, Salem, MA

August 1, 2013

Keenan: Important to know true cost of cable project

John Keenan
The Salem News

---- — Two weeks ago, the Salem City Council voted to put a nonbinding public opinion question on the November election ballot. This question asks whether the public believes the city should advocate for National Grid to utilize a method called horizontal directional drilling to carry out a statutorily mandated transmission cable replacement project. Horizontal directional drilling entails drilling beneath the Salem Harbor floor, burying the transmission cable, and continuing to dig a land route through the Point neighborhood to the Canal Street substation. The alternative route is solely a land-based route that would travel Webb Street, Forrester Street, Hawthorne Boulevard, and via Congress, Leavitt, Fairfield and Cypress streets to the Canal Street substation.

On its face, horizontal directional drilling may sound like an easy alternative to avoid possibly disruptive road construction. However, it is important to inform voters of what the potential implications are for advocating for this proposal. For example, what would the cost of horizontal directional drilling route be, you ask? You won’t find it in the ballot petition. A feasibility study recently released by National Grid estimates that the total cost will be $110 million—perhaps twice the cost of the preferred land route. The logical question that follows is: Who picks up this tab? The ratepayers. WE are the ratepayers. This seems a rather pertinent fact that was left out of the ballot petition.

Some have argued that National Grid profits by proposing one less-expensive route (the land route) over another (the water route.) This view expresses a misunderstanding of the regulated utility industry and is misleading to the city’s voters. National Grid is the regulated monopoly provider of electricity transmission and distribution in this region. In this model, each investment they make, plus a regulated profit, is recovered from ratepayers over a period of time determined by a government regulatory agency. This results in the price of electricity that we pay. The profit that National Grid recovers on each prudent investment that they make is a regulated percentage of their actual capital investments. This means the larger the prudent capital investment, the larger the company’s profit from that investment. Ultimately, any costs that National Grid incurs from these types of projects are passed on to their ratepayers, you and me, and results in higher bills for years to come.

This is precisely why the Energy Facility Siting Board exists: to protect the state’s ratepayers. The Siting Board is tasked with permitting transmission projects built by utilities in order to control rates. As is the same with every other utility project in the state, this project must be filed with the Siting Board and will only be approved after much scrutiny of how reliable the finished project will be and on the financial impact that it would have on each of us, as well as on our environment. To put this in proper perspective, Massachusetts already has some of the highest electricity rates in the country (aside from Alaska and Hawaii.) Over the past 10 years alone, the New England region has spent $5 billion in necessary transmission upgrades and is on track to spend another $5 billion in the next five years. Imagine if every community or project sought to double its costs—we would quickly be up to $10 billion.

I am concerned about the financial impacts that horizontal directional drilling could have on the average homeowner, business owner and taxpayer in the city of Salem, as well as the competitiveness of our Commonwealth. I care about what negative impact this may have on our beautiful harbor and historic waterfront. I will not advocate for a plan that would saddle Salem residents (and perhaps all of those on the North Shore) with higher electric bills and sacrifice safe and efficient repairs if there were ever a problem by putting cables in the middle of the harbor. I am hopeful that the 17,842 homeowners in our city might agree with me.

As a public official, I have always been a staunch supporter of the democratic process and fully welcome the public’s input on this important matter. I recognize the City Council’s authority to place this question on the November ballot, and I respect their decision to do so. I must add, however, that I am supporter of fully informed decisions.

I believe that in asking our ratepayers to opine on what position the city should advocate for, it only seems fair to inform them of the factual reality of what they would actually be advocating for—tacking $55 million on to their electric bills to be paid for in decades to come.

Representative John Keenan represents Salem in the state House of Representatives. He has served as House chairman of the Joint Committee on Telecommunications, Utilities and Energy since 2011.