The URL can be used to link to this page

Home My WebLink About2002-11-UTIL-rpt.pdf Electricity supply & distribution in Lexington • Electric Utility Ad-hoc Committee formed early 2002 by the Selectmen • Objectives — to review all issues around electricity supply & distnbution in Lexington — to propose initiatives to improve the situation and to save money for residents, businesses and the Town Electric Utility Ad hoc Committee (November 2002) What we have done • We looked at: — Town accounts • what do we spend with NSTAR? Can we save money? — "aggregation" • can citizens and businesses save money ("Supplier services")? — double poles • utilities must, by State law, deal with them in 90 days — reliability • how can we get NSTAR to improve? — forming a "Municipal Light Plant" ("municipalization") • to save money on our electric bills and to improve reliability Electric Utility Ad hoc Committee (November 2002) Electricity: from the power plant to your house fNal �).. • 'Anfinx. mvmnR`nr lY [ryv yy • t MI RI Generation of ins ission ;Distribution electricity Power plants & very high voltage lines Substations, poles, wires "Supplier services" "Delivery services" by NSTAR (formerly Boston Edison) in Lexmgton Electric Utility Ad hoc Committee (November 2002) NS TAR bill • [a copy of my own bill highlights the 2 halves, "supplier" and "delivery" services] Electric Utility Ad hoc Committee (November 2002) Supplier services and Delivery services • Supplier services : - cost of generating the electricity (power plants, fuels) — cost of long-distance transmission (very high voltage lines) — NSTAR is not in this business any longer • NSTAR purchases bulk electricity on the open market • Delivery services: - cost of distributing the electricity in and around Lexington • poles, wires, transformers maintenance, new equipment, etc • meters equipment and meter readings — customer service outages, billing, etc — NSTAR' s only business now, in some 150 towns and cities in the greater Boston area Electric Utility Ad hoc Committee (November 2002) Town accounts : reducing costs • Lexington Town government pays NSTAR about $1,500,000 annually for over 100 accounts (including the schools) — Most of that is for our 9 schools, Town Offices, police station, main pumping station, DPW barn, and some housing projects • We will seek ways to reduce those costs — review our delivery charges with NSTAR to ensure that each account is on the proper rate, to correct billing errors and to combine multiple accounts at a facility — review prices from alternative power suppliers (supplier charges) Electric Utility Ad hoc Committee (November 2002) Summary of Town' s electric bills NSTAR bills Aug 2001 -July 2002 Schools Clarke $437,958 High School $247,238 Bowman $78,358 Bridge $56,737 Estabrook $53,715 Diamond $47,881 Harrington $47,829 Hastings $43,281 Fiske $34,145 Subtotal Schools $1 ,047, 141 Town Town Offices $95,068 Main Pumping station $41 ,297 DPW Facility $25,912 Police Station $24,122 Other town accounts (about 100) $134,382 Subtotal Town $320,781 Lexington Housing Authority $180,816 Total Lexington accounts $1 ,548,738 Electric Utility Ad hoc Committee (November 2002) Supplier services : choice and "aggregation" • Any customer can now select a supplier for power — customers who do not choose a supplier are supplied by the existing utility, in our case NSTAR • Any municipality in Massachusetts can purchase bulk electricity for all households and businesses located in the Town (a process called "aggregation") — votes already taken by Lexington' s Town Meeting in 96 and 97 • NSTAR would continue to distribute the electricity throughout Lexington and bill all customers like it does today Electric Utility Ad hoc Committee (November 2002) Supplier services : savings from "aggregation' • Electricity consumption in Lexington is 25% residential, 50% very large commercial/industnal, 25% other commercial/municipaYindustrial ._. NSTAR NSTAR NSTAR Number Electricity total bills bills bills of consumption % of total ($ million (Supplier_(Delivery Type of electric account accounts (kWh/year) Lexington per year) :services)services) Residential 10,709 101 ,029,420 25% ' $12.7 $4 9 $7 7 Small commercial 1 ,086 9 307,294 2% $1 3 $0 5 $0 8 Medium commercial/municipal/industrial 362 39,580,176 10% $4 7 $1 9 $2 8 Large commercial/municipal/industrial 80 47,801 ,426 12% $4 5 $2 3 $2 1 Very large commercial/municipal/industrial 45 204,992,561 50% $14 6 $10 0 $4 6 Total Lexington 12,645 408,779,678 100% $37 7 $19 7 $18.0 • Supplier services are about $20 million of the $38 million that Lexington households and businesses pay annually for electncity — even a 5% savings from aggregation would represent an annual benefit of S1 million for Lexington citizens and businesses Electric Utility Ad hoc Committee (November 2002) Supplier services : "aggregation" (cont' d) • We will explore whether electricity wholesale markets are currently favorable for Lexington to acquire power from an alternative supplier — initially for Town accounts (via HEFA - a Massachusetts State agency - or independently) — possibly for all residences and businesses Electric Utility Ad hoc Committee (November 2002) Double poles • [3 color photos of double poles] Electric Utility Ad hoc Committee (November 2002) Double pole standards • When a pole must be replaced, utilities first install a new pole and bolt the old pole to the new one, creating a "double pole" • Double poles are unsightly and may be dangerous • Massachusetts law requires the utilities to remove double Doles within 90 days — each utility must first transfer its lines and equipment to the new pole, generally in a fixed order — requires coordination between utilities, and utility commitment and resources • Lexington utilities (NSTAR, Vernon, AT&T Broadband and RCN) are breaking State law double poles stay on our streets for many months or years Electric Utility Ad hoc Committee (November 2002) What we have done on double poles • We have identified over 400 double poles throughout Lexington • We helped the utilities make their database of double poles accurate, which will allow us to monitor the utilities' progress and will help the utilities coordinate their efforts • The Selectmen have informed the utilities that, unless they come into compliance, the Town will use a provision of State law allowing the Town to have contractors remove the old poles at the utilities' expense Electric Utility Ad hoc Committee (November 2002) Reliability • Lexingtonians are all too familiar with power outages, darkened homes, lost computer files and blinking digital clocks — a Woodhaven resident counted 51 hours without power over the past 18 months — in the Center this summer, an old overloaded NSTAR transformer caught fire and two poles collapsed on Massachusetts Avenue • In May, we asked NSTAR to provide information about the reliability of its electric service in Lexington — we received a partial response in October. NSTAR has agreed to meet with us to discuss its plans to reduce the frequency of outages in Lexington Electric Utility Ad hoc Committee (November 2002) NSTAR transformer on fire (July 3 , 2002) • [photo of transformer fire on front page of Minuteman] Electric Utility Ad hoc Committee (November 2002) Municipalization • 41 Massachusetts communities (including Concord, Belmont and Wellesley) serve their residents via a municipal utility ("mum") which — purchases bulk electricity (like NSTAR does), and — owns and runs the distribution system in town (poles, wires, transformers, substations, billing, etc) • A "mum" can deliver power at a lower cost than NSTAR because it — can issue tax-exempt bonds — does not need to earn a profit for shareholders — does not pay income taxes — operates locally, with less management and higher efficiency than large "investor-owned utilities" • On average over the past 10 years, Boston area "mums" charged residential customers 24% less than NSTAR Electric Utility Ad hoc Committee (November 2002) Municipalization: customer satisfaction • A municipal utility can provide better service and reliability than NSTAR — as a locally based utility, a "mum" is very focused on quality of service and responsiveness to customers — people familiar with Concord or Belmont know from experience — nationwide customer satisfaction surveys rate "mums" consistently above investor-owned utilities ("IOUs") • the nationwide RKS Emergency Response Benchmark Survey (Q4 2000 & Q1 2001) calculates an Emergency Response Performance Monitor ("ERPM") by rr°.,s"ring and weighting (1) restoration, (2) time, (3) preparedness, (4) communications, and (5) awareness. ERPM is indexed so that the average score nationwide is 100 00 ERPMs were — for IOUs 94 15 (Residential) and 98.36 (Commercial) — for Munis 103 02 (Residential) and 105 66 (Commercial) Electric Utility Ad hoc Committee (November 2002) Municipalization: preliminary economics • Our initial projections (based on Concord's expenence) of the costs to operate a Lexington "mum", after reimbursement of the funds borrowed to acquire NSTAR' s assets, suggest that: — a typical Lexington household may save $250-320 per year on its current S1 ,300 annual NSTAR electric bill, a 19-24% reduction — commercial & industrial customers in Lexington may save 9-14% on their NSTAR bills Electric Utility Ad hoc Committee (November 2002) Publicly Owned Utilities in the US ( 1998) r g �a ggyy _ K d x itre(1 -1* g k Y # ain. IP 1 .-,fir " „, - ,a I -'-_, �+ 1 w r '1 ✓ "4 —121 irIalto - F sit Source: US DOE (httn://www.eia.doe.eov/cneaf/electricity/che stru update/fiel1.htm1) Electric Utility Ad hoc Committee (November 2002) Other advantages of municipalization • Better reliability of electric service than what NSTAR currently provides (based on Concord experience) • Better maintenance of the electric infrastructure resulting in improved aesthetics across town (fewer double poles, less obsolete equipment, etc) • Ability to place the infrastructure underground over a long period of time (like Concord does) to further improve aesthetics across town • Build±ng the Town's asset base after the 20-year loan necessary to purchase NSTAR' s assets is reimbursed, Lexington will own $50-60 million worth of electric distribution assets in full (after having provided the 19-24% and 9-14% $ savings on electric bills) Electric Utility Ad hoc Committee (November 2002) Municipalization: next steps • To proceed with the planning and legal work necessary to form a "mum" in Lexington, we recommend that the Town budget $150,000 for a feasibility study — a $ 15 per household investment to determine whether annual savings of over S250 per household are indeed possible by forming a "mum" — proceeding with this expenditure in the coming very tight fiscal year will require a high level of public support _ it :tse email your thoughts about forming a municipal utility in Lexington to ElectricAdhoc@yahoo corn Electric Utility Ad hoc Committee (November 2002)