Devens: What would a ‘super’ utility mean for Harvard?

When Harvard’s Devens economic analysis committee met with the selectmen last week, all eyes were on its latest estimates of what it would take to run the state-managed economic development zone.

But missing from the committee’s six-page handout were two pages on a lesser known but critical component of the Devens operation: its Utilities Department, a potential jewel in the crown of the 4,400 acre Devens Regional Enterprise Zone (DREZ). At least that’s what Harvard’s six-member Devens Economic Analysis Team (DEAT) thinks.

As reported last week (“DEAT says Devens is more asset than liability”), the DEAT believes that if it were reorganized as a municipal utility, the Utilities Department could not only provide Harvard, Shirley, and Ayer with more reliable and more cost-competitive services sometime in the future, but might also add revenue to the towns’ coffers. Moreover, says DEAT, a locally owned utility would be a better deal for the businesses at Devens as well.

MassDevelopment holds the cards

For better or worse, state law leaves that decision in the hands of MassDevelopment, the agency that oversees Devens development. According to DEAT member Paul Green, who led the DEAT’s analysis of Devens utilities, MassDevelopment could simply sell off the various components of its utility department to investor-owned firms such as National Grid, making money for the state, but losing the efficiencies of a centrally managed organization and potentially increasing usage rates for Devens businesses.

DEAT wants the three abutting towns to instead petition the state Legislature for control over the disposition of the Devens utilities and to ask permission to form a “super” municipal utility managed by the towns, one that would keep management of its services under one roof. There’s no reason that couldn’t be done sooner rather than later, says Green.

Devens has some of the lowest electricity rates in the state, Green told the Press in a recent interview. The department is an “economic magnet,” he says, vital to the continued success of the former Army base. While state law prohibits Devens from providing gas or electrical service beyond the DREZ, that is not the case for water and wastewater treatment.

Water and wastewater treatment for Harvard?

According to its 2013 Annual Report, Devens handled 61 million gallons of wastewater from Shirley, and 38 million gallons from Ayer. The plant also treated more than 7 million gallons of wastewater and septage from the Ayer Pepsi plant and surrounding communities. Green says wastewater service could be extended to Harvard’s commercial district on Ayer Road, should the town approve it.

In their report, DEAT wrote that “we do not propose to change these [electrical and gas] restrictions at this time. We hope that once a public utility for the DREZ has gained several years of successful operation, the towns could look into the possibility of expanding [its] operation into other [geographic] areas.”

Though managed by MassDevelopment, the Devens Utilities Department is already run as if it were an autonomous, town-operated utility, DEAT has concluded. The department’s director, Jim Moore, reports to Devens Executive Vice President for Operations George Ramirez, who is effectively town manager of the DREZ. It is a “super” utility, responsible for not only electricity and gas, but also water and wastewater treatment.

MassDevelopment owns the poles, gas lines, and water and wastewater lines at Devens, as well as a solar farm and state-of-the-art wastewater treatment plant built to help draw Bristol-Meyers-Squibb to the site. Operations and maintenance are provided under contract by outside companies (see “Devens Utilities Department at a Glance.”)

An economically viable operation

According to DEAT, the Devens Utilities Department has generated excess operating revenue every year since fiscal 2006. In fiscal 2013 that number was nearly $600,000, though it was higher before the recent economic downturn and the shutdown of the Evergreen Solar manufacturing plant. That number is expected to rise quickly in the next one to three years.

In fiscal 2010, the department began paying an annual PILOT (payment in lieu of taxes) to Devens, amounts that have ranged between $1.5 million and $500,000.

PILOTS are completely optional, Green told the Press. There is no guarantee they will be available in any given year. But, he agreed, their payment in fiscal 2010 through 2013 indicates that the department’s reserves have reached a level that makes such a payout possible.

But it’s not just about the money. “We believe that a locally managed public utility will have a much stronger incentive than an investor-owned utility to protect its plant and equipment against acts of nature,” the DEAT report states. “Recent storms in our area have proven that investor-owned utilities use a ‘build—let break—madly repair’ model of operation, whereas public utilities are mounting a sustained, multi-year … effort to protect vulnerable equipment against snow, ice, and wind.”

Next move is up to the towns

The absent pages have since been restored to the DEAT report, which was to have been posted online this week at the town website. The next steps are up to the Joint Boards of Selectmen of Harvard, Shirley, and Ayer, though any one of the towns could petition the Legislature for a change in ownership. How the state’s investor-owned utilities or the state Department of Public Utilities or MassDevelopment would respond to such a move is yet to be determined.