Most people never think about how the electric industry works. Like all of us, their main concern is that power be available, low-cost, and reliable. But those three traits relate directly to the industry today. The deregulation of the electric industry at the turn of the 21st century divided it into two sections: 1) Generating companies, which produce electrical power through the power plants they operate, and 2) Transmission and Distribution companies, which deliver the power over a system of power lines which they own and maintain. Distribution companies also maintain the substations, transformers, and other equipment required for delivering power locally. If there is a storm, and outages occur, distribution companies are also responsible for restoring power within their service territories. How We Operate Unitil is a distribution company, and a regulated monopoly, which means customers within our service area have no other options for electric distribution, and we operate under state regulation. Like most distribution companies, we are also the energy supplier of last resort; we are required to purchase power for all our customers who do not buy from a competitive supplier. Consequently, we are always shopping for the best possible purchase prices for energy. We purchase power on the open market, and resell it to our customers without profit or mark-up. Generating companies are not regulated, and can compete to sell energy to customers in any service territory. We are obliged to distribute their power over our lines, but you pay the same price for our distribution services, no matter what energy supply you purchase.

The “Green Revolution” In the future, this scenario is likely to change, for a number of reasons. One is that a quiet revolution is taking place a “green” revolution. Citizens, businesses, and yes, energy companies, are all concerned about global warming and pollution. Fuel prices are rising higher and higher, and it seems we are paying, not only a high cash cost for fossil-fueled energy, but also a high environmental cost. The push is on for clean, “green” fuels. States in our region have passed legislation requiring local utilities to purchase a portion of their energy from renewable sources like solar, wind, and water. Large companies such as General Electric, BP, and Wal-Mart are investing billions of dollars in these technologies. Individual energy consumers are asking utilities about “green” energy options, and are seeking to install their M own on-site generation. These actions may soon change what type of power is produced and purchased, what power costs, and who buys it.

Unitil is listening. We believe New England is overly dependent on natural gas for generating electricity, and energy prices in our region are very high and very volatile as a result. The most attractive options, from an energy security and environmental standpoint, are local renewable resources. Wood and hydropower are examples. They have been used to produce energy in New England for hundreds of years. Wind and solar are examples of new energy resources, the harvesting of which depends on new and developing technologies. Using renewable resources will allow us to diversify our energy mix over time — hopefully leading to lower prices. It would provide an extra measure of energy security, as we would not have “all our eggs in one basket.” A New Energy Picture We at Unitil are excited about being part of this new energy picture. We are hoping that policy changes will allow us to play an active role in exploring new energy technologies, and will help us bring “greener” options to consumers. We believe our knowledge of the industry, the technology we have in place, and our relationship with customers makes us a natural enabler when it comes to promoting and implementing options such as solar and wind power, energy storage, and home energy sources. Such a move also fits well with our existing commitment to energy conservation. By working on both fronts, we can truly make a difference in the energy picture of tomorrow.

Support for Energy Conservation? The Massachusetts Department of Public Utilities recently announced that it is launching an investigation to consider a change in the way distribution utilities charge for their services. This shift would separate how much a utility company collects in revenues from the amount of energy their customers buy. Currently, distribution utilities lose money when customers conserve energy, because their revenues are tied directly to how many units of energy they deliver. The goal of regulatory policy should be to eliminate this disincentive for distribution utilities. Their finances should be aligned with, and not against, the policy goals of energy conservation and renewable energy development. According to Governor Patrick, who has endorsed the concept as part of his new energy plan, such a move will actually encourage utilities to promote conservation more vigorously. Customers would save money. The plan could create up to 3,500 jobs for people selling energy-efficient products and services. Customers could also receive subsidies for installing energyefficient lighting, appliances, and industrial gear.