MASSENA - Keep politics out of it, and you can find success.
That's the most important advice those involved with the Massena Electric Department can offer to municipalities looking to become an electric utility.
In 1981, Massena concluded a 13-year battle with Niagara Mohawk, the investor-owned utility that had served the area, when it officially took over the distribution system in the township and became the last public utility to form in New York.
Through those 13 years and at least seven election cycles, the city remained united about one vision - that it would someday join the handful of municipal utilities in the state that offers its customers lower electric utility rates.
Eugene Nicandri, who was the town attorney during much of the process, declined to reveal which political party first initiated the idea in 1968.
“It doesn't make any difference,” Nicandri said. “This is the type of project that ought to stand or fall on its own legs. ... As soon as you mention (party affiliation), politics raises its head.”
Since before its inception, Massena Electric was a bi-partisan issue and even today, 36 years since the idea was first raised, the city electric department remains insulated from politics. It's overseen by a non-political advisory board and is largely separated from the rest of the city's government operations.
“Massena Electric has never been politicized,” said Andrew McMahon, superintendent at MED. “The town has always wanted to think of us as a separate company. We're insulated from the political tradewinds.”
To be sure, the town needed everyone on its side when it took on Niagara Mohawk in what ended up being a “knock down, drag out” fight in the late 60s, 70s and into the 1980s.
Massena's journey began with a village trustee, Fred Cook. His enthusiasm for the project was met by the village and eventually by the town of Massena after a preliminary feasibility study proved to be encouraging.
They followed with a $25,000 comprehensive feasibility study that projected savings by consumers of as much as $5.6 million during the first 10 years. The total upfront costs, including acquisition, severance, damages and start-up, came in within the proposed bond issue of $4.5 million.
When the option to negotiate for or condemn the distribution system came up for public referendum in 1974, Niagara Mohawk fought back with an extensive advertising campaign.
Nicandri recalled that the private company ridiculed the results of the feasibility study as faulty and incomplete.
“They (told customers), 'We provide good service, what are you complaining about? Do you really want to trust government to provide your electricity?'” he said.
At the time, neither the town board nor the village trustees endorsed or opposed the idea of the acquisition. They appointed an advisory committee to evaluate the study, according to a history of the process written by Duncan, Weinberg, Miller & Pembroke, P.C., the legal firm representing the city for the municipalization effort.
The referendum passed, negotiations failed and in 1975, Massena filed a petition to condemn the distribution system within its limits. The petition was followed by six years of costly and difficult litigation.
One of the sticking points in the process was that Massena's town limits did not coincide with the service territory of the two Niagara Mohawk substations in Massena. In the end, Massena ended up taking over some of the lines outside of its town boundaries to coincide with the existing service territory.
In the end, for a total of $7.7 million, Massena agreed to acquire Niagara Mohawk's two substations within the town limits, its service center and the distribution facilities in Massena and parts of the surrounding communities coinciding with the service area.
To meet the increased costs of the new plans, Massena held a referendum in 1981 to issue $10.5 million in bonds. As part of the agreement, Niagara Mohawk agreed not to oppose the referendum with an ad campaign as it had in the past. The referendum was approved by 84 percent of the voters.
Massena's success hinged on three major elements, according to the history:
A) The removal of politics from the issue so as to create a united front;
B) An informed electorate;
C) A backfiring of NiMo's strategy assuming an apathetic electorate.
The town let the experts - the engineering and legal firms it hired - speak on behalf of the municipalization during public forum debates with NiMo. Nicandri said that was essential.
“The thing you can't do is leave the discussion in the hands of Niagara Mohawk,” he said. “Otherwise you let the competitors say what they want. It's an issue of credibility: Who do you believe?”
Today, Massena operates with 21 employees. In the first year, the newly-formed department operated in the red and ran into issues with service. Now, however, McMahon said the MED system's reliability is among the top 25 percent in the nation.
The department receives some of its power, about 22.5 megawatts, out of 40 to 42 megawatts total, from the New York Power Authority hydropower cache - the so-called preference power that is tied up in long-term contracts until 2025. The rest is purchased through a joint action agency, the New York Municipal Power Association, made up of other municipal utilities that keep the energy costs stagnant until those contracts expire.
To hedge against rising energy costs in the future, Massena is in the beginning phases of building a small hydro dam, which would generate 5 percent of its electricity needs to the community, McMahon said.
“It's an ongoing battle to keep the rates low,” he said.
The department charges its customers between 4.5 and 5 cents a kilowatt/hour (Auburn residential customers pay 12.5 cents). Of its expenses, about 60 percent comes from the costs of energy, while the remainder goes toward general operating expenses, according to Jeffrey Dobbins, MED treasurer.
Any additional revenue after covering costs is invested back into the system. Aside from the payment in lieu of taxes the department pays to city per its initial agreement when MED formed, no money is allocated to any other city departments.
“We don't have to increase our rates to subsidize some other department in the town,” he said.
The town is just now beginning to look at the economic development benefits of low-cost energy, McMahon said. While he's not sure whether it will be enough of an incentive in a world economy given the high taxes in the state, McMahon said marketing the low-cost power is not something the town had done in the past and he's eager to explore opportunities.
The initial intention of the municipalization, however, was to save ratepayers money so that it could be invested back in the community. And that, everyone believes, has been achieved.
Despite the fact that some voters clearly voted against the referendums, Nicandri said “it's hard today to find anyone that was opposed to this then.”
Staff writer Anne Gleason can be reached at 253-5311 ext. 248 or at anne.gleason@lee.net
In 1981, Massena concluded a 13-year battle with Niagara Mohawk, the investor-owned utility that had served the area, when it officially took over the distribution system in the township and became the last public utility to form in New York.
Through those 13 years and at least seven election cycles, the city remained united about one vision - that it would someday join the handful of municipal utilities in the state that offers its customers lower electric utility rates.
Eugene Nicandri, who was the town attorney during much of the process, declined to reveal which political party first initiated the idea in 1968.
“It doesn't make any difference,” Nicandri said. “This is the type of project that ought to stand or fall on its own legs. ... As soon as you mention (party affiliation), politics raises its head.”
Since before its inception, Massena Electric was a bi-partisan issue and even today, 36 years since the idea was first raised, the city electric department remains insulated from politics. It's overseen by a non-political advisory board and is largely separated from the rest of the city's government operations.
“Massena Electric has never been politicized,” said Andrew McMahon, superintendent at MED. “The town has always wanted to think of us as a separate company. We're insulated from the political tradewinds.”
To be sure, the town needed everyone on its side when it took on Niagara Mohawk in what ended up being a “knock down, drag out” fight in the late 60s, 70s and into the 1980s.
Massena's journey began with a village trustee, Fred Cook. His enthusiasm for the project was met by the village and eventually by the town of Massena after a preliminary feasibility study proved to be encouraging.
They followed with a $25,000 comprehensive feasibility study that projected savings by consumers of as much as $5.6 million during the first 10 years. The total upfront costs, including acquisition, severance, damages and start-up, came in within the proposed bond issue of $4.5 million.
When the option to negotiate for or condemn the distribution system came up for public referendum in 1974, Niagara Mohawk fought back with an extensive advertising campaign.
Nicandri recalled that the private company ridiculed the results of the feasibility study as faulty and incomplete.
“They (told customers), 'We provide good service, what are you complaining about? Do you really want to trust government to provide your electricity?'” he said.
At the time, neither the town board nor the village trustees endorsed or opposed the idea of the acquisition. They appointed an advisory committee to evaluate the study, according to a history of the process written by Duncan, Weinberg, Miller & Pembroke, P.C., the legal firm representing the city for the municipalization effort.
The referendum passed, negotiations failed and in 1975, Massena filed a petition to condemn the distribution system within its limits. The petition was followed by six years of costly and difficult litigation.
One of the sticking points in the process was that Massena's town limits did not coincide with the service territory of the two Niagara Mohawk substations in Massena. In the end, Massena ended up taking over some of the lines outside of its town boundaries to coincide with the existing service territory.
In the end, for a total of $7.7 million, Massena agreed to acquire Niagara Mohawk's two substations within the town limits, its service center and the distribution facilities in Massena and parts of the surrounding communities coinciding with the service area.
To meet the increased costs of the new plans, Massena held a referendum in 1981 to issue $10.5 million in bonds. As part of the agreement, Niagara Mohawk agreed not to oppose the referendum with an ad campaign as it had in the past. The referendum was approved by 84 percent of the voters.
Massena's success hinged on three major elements, according to the history:
A) The removal of politics from the issue so as to create a united front;
B) An informed electorate;
C) A backfiring of NiMo's strategy assuming an apathetic electorate.
The town let the experts - the engineering and legal firms it hired - speak on behalf of the municipalization during public forum debates with NiMo. Nicandri said that was essential.
“The thing you can't do is leave the discussion in the hands of Niagara Mohawk,” he said. “Otherwise you let the competitors say what they want. It's an issue of credibility: Who do you believe?”
Today, Massena operates with 21 employees. In the first year, the newly-formed department operated in the red and ran into issues with service. Now, however, McMahon said the MED system's reliability is among the top 25 percent in the nation.
The department receives some of its power, about 22.5 megawatts, out of 40 to 42 megawatts total, from the New York Power Authority hydropower cache - the so-called preference power that is tied up in long-term contracts until 2025. The rest is purchased through a joint action agency, the New York Municipal Power Association, made up of other municipal utilities that keep the energy costs stagnant until those contracts expire.
To hedge against rising energy costs in the future, Massena is in the beginning phases of building a small hydro dam, which would generate 5 percent of its electricity needs to the community, McMahon said.
“It's an ongoing battle to keep the rates low,” he said.
The department charges its customers between 4.5 and 5 cents a kilowatt/hour (Auburn residential customers pay 12.5 cents). Of its expenses, about 60 percent comes from the costs of energy, while the remainder goes toward general operating expenses, according to Jeffrey Dobbins, MED treasurer.
Any additional revenue after covering costs is invested back into the system. Aside from the payment in lieu of taxes the department pays to city per its initial agreement when MED formed, no money is allocated to any other city departments.
“We don't have to increase our rates to subsidize some other department in the town,” he said.
The town is just now beginning to look at the economic development benefits of low-cost energy, McMahon said. While he's not sure whether it will be enough of an incentive in a world economy given the high taxes in the state, McMahon said marketing the low-cost power is not something the town had done in the past and he's eager to explore opportunities.
The initial intention of the municipalization, however, was to save ratepayers money so that it could be invested back in the community. And that, everyone believes, has been achieved.
Despite the fact that some voters clearly voted against the referendums, Nicandri said “it's hard today to find anyone that was opposed to this then.”
Staff writer Anne Gleason can be reached at 253-5311 ext. 248 or at anne.gleason@lee.net
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