That's why, in a sane world, there'd be a state-level organization that does the things that are too big for small towns, not a private corporation. The excuse is that the state authorities are too backed up - essentially, that they're underfunded. How transferring tax money to a private LEC helps with that is not entirely clear to me.

The most important question here is, who exactly authorizes the use of force by NEMLEC? This, as is, allows undisclosed use of force whenever the powers that be (I believe police chiefs) feel like it, without the need for disclosure.

This is essentially an unregulated regional army. Paid for with taxes, but not actually beholden to the tax payer.

Why would somebody form that? That depends on how paranoid you want to think.