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Tuesday, November 27, 2012

Report will explore creation of municipal utilities

As published in the Record Journal Tuesday November 27, 2012

By Russell Blair
Record-Journal staff
(203) 317-2225

WALLINGFORD — Time and again the town-owned Electric Division has outperformed larger utility companies when it comes to limiting outages during storms and restoring power afterward, and state legislators have taken notice.

At the request of lawmakers, the Public Utilities Regulatory Authority will issue a report by Jan. 1 examining the procedures for creating and expanding municipal electric utilities in the state. In addition to Wallingford, six other cities and towns run their own electric companies.

“We will put everything on the table, what communities would need if they want to start their own utility,” said Rep. Laura Hoydick, the ranking House Republican on the legislature’s Energy and Technology Committee.

Wallingford and other municipal utilities have developed a reputation for keeping the lights on during storms that knock power out in neighboring towns for days. Democratic state Rep. Mary G. Fritz, who represents the 90th House District, said the Cheshire portion of her district loses power at a higher clip than the part of Wallingford she represents.

“I think it’s a good idea,” she said of the report. “I think people feel a strong support for their electric division when they are working directly for them.”

Public Utilities Director George Adair attributes the Electric Division’s success to a consistent tree-trimming program and the type of wires the department has in place. The division uses a wire that is “more tolerant of incidental contact,” he said.

“Having said that, we’re not infallible,” Adair said in an interview earlier this year. “I don’t ever want to create a sense of infallibility. A major storm will produce power outages,” he said. A serious hurricane that brings down trees would be an issue, he said.

The state’s two largest electric utilities, Connecticut Light & Power and United Illuminating, have concerns about expanding or creating new municipal electric divisions. UI representatives said expansion would be costly and complex.

“Municipalities would need to raise billions of dollars, in aggregate, to pay fair market value to acquire electric distribution company systems,” the company said in testimony before the Energy and Technology Committee. “This would burden, or overburden, the available bonding authority of municipalities and mean tax increases to the resident-customers.”

Costs were substantially lower when the Wallingford Electric Division was launched in 1899. Startup costs were $50,000, or about $1.3 million in today’s dollars. While the major utility companies pay taxes on the infrastructure they own in towns, municipal utilities return a portion of their proceeds to town budgets.

Stephen Gilbelli — associate general counsel of Northeast Utilities, CL&P’s parent company — said a municipality acquiring the electrical infrastructure within its borders could disrupt service to other towns.

“Utility facilities do not end at each municipality’s border,” he said in testimony. “A distribution system is composed of an elaborate, intertwined electric grid that serves the entire state. Facilities in one town often are a critical piece of another town’s electric supply system.”

State Rep. Vincent J. Candelora, a Republican representing the 86th House District, said he hasn’t received a complaint about Wallingford Electric in his six years representing the district, which includes southeastern Wallingford, North Branford and portions of Durham and Guilford, but has had constituent concerns about other utilities. The district is serviced by Wallingford Electric, UI and CL&P.

Candelora admitted that it would take “significant capital investment” for new municipality utilities to be formed, but thinks it’s possible the current ones could expand their service areas. Regardless, Candelora said legislators want to learn more about the municipality utilities. “They did so well in storm response, it certainly made it easy for us to take a look at what they are doing and what the for-profit utilities are not doing,” he said.

Information from the Associated Press is included in this report.

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