Customers, AG Line Up Against Unitil Rate-Hike Request

Unitil Corp., the New Hampshire utility that provides electricity to homes and businesses in Fitchburg, Ashby, Lunenburg and Townsend, has long had a public relations problem in North Central Massachusetts, and a pending proposal for a rate increase isn't helping matters.

Much of the opposition Unitil faces comes from residents who still have bad memories of the 2008 ice storm, which left many customers without power for weeks, and who decry paying higher rates for electricity than what Bay Staters in other communities pay. Local elected officials and business leaders also cite Unitil as a deterrent for businesses that are considering locating in the economically-troubled region.

But do Unitil's prices really have a meaningful impact on economic development? And what will a rate increase — Unitil said the hike, which would take effect in June 2014, would raise an additional $6.7 million — which requires review and approval by the Massachusetts Department of Public Utilities (DPU), mean for businesses that consume large amounts of power?

Coming up with an average monthly bill for a mid-size commercial Unitil customer, or any commercial electricity user, is not simple, according to Alec O'Meara, a spokesman for the utility. That's because a business' power needs vary greatly, depending on its industry and operations. For instance, some customers require constant power, seven days a week. Others power down on weekends. And manufacturers' electricity needs vary depending on what they make.

On the residential side, how Unitil's rates compare to those of other utilities that service Massachusetts customers is more concise because there's less variation in how much power residents use, O'Meara said.

Unitil's base distribution charge, which it's seeking to increase through the proposed rate hike, is 5.4 cents per kilowatt hour for residential customers, while National Grid, which provides electricity to most neighboring Central Massachusetts communities, charges 3.5 cents. Business charges are broken down differently, but an increase in the base rate would also be reflected in business customers' bills, according to O'Meara.

The difference is — with other charges related to industry deregulation in the late 1990s and that are scheduled to expire in 2014 — Unitil predicts business customers will see a net decline in their rates as of January 2015. But residential customers will see an average increase of about 40 cents a month, according to O'Meara. He said the money will be used to create a reserve fund to cover maintenance costs.

“Because of the decrease in the transition rate, the expectation is that even with this rate case ... rates will stay (virtually) flat for residents and ultimately decrease for businesses,” O'Meara said in a statement.

Though Unitil's stance is that the impact will be minimal to customers, Attorney General Martha Coakley has formally opposed the rate hike before the DPU, which is expected rule on the request sometime in mid-2014.

Wider Problem For Business?

While residents spoke against the rate increase in a DPU hearing in September, the business community has been less vocal. David McKeehan, president of the North Central Massachusetts Chamber of Commerce, said the high cost of electricity is a problem, but not unique to Fitchburg and neighboring towns.

“The feeling is that the cost of electricity in all of New England is higher than it is in the rest of the country, and it's a tremendous burden overall —it's not just Unitil,” McKeehan said.

That's true, according to data from the U.S. Energy Information Administration, which shows that in 2013, the average Massachusetts commercial customer is paying 14.5 cents per kilowatt hour, higher than the average rates businesses pay in most other states.

McKeehan, who called Unitil's rates “marginally higher,” than those offered by other utilities, said the higher-than-average cost of power has nudged some companies toward pursuing alternative energy sources to reduce costs. In those cases, Unitil continues to act as the distributor, but companies realize savings on the supply side.

One is Simonds International of Fitchburg, a 175-year-olld cutting-tools manufacturer. Raymond Martino, president and CEO, said Simonds is committed to maintaining its headquarters. But with huge power needs 24 hours a day, seven days a week, Martino said Simonds was compelled to find a cheaper way to keep the machines running.

So, in 2011, it installed a 1.8-megawatt co-generation function, which now provides most of its electrical, heating and cooling needs. Simonds now only receives between 5 and 10 percent of its power from Unitil. Martino explained that the switch to co-generation was beneficial to Unitil as well, because state law requires a certain percentage of power to come from co-generation. He also said area manufacturers are increasingly looking to solar energy, as a number of solar fields have cropped up in the region.

Read more

Unitil Asks State For Rate Hike

Unitil Cuts Quarterly Losses

Natural Gas Sales Boost Unitil In Q3

Unitil works to make amends; dark memories still linger