Municipalization of the Distribution System Patrick Hyland Executive Director Northeast Public Power Association

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

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

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

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

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

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