Electric power to the people?
Healy, Councilor at odds on ‘muni’
By Janice O’Leary, Globe Correspondent | February 12, 2006

A city councilor’s push for Cambridge to own an electric utility in order to improve service and cut rates has gotten a cool response from City Manager Robert Healy.

At the request of Councilor Henrietta Davis, Healy issued a report recently analyzing the costs of becoming a municipal power company, or “muni.” The report estimated that the move would cost $200 million to $250 million in the first three years, which would include acquisition, fees, specialized vehicles, and ongoing maintenance.

In his memo to the City Council late last month, Healy stated, “The capital expenditure required to own and operate a municipal power company would greatly impact the city’s capacity to continue or commence other necessary capital projects and would, in all likelihood, have a negative impact on the city’s bond rating. I am not recommending that the city pursue this option.”

But Davis, who chairs the Cable TV, Telecommunications and Public Utilities Committee, said in an interview that the report “looks at the issue too narrowly.”

“You can tell the opinion behind the numbers,” she said.

“Right now might be the appropriate time for every municipality to look at the energy issue,” she said, citing national concern over dependency on oil and finding alternative energy sources. “Big utilities aren’t moving toward renewable energy, and that’s not in the public’s best interests.”

The city purchases its electricity from TransCanada, an option not available to residents, who must use NStar, which raised its rates on Jan. 1. “Our next step is to look into the issue more carefully,” Davis said. “We don’t yet know the right role for the city. It might be contracting with a producer of energy, such as a windmill or a plant. Or it may be the right role is just to purchase energy ourselves. Then it’s just a matter of sitting in an office and buying energy on the market.

“In the past, utilities have met our citizens’ needs. Now they’re not.” As an example, she gave the city’s experience with purchasing street lamps. “A year ago we had been having the worst service for our street lights,” Davis said. “On any given night 300 lights were out. NStar wasn’t replacing them effectively, so we bought them.

“Service vastly improved right away. The city could fulfill requests within a few days. It’s simple now. Isn’t that the way it’s supposed to work?”

An NStar spokeswoman, Caroline Allen, said in an e-mail that while “existing municipal electric departments generally do have lower rates” than private utilities, it is because municipalities, “don’t have renewable energy surcharges, energy efficiency programs to pay into, low-income discounts, or property taxes to pay for.”

“Because there has not been a new muni created in nearly a hundred years, there’s no way of knowing if their rates would be lower,” she said. “There are several unknowns, including how much it will cost them to purchase the infrastructure, buy the power from the market, set up a call center, hire and train employees, and maybe make capital improvements to the equipment that we were going to make.”

Davis acknowledges that starting a muni wouldn’t be easy. “Money will be the big obstacle,” she said. “It may turn out that we’re better off doing something completely different, such as creating a public authority. There are many models to consider.”

Among those models are 41 Massachusetts communities that already own their own electric power, including Braintree, Concord, and Wellesley, all of which purchased their utilities before 1926, according to the Massachusetts Alliance for Municipal Electric Choice.

That organization has found that on average, municipal rates are 24 percent cheaper than those charged by private utilities, said Patrick Mehr, statewide coordinator for the program, who shared the findings with city councilors.

The issue of starting a municipal power company could be moot if a bill currently before the state Legislature doesn’t pass. The bill would ease rules for starting a municipal light plant and create much-needed competition, said Mehr.