Municipalization of the Distribution System

1
Municipalization of the Distribution System

• Patrick Hyland
• Executive Director
• Northeast Public Power Association

2
Municipal Electric Utilities in Massachusetts

• 41 distribution systems in Commonwealth serving
  48 cities and towns
• Most in service for last century most recent
  municipal utility formed in 1996 (Devens Commerce
  Center)
• Approximately 380,000 meters served
  approximately 840,000 residential consumers

3
Municipal Electric Utilities in Massachusetts
(cont.)

• Approximately 7.5 million MWH sales in 2002
• Approximately 703 million in revenues in 2002
• 1,340 employees
• Power supplied through jointly-owned generation
  facilities, power sales agreements (through
  MMWEC), bilateral contracts, and some on-site
  municipal generation

4
Characteristics of Municipal Utilities

• Most are governed / regulated by Municipal Light
  Boards, pursuant to MGL, Chapter 164
• Subject to all laws governing public agencies
  (open meeting, freedom of information, etc.)
• Utility assets owned by community no stock
  ownership
• Receive preference in the purchase of hydropower
  from federal projects or from other public
  entities

5
Characteristics of Municipal Utilities (cont.)

• Not-for-profit public entities no federal tax
  liability
• Virtually all make payments in lieu of property
  taxes to municipal governments
• Able to raise capital through tax-exempt bonds
• In Massachusetts, municipal utilities are not
  subject to state restructuring legislation did
  not have to divest generation or open systems
  to competitive suppliers

6
H 1468 Public Power Perspective

• A significant improvement over existing state law
• Puts decision over public/private ownership and
  management in hands of local citizens, not
  incumbent utility
• Assures an impartial / objective determination of
  plant value, which is principal obstacle to
  municipalization

7
H 1468 Public Power Perspective (cont.)

• Would enable communities to invest in local
  infrastructure (similar to water, sewer, streets)
  to improve service and coordinate physical
  planning
• Would enable communities to lower distribution
  costs through tax-exempt financing, reduced
  overhead and non-profit operations
• Would make local officials accountable for the
  cost and quality of a critical public service