator Morrissey,
On behalf of the cities and towns of the Commonwealth, the Massachusetts Municipal Association (MMA) would like to thank the Legislature for including a provision in the Green Communities Act requesting the Department of Energy Resources to compile a report documenting the barriers to establishing Municipal Lighting Authorities. The DOER report was issued in January. We urge this detailed report be made available to legislators, communities, taxpayers and the public.
After reviewing the report, the MMA strongly urges the Committee to act favorably on H. 3087 and S. 1527, legislation to ensure that all municipalities have a choice for electricity distribution, thereby creating, for the first time in Massachusetts, a form of competition in the distribution of electricity.
According to the DOER report, electricity rates at municipal utilities (“munis”) were consistently lower than at investor-owned utilities (“IOUs”). In fact, in 2006 rates offered by munis were lower by 30 percent (DOER report, exhibit 11, p. 34). DOER correctly points out that new munis may not be able to replicate such low rates. That is why H. 3087 and S. 1527 would require a city or town that considers forming a municipal utility to present an in-depth economic feasibility study to the DPU to ensure viability.
It is worth noting that over 100 individual cities and towns from across the state have voted to support the legislation, and nearly 50 of your colleagues are co-sponsors.
The legislation would amend a century-old statute that has made it impossible for a municipality to acquire the assets of the existing utility and establish a municipal light authority. Currently, any investor-owned utility can choose not to sell its assets to a municipality at a price set by DPU. The current “remedy” is to allow a municipality to then establish its own distribution network. At the turn of the last century (1900) that may have been feasible. Today, however, establishing a second network infrastructure is uneconomical and virtually impossible. Municipal officials cannot realistically propose doubling the number of poles and wires in a community when that infrastructure already exists. As a result, it is not practical for any community to even conduct a feasibility study to establish a municipal lighting authority without legislative relief.
That is also why no city or town in Massachusetts has formed a new muni since 1926. Updating this statute is good for all consumers, including municipalities, residents and businesses.
The MMA strongly endorses this legislation because it would provide a reasonable option to allow communities to lower their own municipal energy costs (saving taxpayer dollars), and reduce energy costs borne by their residents, businesses and industry during very tough economic times. Under the legislation, once the DPU determines the value of the existing utility’s assets in a community, the utility would be required to sell to the city or town if the community so requests. After the value has been set, communities would conduct a detailed feasibility analysis, and decide whether to form a municipal facility based on their findings and on the benefit to residents and consumers. In addition to the benefits to municipalities and residents, the prospect of competition may result in IOUs working harder to reduce their rates.
Any tool the Legislature can provide to cities and towns to help reduce costs and provide savings to their residents is certainly in the public interest.
The MMA looks forward to working with you and your colleagues on this important initiative, and we urge you to issue a favorable report to H. 3087 and S. 1527. Thank you very much.
Sincerely,
Geoffrey C. Beckwith
Executive Director, MMA
Advocacy Letters to State Leaders MMA letter to Telecommunications, Utilities and Energy Committee supporting bills to establish municipal lighting authorities
MMA letter to Telecommunications, Utilities and Energy Committee supporting bills to establish municipal lighting authorities
The Honorable Barry Finegold, House Chair
The Honorable Michael Morrissey, Senate Chair
Joint Committee on Telecommunications, Utilities and Energy
State House, Boston
Re: Bills H. 3087 & S. 1527 - Establishment of Municipal Lighting Authorities
Dear Representative Finegold and Senator Morrissey,
On behalf of the cities and towns of the Commonwealth, the Massachusetts Municipal Association (MMA) would like to thank the Legislature for including a provision in the Green Communities Act requesting the Department of Energy Resources to compile a report documenting the barriers to establishing Municipal Lighting Authorities. The DOER report was issued in January. We urge this detailed report be made available to legislators, communities, taxpayers and the public.
After reviewing the report, the MMA strongly urges the Committee to act favorably on H. 3087 and S. 1527, legislation to ensure that all municipalities have a choice for electricity distribution, thereby creating, for the first time in Massachusetts, a form of competition in the distribution of electricity.
According to the DOER report, electricity rates at municipal utilities (“munis”) were consistently lower than at investor-owned utilities (“IOUs”). In fact, in 2006 rates offered by munis were lower by 30 percent (DOER report, exhibit 11, p. 34). DOER correctly points out that new munis may not be able to replicate such low rates. That is why H. 3087 and S. 1527 would require a city or town that considers forming a municipal utility to present an in-depth economic feasibility study to the DPU to ensure viability.
It is worth noting that over 100 individual cities and towns from across the state have voted to support the legislation, and nearly 50 of your colleagues are co-sponsors.
The legislation would amend a century-old statute that has made it impossible for a municipality to acquire the assets of the existing utility and establish a municipal light authority. Currently, any investor-owned utility can choose not to sell its assets to a municipality at a price set by DPU. The current “remedy” is to allow a municipality to then establish its own distribution network. At the turn of the last century (1900) that may have been feasible. Today, however, establishing a second network infrastructure is uneconomical and virtually impossible. Municipal officials cannot realistically propose doubling the number of poles and wires in a community when that infrastructure already exists. As a result, it is not practical for any community to even conduct a feasibility study to establish a municipal lighting authority without legislative relief.
That is also why no city or town in Massachusetts has formed a new muni since 1926. Updating this statute is good for all consumers, including municipalities, residents and businesses.
The MMA strongly endorses this legislation because it would provide a reasonable option to allow communities to lower their own municipal energy costs (saving taxpayer dollars), and reduce energy costs borne by their residents, businesses and industry during very tough economic times. Under the legislation, once the DPU determines the value of the existing utility’s assets in a community, the utility would be required to sell to the city or town if the community so requests. After the value has been set, communities would conduct a detailed feasibility analysis, and decide whether to form a municipal facility based on their findings and on the benefit to residents and consumers. In addition to the benefits to municipalities and residents, the prospect of competition may result in IOUs working harder to reduce their rates.
Any tool the Legislature can provide to cities and towns to help reduce costs and provide savings to their residents is certainly in the public interest.
The MMA looks forward to working with you and your colleagues on this important initiative, and we urge you to issue a favorable report to H. 3087 and S. 1527. Thank you very much.
Sincerely,
Geoffrey C. Beckwith
Executive Director, MMA
