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Last-Minute Surprise: NSTAR Enters Substation Debate

Financial watch dog gives OK to bond $53.7M, asks selectmen to negotiate with utility giant.

The last-minute insertion by energy giant NSTAR into the four-year debate on building a new electric substation has thrown a curve into the vote before the reconvened Special Town Meeting on Wednesday on the town’s largest capital project in decades.

Representatives at the meeting Feb. 8 will not only be voting to approve a $53.7 million bond authorization to purchase land on Flanders Road and build the electrical substation, but will now allow the Belmont to negotiate with the electrical and natural gas utility monopoly on the continued use of the current electrical standard, the 13.8 kilovolt system.

“It is a surprise that they came forward" with an offer, said Ralph Jones, chairman of the Light Board and Board of Selectmen.

The first public notice of NSTAR’s interest and an offer of $58 million to build the station and bring two new electrical cables into Belmont came during the financial review of Article 2 – the substation bonding authorizing measure before Town Meeting – by the Warrant Committee during its weekly Wednesday meeting, Feb. 1, at the Chenery Middle School. 

At the end of the night, the Committee voted to advise Town Meeting to approve $53.7 million in long and short term bonds and accept language inviting the Selectmen’s involvement to negotiate with NSTAR on the best possible deal. 

A vote on article 2 was delayed by the request of the Light Board in the first session of the Special Town Meeting on Jan. 18 after fast-moving events would prevent the Warrant Committee – the financial watch dog of Town Meeting – and Capital Budget Committee from thoroughly review the project in one day. 

Just how Town Meeting representatives will view the dramatic – and until Wednesday, secretive – involvement of NSTAR’s 13.8 kV standard to a 115 kV system long championed by Belmont officials has yet to be seen.

"My own bet is that the article will pass although that is not the way I may vote," said Town Meeting Rep. Eleanor Councilman from Precinct 2.

"I don't know if I or anyone will bring up an objection but I do know that this is a boat load of money. And even though they say it's just a little bit on every bill, we will be paying this off for a long, long time," said Councilman. 

'Just tired of it'

Another concerned citizen who wished to remain anonymous said that the project has so much momentum that the relative merits don't matter anymore. 

"There are options that they haven't even considered. But everyone is so impatient because everyone is tired of this," he said.

Yet Elizabeth Allison, Warrant Committee chairwoman, said while it is always difficult to introduce a new element into a process at the last minute, "Town Meeting has many people who deal with complicated issues at their own work and will understand that these things happen." 

Where once the Light Board – made up of the members of the Board of Selectmen – its Advisory Board and the Belmont Municipal Light Board stood firmly behind the least expensive (a roughly $17 million difference with a 13.8 kV system costing $77 million) and technically superior 115 kV system, the Selectmen will determine if NSTAR is committed to remain Belmont’s electrical supplier.

“We now have leverage over this monopoly because they understand now that we are moving forward with our own system," said Jones.

In a 13.8 kV system, the town will remain dependent on NSTAR and its problematic Alewife station to be the conduit in supplying electricity from the national grid. Under the 115 kV approach, the town would cut into the grid between the Alewife location and a substation located in Boston's Brighton neighborhood, allowing for greater reliability as well as cutting NSTAR out of the equation. 

Making an offer

NSTAR will need to bid significantly lower than the $53.7 million the Light Board is asking Town Meeting reps to approve for a 115 kV project because of reliability issues inherit in a 13.8 kV system.

“But like any project, you can accept less if the cost is right,” said Jones.

A source said after the meeting that NSTAR would need to reduce its total bid “to the $45 million range” to be a credible competitor with a 115 kV project. 

According to Municipal Light Department General Manager Jim Palmer, the time line of NSTAR's interest in the electrical substation project started when the utility titan became aware that the Special Town Meeting would be voting on the substation early in 2012.

With the prospects of losing a dedicated revenue stream from the loss of a transaction fees it imposes on the town, NSTAR – which provides electricity and natural gas to 1.4 million customers in eastern and central Massachusetts – made the $58 million offer at the end of December to show the Light Department it was serious.

As a counter, Allan Rice, the chief engineering consultant for the BMLD, asked that NSTAR commit five cables to the project, to nearly match the power that a 115 kV system would supply. The utility has not responded to the counter offer.

While still concerned that many of the financial numbers coming from NSTAR are "squishy," Ashley Brown, chairman of the Municipal Light Advisory Board, said NSTAR will likely come back with an offer. 

"But we should be very careful how we proceed in negotiations" with the company, said Brown, who worked in utility regulations. 

"We need to truely analyze what they are proposing" for the town, said Brown. 

John Bowe February 06, 2012 at 03:29 PM
This is so late in the process for NStar to jump in. Belmont's effort has been ongoing for several years. Is this a deliberate attempt to sabotage the effort by injecting fear, uncertainty, and doubt?
Waverly Watchdog February 08, 2012 at 05:08 AM
Or, it might be way to save the ratepayers of Belmont some money. But saving Other Peoples' Money is not Mr. Bowe's thing. "But we should be very careful how we proceed in negotiations" with the company, said Brown, who worked in utility regulations. We should also be very careful of what Brown says. I would very much like to hear him explain why the BMLD is, and has been, exceeding the State imposed Retoun on Plant these many years.

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