Municipal Light Plants (MLP)s

Introduction to Municipal Light Plants (MLP)s

FalmouthNet proposes that Town Meeting pass an article approving the formation of an MLP as a way to be able to deliver fiber optic Internet service to every home and business in Falmouth.

So, what is an MLP and why do we propose its formation?  An MLP is a legal and financial structure under Massachusetts law that allows municipalities to operate utilities (like the fiber optic network FalmouthNet envisions) with the right balance of town oversight and business flexibility.1 

MLPs date back to the 1880s and were initially established to help towns provide electric lighting. Today there are about 50 communities in Massachusetts offering utility services such as electricity, cable TV, and fiber optic Internet connectivity using an MLP.

What is an MLP? 

• MLPs are non-profit, publicly owned entities for operating town utilities such as fiber optic networks.

• MLPs are established by a 2/3-majority ballot vote at two Town Meetings, no more than 13 months apart, and then by a simple majority of voters in a referendum.

• The initial vote does not obligate the town to any expenditures or course of action. 

• MLPs are governed by a Municipal Light Board (MLB), which may be the Select Board acting as the MLB or an independently elected MLB of 3 or 5 people who serve defined terms.

• The MLP shall appoint a Manager to run operations and provide detailed operational and financial statements on a yearly basis.

How does an MLP operate? 

• An MLP may construct, purchase or lease facilities to provide services such as broadband internet over a fiber optic network.

• MLPs have broad flexibility to operate a network or partner with a private service provider.

• MLPs are empowered and obligated to act in the interests of their customers.

• An MLP may build, operate and maintain the utility service it provides, or it may hire and oversee an independent entity for this purpose.

• MLPs must still seek 2/3 majority Town Meeting approval to build or purchase facilities  (such as the fiber optic network) or to incur debt to do so.

What other advantages do MLPs provide? 

• MLPs may contract with other towns to provide billing, administrative, operational or other support services and take advantage of economies of scale (e.g. help desk, maintenance crews).

• MLPs of several towns may form a cooperative that embodies a larger regional effort.

• The MLP may use surplus funds to pay off debt and/or cover maintenance and depreciation.

• As a non-profit, an MLP does not pay taxes to the town, but may contribute profits from operating the network to the town general fund.2

1 The full text of the law on MLPs is in Chapter 164:

2 There is a useful and detailed summary of MLP practices at startup-operational-considerations/municipal-light-plant-mlp-authority/