Municipal Light Plants (MLPs) are utilities that are owned by a local municipality, and they account for 14% of the electricity distributed in Massachusetts. Unlike investor-owned utilities (IOUs), MLPs are allowed to own and operate generation facilities as well as purchase power from the wholesale market and distribute it to their customers. MLPs are non-profit entities and often prioritize the needs of their community. Due to their regional focus, MLPs can provide targeted and customized services to their customers. This decentralized approach to energy distribution allows residents to exercise more influence over their energy supply and enter into long-term contracts, often allowing them to keep the cost of energy lower than IOUs. For this reason, electrifying residential heating and cooling systems not only helps MLP towns meet their decarbonization goals, but also makes economic sense for homeowners because their cost of electricity is much lower, as highlighted in the table below.
Switching from fossil fuel heating systems to electric heat pumps in MLP towns yields greater operational savings because MLP electricity prices are significantly lower compared to IOUs. On average MLP customers pay 66% lower cost per kWh than Eversource/Boston customers. This decreases the cost of operating a heat pump and generates greater savings for homeowners.
Since MLPs are non-profit organizations, they do not have to pay dividends to their shareholders and generally run small operations. Due to the localized nature of MLPs, they are also able to focus on investment policies customized for their relatively small service areas and have a reliable network of linemen and electricians who are well-versed with the local electric grid. Additionally, MLPs are not beholden to the same regulations as IOUs such as the Renewable Portfolio Standard (RPS), which requires IOUs to purchase a certain portion of their electric supply from renewable sources or risk paying expensive compliance payments. The combination of these factors leads to lower electricity prices, which in turn make heat pumps more economically viable in MLP communities.
Another important element in this relationship is that MLP communities can determine the composition of their energy-mix, i.e. where and how their energy is generated. This consideration combined with their smaller service areas means that MLP towns typically supply a greater proportion of their electricity from clean sources than IOUs, despite not being subject to the aforementioned RPS. MLP towns can implement a variety of solutions to provide a cleaner energy supply, ranging from purchasing regionally-produced renewable energy to investing in clean energy generation within their town. For example, the MLP town of Hingham supplied 100% carbon-free electricity to its residents in the years 2017 & 2018 through a community grassroots movement, which convinced the MLP board to purchase more renewable energy for their town. This means that heat pumps not only cost less to operate in MLP towns, but can also generate less off-site carbon emissions because the energy used to operate the heat pump is cleaner.