New Hampshire towns face choices under state’s energy aggregation law

Bizar Male

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New Hampshire cities and towns will soon be able to play a bigger role in deciding where their energy comes from, but first they have a choice: join forces or go it alone.

As rulemaking for the state’s recent community choice aggregation law nears a conclusion, municipalities are drafting plans for purchasing cleaner and cheaper power for residents.

Two competing models are emerging — both with proven track records in other states. Some local governments are banding together to create a clean power portfolio, while others are seeking services from well-established energy brokerage firms that promise more localized solutions.

Experts say that both approaches offer a path to increasing renewable energy and decreasing costs.

A new role for cities, towns

Eighteen states and Washington, D.C., allow retail choice in electricity, in which customers can choose an electricity supplier other than the utility that owns the power lines in their neighborhood. Community power, also known as community choice aggregation, is a model in which municipalities secure power on behalf of their residents, who typically have the option of opting in or out of the programs.

Buying as a community helps residents get better rates and safeguards against manipulative sales tactics sometimes associated with alternative suppliers marketing to individual customers. Ten states currently have community power programs in place, according to the Local Energy Aggregation Network, which advocates for more community choice in the United States.

New Hampshire has technically allowed community choice since the state restructured its utilities in 1996, but it wasn’t until 2019 that a new state community power law allowed cities to automatically enroll customers under an opt-out model. This made it far more viable to start a program than trying to convince residents to sign up.

That law was nearly gutted earlier this year after Eversource, the state’s largest investor-owned utility, raised objections. But utilities, city officials and lawmakers landed on a compromise that’s awaiting signature from Gov. Chris Sununu, who’s expected to sign it.

After rulemaking is complete, the Public Utilities Commission will be able to review and approve community power plans submitted by municipalities. Communities are expected to be able to move forward getting new power supplies sometime in 2022.

Some have already drafted community power plans, and others are working to develop them. These plans are required before a municipality can move forward securing power. They have to be approved by the municipality and the state, and they act as a blueprint as communities secure new power supplies and inform residents of the changes.

The details of these plans differ from town to town, but they generally include a list of supply options residents can choose. Both Lebanon and Keene, for example, plan to offer residents four choices. One is a default plan, in which residents will automatically be enrolled with a 5% to 10% increase in renewable power and rates that are expected to be less than or competitive with current utility prices. 

Residents can also opt out of that plan and choose a different one with the minimum amount of renewables required by the state’s renewable portfolio standard, at a potentially lower rate than they get with the distribution utility. Alternatively, they can choose a plan in which 50% of their supply is renewable, or a plan that’s 100% renewable, which would be the most expensive option.

Banding together

The city of Lebanon is banding together with other municipalities as a founding member of the Community Power Coalition of New Hampshire. Assistant Mayor Clifton Below, a former state lawmaker and public utilities commissioner who helped draft the 2019 law, described the group as “an organization that’s for communities, by communities.”

The coalition plans to form a board with representation from each member municipality. The board will manage the coalition with shared administrative costs through a joint powers agreement. Together, they’ll procure shared power services and will be able to use a portfolio management approach for their supply, Below said.

Each city or town will have its own renewable energy goals and will decide how to fulfill those goals, which could involve contracts with multiple suppliers and power purchase agreements with developers for varying amounts of time. Some projects such as supply contracts, community solar arrays or solar-plus-storage installations may be shared among communities.

Below compared it to joint powers agencies that municipal-owned electric utilities often take part in. He noted the Redwood Coast Energy Authority in California, which is coordinating an offshore wind project in the state’s Humboldt County, as an example of a community power coalition model the New Hampshire group could follow.

“We see it as an opportunity to bring some new professional resources to the municipal level so we can be more fully partners with the electric utility and the distribution utility and the policymakers at the state and regional level,” he said.

According to Henry Herndon, a consultant at the coalition, the model has been demonstrated to be “best equipped to drive power sector innovation.”

An independent approach

Other communities, such as the town of Keene, are going it alone but with expertise from energy brokers such as Standard Power and Good Energy. The two companies have partnered to consult with New Hampshire municipalities on community power, and they say they can deliver innovation but with more community autonomy. 

Standard Power already has a presence in New Hampshire, where it helps more than 60 communities and school districts secure power for municipal facilities and administer hydroelectric net metering programs. Good Energy consults with municipalities in the Midwest and Northeast on community power programs. In nearby Massachusetts, the company works with more than 50 communities, including more than 20 who buy power as a group.

Once a New Hampshire community decides to work with Standard Power and Good Energy, they sign a nonbinding memorandum of understanding with the companies and receive help developing their community power plan. After it’s approved, the brokers will facilitate a request for bids from energy suppliers. Typically, the municipality will end up with a 12- to 36-month contract with one supplier, which could include local renewable projects. Payment for the services of Standard Power and Good Energy is built into that contract.

There’s a bit of a hybrid model, too. Standard Power and Good Energy are also creating a buying group for communities that choose to seek supplier bids together. If the group decides to take a bid from a supplier that one member doesn’t like, that community can choose to separate and seek a bid from someone else even if the others choose to move forward.

Whether they buy individually or as a group, each community in this model would end up with its own contract with one supplier. That supplier could include renewable energy credits from multiple sources — for example, New Hampshire hydroelectric facilities — in the contract. Buying group members can also jointly procure community-based projects, like solar arrays, with the output integrated into their respective supplier contracts.

Unlike the Community Power Coalition, which would create its own new board through the joint powers agreement, “there’s no new layer of bureaucracy,” said Patrick Roche, director of innovation at Good Energy.

“We provide all the bulk purchasing benefits of a buying group while retaining complete autonomy for each municipality,” he said. In addition to helping towns create community power plans and seek supplier bids, the consultants help create outreach materials to educate residents on the change in suppliers. They also manage other key aspects of the process, such as customer enrollment and reporting on the program’s progress.

Roche added that the buying group will contract with large, well-established suppliers. This will guarantee better electricity reliability, he said, and it doesn’t preclude communities from still securing in-state energy.

Making the choice

“I don’t know at the end of the day how much of a difference it ultimately makes” whether communities use brokers or join a coalition, said David Kolata, executive director of the Illinois Citizens Utility Board. The utility consumer advocacy group is based in Illinois, where Good Energy has operated community choice aggregation consulting services since 2011.

Kolata said that no matter what path a city chooses, the important thing is for city staff to be dedicated to the program and to be specific about their goals, so progress can be measured.

For Keene, the decision to work with Standard Power and Good Energy was a matter of timing, said Rhett Lamb, assistant city manager. “We wanted to move as quickly as we could,” he said, and since the coalition hasn’t yet incorporated through the joint powers agreement, leaders in Keene felt they could secure new power more quickly by working alone for now.

Given the state’s program is delayed anyway as the law is finalized and the commission does its rulemaking, Lamb said Keene could end up joining the coalition down the road. Keene and nearby Swanzey are the only members of the Standard Power buying group at the moment, and it’s possible they won’t end up buying power together, since Swanzey hasn’t approved its community power plan yet. More towns could join the group if they finalize their community power plans in time for all of them to seek supplier bids together. Roche said there’s plenty of time for communities to join the group to prepare for a summer 2022 supplier bid.

In Swanzey, the town’s community power committee earlier this year decided to contract with Standard Power and Good Energy through a memorandum of understanding. The committee is currently developing a community power plan. If that’s approved during the annual town meeting next March, Swanzey will go forward seeking supplier bids.

According to Matthew Bachler, Swanzey’s director of planning and economic development, the arrangement seemed to offer more assistance than the coalition in securing energy and helping with outreach to residents.

“I think the committee members felt that a commercial broker would be a little more ready to provide those support services to the committee,” Bachler said. He added that Swanzey already has a relationship with Standard Power to acquire electricity for municipal facilities. And being located close to Keene seemed to offer more potential for collaboration if both places participate in the buying group, he said.

“I think we’re all used to relying on the default energy system,” Bachler said. But, he said, “I think having this option for the community to come together and do that aggregation and pool all of ourselves as consumers and figure out what we want to pursue for our energy goals as a community — I think that’s a really powerful thing.”

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