Deficit-ridden MBTA eyes energy savings

Officials say transit agency will realize 20 percent cost reduction over next five years

STATE HOUSE NEWS SERVICE

BESET BY BILLIONS of dollars in unmet capital needs and persistent operating budget deficits, the MBTA is poised to save money in electricity procurement.

At an official’s recommendation, MBTA’s Fiscal and Management Control Board on Monday elected to pursue “option one,” the same style of energy contract currently in place, which locks in the price for a bulk of the electricity and then leaves a portion of the cost to be determined by the market.

“There’s a significant reduction in the cost of electricity over today,” Andrew Brennan, the T’s chief of energy and environment, told the control board before the vote. “Were we to go with option one over the five-year term, we would see on average about a 20 percent reduction in cost of our electricity, which is a function of the market.”

In fiscal year 2015, the MBTA – the state’s largest electricity consumer – paid $26.5 million strictly for generation of the 435 million kilowatt hours used annually by the transit system, according to the transit authority. There are other fees for power, including transmission, Brennan told the News Service.

The state’s electrical market is facing uncertainty with natural gas supplies constrained and major coal and nuclear-powered plants announcing plans to shut down. Efforts to import hydroelectricity from Canada or foster offshore wind to power Bay State homes would need to clear several hurdles, and new or expanded gas pipelines are not assured.

The 20-percent energy cost reduction the MBTA could see over five years could indicate some optimism about the price of energy among power companies.

“My interpretation is that they’re expecting that the price of natural gas remain pretty low, and maybe even drop a little bit lower and that the supply of pipeline and capacity in pipelines becomes more stable,” Brennan told the News Service. “That’s what we interpreted.”

“We actually see pricing going down in the later years,” Brennan told the control board.

The control board delegated MBTA General Manager Frank DePaola to execute a contract under a compressed timeframe. The MBTA plans to go out to bid and close the bidding on Thursday.

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Andy Metzger

Reporter, CommonWealth magazine

About Andy Metzger

Andy Metzger joined CommonWealth Magazine as a reporter in January 2019. He has covered news in Massachusetts since 2007. For more than six years starting in May 2012 he wrote about state politics and government for the State House News Service.  At the News Service, he followed three criminal trials from opening statements to verdicts, tracked bills through the flumes and eddies of the Legislature, and sounded out the governor’s point of view on a host of issues – from the proposed Olympics bid to federal politics.

Before that, Metzger worked at the Chelmsford Independent, The Arlington Advocate, the Somerville Journal and the Cambridge Chronicle, weekly community newspapers that cover an array of local topics. Metzger graduated from UMass Boston in 2006. In addition to his written journalism, Metzger produced a work of illustrated journalism about Gov. Charlie Baker’s record regarding the MBTA. He lives in Somerville and commutes mainly by bicycle.

About Andy Metzger

Andy Metzger joined CommonWealth Magazine as a reporter in January 2019. He has covered news in Massachusetts since 2007. For more than six years starting in May 2012 he wrote about state politics and government for the State House News Service.  At the News Service, he followed three criminal trials from opening statements to verdicts, tracked bills through the flumes and eddies of the Legislature, and sounded out the governor’s point of view on a host of issues – from the proposed Olympics bid to federal politics.

Before that, Metzger worked at the Chelmsford Independent, The Arlington Advocate, the Somerville Journal and the Cambridge Chronicle, weekly community newspapers that cover an array of local topics. Metzger graduated from UMass Boston in 2006. In addition to his written journalism, Metzger produced a work of illustrated journalism about Gov. Charlie Baker’s record regarding the MBTA. He lives in Somerville and commutes mainly by bicycle.

Electrified subway lines and trolleys accounted for 244.7 million MBTA trips in fiscal 2015, according to MBTA data. The MBTA’s total budget for fiscal 2015 was roughly $1.9 billion.

The current five-year contract with BP Energy Company, a subsidiary of the global energy company, ends Dec. 31.

“Option one,” where the MBTA carries more of the risk than the other two procurement options, would have the T purchase 70 percent of electricity and leave the remaining 30 percent to the “spot market.”