Municipal Light Plant (MLP) Authority
Prepared by Diedre Lawrence
Duncan & Allen N.E., LLC
35 Braintree Hill Office Park
Braintree, MA 02184
Overview of Municipal Light Departments
- Municipal light departments generally are not governed by the same laws that govern cities and towns. Rather, General Laws Chapter 164 governs the management and operation of municipal light departments.
- In several cases, the state’s highest court has recognized Chapter 164 as the primary and, in most instances, exclusive statutory authority governing municipal light department operations.
- Under this statutory scheme, municipal light departments operate and are managed as commercial enterprises, separate and independent from general city or town governmental departments (with the exception of incurring debt) and subject to some general oversight by the Department of Public Utilities (“DPU”). See Holyoke Water Power Co. v. Holyoke, 349 Mass. 442 (1965) (light departments not subject to rate regulation but claims of rate discrimination should go to the DPU before they are taken to court).
- G.L. c. 164, § 56 vests exclusive managerial power over the municipal light department in the Board of Selectmen (“BOS”), the mayor, or the municipal light board, if any, and their appointee, the general manager.
- As the courts have recognized on numerous occasions, “a municipality can exercise no direction or control over one whose duties have been defined by the legislature.”
- In some municipalities, the BOS may serve as the light board. (In others, there are elected light boards.) But in those instances where the BOS serves as the “light board,” it still must act in accordance with G.L. c. 164 and the interests of the light department and its ratepayers, and not general town interests.
- Although light departments operate independently from the town, under Chapter 164, light department funds are deposited into the town or city treasury, and therefore, the treasurer and certain other officials necessarily will have some involvement or interaction with the light department. But the municipality’s role in the operations of the light department is largely ministerial, i.e., processing warrants and payments.
- The treasurer is responsible for managing funds deposited in the general treasury, which includes the light department’s general receipts. But they can only be spent for light department purposes under c. 164.
- No one else in the town may make independent evaluations of the necessity or wisdom of any such payments, or in any way exercise a business judgment with respect to such payments. In terms of the process of paying bills, once the BOS acting as the light board approves payment of a bill placed on the warrant, it then goes to the town for payment. Where the BOS is the light board, then some other officer in the town (having duties similar as auditor- perhaps the treasurer or accountant) can only refuse to process the payment if that officers believes it to be “fraudulent, unlawful or excessive.”
- As the Supreme Judicial Court (“SJC”) specifically recognized in Municipal Light Commission of Peabody, v. Peabody, 348 Mass. 266 (1964): “This in terms is an unrestricted power in the manager and the commission. There is in [G.L. c. 164] an implication that their determination as to what should be expended for the efficient operation of the business is not subject to change by other public officers or the legislative department.”
- In the Peabody case, the SJC also clarified that a municipal light plant is not dependent upon appropriations from the city or town for its operations, and that the budget and operations is determined in accordance with c. 164 and not c. 44 governing control of municipal departments.
Manager, Board Structure
- As mentioned, a town may establish an elected light board with three or five members. (G.L. c. 164, § 55). It is not required to establish such a board and in the absence of an elected board, the role of the light board is assumed by the BOS.
- L. c.164, § 56 also provides for the appointment of a manager by the BOS, who “under direction and control of the… Board…[shall] have full charge of the operation and management of the department, the manufacture and distribution of…electricity, the purchase of supplies, the employment of attorneys and of agents and servants, the method, time, price, quantity and quality of the supply, the collection of bills, and the keeping of accounts.”
Board Duties Versus Manager Duties
- As set forth above, the manager has “full charge of the operation and management of the department.” This includes:
- hiring and firing of employees, attorneys, consultants, and independent contractors (this power is exclusive to the manager, see Golubek v. Westfield Gas & Elec. Dept., 32 Mass.App.Ct 954, 955-56 (1992));
- purchasing supplies;
- managing all aspects of the distribution system;
- preparing and submitting annual budgets to the Board; and
- managing billing and accounts (in accordance with statutory and regulatory requirements).
- In turn, the BOS acting in the role of a light board typically performs the following duties:
- approves personnel and other general light department policies, consistent with their roles in establishing policy for light departments (see discussion below on the Golubek case);
- approves the light department’s rates under G.L. c. 164, §58, and terms and conditions for electric service, upon recommendation of the manager;
- decides whether to accept the lien laws (see 58B), participate in self-insurance funds (see § 130);
- reviews annual financial reports from the manager (see§ 56, 57) and votes on the annual budget submitted by the manager;
- determines when and how depreciation funds should be appropriated in accordance with the statute (§ 57);
- files annual reports with the DPU; and
- acts as the Chief Executive Officers (under G.L. c. 150E) for the purpose of collective bargaining in those systems that have unions. See Town of Marblehead and AFSCME, Council 93, MCR-2955, slip. op. at *4-5 (1980).
- In our representation of municipal light departments over the past 20 years, we have observed different customs in different systems regarding the signing of contracts, etc. However, one constant remains: the manager is responsible for the operation of the light department and the decisions that go into such operation. This is because most light boards (and in those instances where BOS operate as light boards) are comprised of individuals without extensive technical experience in light plant operations. In its wisdom, the Legislature created a system whereby the boards establish policy and their appointed managers possess the technical ability to run the daily operations of the light department.
- In the Golubek case, the Court of Appeals addressed the scope of the light board’s authority and the “division of duties” between the board and the manager. The Golubek case involved a dispute between the manager and board over the hiring of a consultant. The Court held that only the manager had authority to decide which firm was to be hired. This precedent applies with equal force where the BOS acts as the light board, because of the dictates of G.L. c. 164.
- In resolving the dispute, the Court described the relationship between the manager and the board as follows: “[T]he management and operation of the department is in the board … by virtue of G.L. c. 164, § 55, and in the manager acting under them as their executive officer by virtue of § 56.” Id. By reason of that subordinate relationship, the board “could frame such general regulations concerning the exercise by … [the manager] of his statutory powers as were found to be reasonably required, and as did not violate the statute.”’ Id. (citations omitted). The Court reasoned that the power to give “direction” means the power to give “general instructions as to the manner of doing” a required act. See , citing Berkshire Woollen Co. v. Day, 12 Cush. 128, 130 (1853). “Control” means the authority to “regulate, direct or dominate.” See id., quoting The American Heritage Dictionary of the English Language 290 (1969 ed.).
- The Court concluded that the words “under the direction and control … of the board” mean that the board has the power to give the manager general directions with regard to the operation of the department.” See at 955-56. The board might, for example, direct that a national search be undertaken, or that the consultant possess particular qualifications. See id. at 956. But the board cannot tell the manager who to hire.
- The court held that a broad policy that merely requires the approval of the board for the manager to take a particular action is invalid as it encroaches on the manager’s powers under G.L. c. 164, § 56. See at 956. This means that the board must adopt genuine policies, setting out specific guidelines and standards.
- The Golubek case indicates that the role of municipal light boards–and BOS acting in the role of light boards, generally is to establish policy and not to engage in the actual mechanics of operating light departments, consistent with G.L. c. 164.
- When a board undertakes a responsibility specifically granted by law to the manager, the board exceeds its authority and such action is invalid.
- In Larch v. Mansfield Mun. Elec. Dept., 272 F.3d 63, 69-71 (1st 2000). the manager of the Mansfield Municipal Electric Department (“MMED”) brought an action against the light department under the Massachusetts Whistleblower Statute alleging his employment was terminated because he refused to obey a board member’s order to hire a particular individual because he believed to do so would be illegal under G.L. c. 164, § 56. See id. Subsequently, the board (in this case the board was the BOS) undercut the manager’s authority to manage the light department, by constantly questioning the manager about payments, interfering with purchases, the hiring of outside consultants, and personnel matters. See id. at 70-71. The board then voted not to renew the manager’s contract for employment. Id. at 71.
- The Court determined that, in light of the plain language of Chapter 164 and the Golubek decision, the manager reasonably believed that following the board member’s order would be illegal under G.L. c. 164, § 56. See at 69. The Court found that the board’s subsequent interference with the manager’s duties and failure to renew his employment contract constituted retaliation because the manager would not hire an employee that a board member ordered him to hire. Thus, the Court held that the board violated the Whistleblower Statute. See id. at 75.