Eversource v. Community Power Coalition, Annotated
Updated: Feb 10, 2021
When people ask me what I think about retail competition in the electric industry, in light of New Hampshire's decision in 1996 to end the era of vertically integrated utilities, I always think of a quip, likely apocryphal, attributed to Mahatma Gandhi.
Supposedly, someone once asked Gandhi what he thought of western civilization and his reaponse was: "I think it would be a good idea."
That's my view of electric competition in New Hampshire. Customers paid handsomely, via "stranded cost" charges on their bills, to compensate utilities for their losses when forced to sell off their generation assets some 20 years ago. In fact, they're still paying, thanks to the $425 million that Eversource wasted on a mercury scrubber for the coal-burning Merrimack Station in Bow, which the company should have simply shut down in 2007. Instead, the coal plant sits mostly idle, collecting free money for its owners in the form of capacity payments, though the plant has been chugging away recently because of February's cold weather.
This very week I have been watching the plume from Merrimack Station -- now owned by Granite Shore Power -- and emitting a bit of a plume myself. Or maybe that's steam coming out of my ears as Eversource gears up to promote House Bill 315.
Why? Because, although commercial and industrial users of electricity in New Hampshire have indeed benefited from the right to shop for electricity (while still connecting to the grid via their legacy utility) the same cannot be said of residential customers.
That could well change, and soon, thanks to CPA -- community power aggregation. Basically, as a residential electric customer you don't have enough buying clout to extract good deals, but if your town or city could gather up (i.e., aggregate) all or substantially all of the community's electricity load and offer it up to suppliers, well, then maybe, just maybe, there'd be some savings on residential bills.
To that end, Lebanon and Hanover have just formed the Community Power Coalition, the aim being not just to do municipal aggregation but to combine the loads of several municipalities. Eversource, the state's biggest electric utility, correctly sees this as a mortal threat. So, the utility wrote House Bill 315 which, if passed, would make it all but impossible for Lebanon and Hanover (and other communities that join either the Community Power Coalition or any similar organization) to succeed.
I've already written an edition of my InDepthNH.org column "Power to the People" about this, so convinced am I that Community Power Aggregation might finally deliver the restructuring-related goods to residential customers that commit to CPA. Here I am focusing on the propaganda Eversource has enlisted chambers of commerce around New Hampshire to emit in an effort to gain passage of House Bill 315. (Interestingly, the utility that serves most of Lebanon and Hanover -- Liberty -- is apparently not on board the House Bill 315 train.)
Here are the Eversource-sourced talking points I received (indirectly) from one of New Hampshire's local chambers of commerce, in red with my annotations in black italics:
Why does the Chamber support this bill?
Community Aggregation can be a good way for communities to pool their resident’s [sic] electric usage to see if they can find lower cost energy in bulk. Yes, but if House Bill 315 passses then communities will find it much more difficult, and perhaps even impossible, to launch successful aggregation programs.
New Hampshire’s utilities make no profit on the sale of electricity, so therefore we would support any opportunity for more savings. It's true that neither Eversource nor Liberty nor Unitil make any profit on their "default" energy service (the utility-procured electricity you get if you don't find another supplier) but they have every reason to encourage you to continue to rely entirely on them rather than seeking flexible, innovative, greener electricity supply from elsewhere, especially if "elsewhere" is a municipality that adopts a comprehensive aggregation program that is more than just farming out the community's load to a single wholesale supplier.
In 2019 legislation that was passed on such aggregation was crafted in a way that caused too many interpretations of the law, thereby bogging down the rulemaking process at the state level, nearly bringing aggregation to a halt. The process is bogged down because the utilities (not the municipalities) have been raising objection upon objection and concern upon concern.
HB 315 was created to bring clarity to aggregation and stream line the process so that aggregation can move forward quickly. The other issues that have nothing to do with aggregation will be addressed at the Public Utilities Commission. The bill allows those non-aggregation issues to be addressed but without slowing down aggregation from moving forward. Translation: Eversource and its allies might be okay with municipal aggregation if (as is common in Massachusetts) all your community does is hire a profit-seeking aggregation firm to go out and peddle the municipality's electric load. The Community Power Coalition has something more ambitious, and potentially transformative, in mind.
The non-aggregation issues, if not addressed, would ensure that every ratepayer, residential and business customer, would pay much more in their costs for electricity to pay for very expensive infrastructure for a few towns who might want to create mini-utilities within their town. HB 315 allows the Public Utilities Commission to look at that issue – and whether it is in the best interest of all ratepayers – but meanwhile allows aggregation to move forward. The sole purpose of aggregation is to lower rates. So HB 315 focuses on that by streamlining this effort. This one is truly what one of my English professors in college used to call a "howler."
Here's why it's a howler. Eversource is worried that municipal aggregation will catch on, causing towns and cities to provide most of the services you commonly associate with your utility. That could cause the utilities' default energy service to go into a death spiral; the cost of default service would go up as more and more customers flee, either via Community Power Aggregation or by their choosing an unregulated supplier on their own.
In reality, and perhaps ironically, that would mean restructuring has finally worked! The architects of the 1996 Restructuring Act always intended the utilities default energy service to be a last-resort option that most if not all customers would spurn in favor of better options elsewhere. Eversource does not want your municipality to be able to offer you a better deal than you can get by continuing to rely entirely on the utility. So the big utility is claiming, in effect, that we should keep default energy service prices artificially low so that retail choice never really catches on among residential users.
I've heard the comprehensive energy program the Community Power Coalition envisions denigrated as "California-type" municipal aggregation, apparently because similar efforts have succeeded on the other coast. But you don't have to cross the continent for an example of how this might work. Check out the Cape Light Compact just one state to the south of us.
As for California, on February 10 a bunch of communities there announced the creation of California Community Power -- a consortium of eight different community power aggregation programs that will, collectively, control load that accounts for 40 percent of the energy provided via the state's largest utility, Pacific Gas and Electric. That's a lot of buying power and, when deployed in service of innovation and savings for consumers, it could really effect change.
Like I said -- as with western civilization, it's worth a try.
[Photographs: Coal- and wood-burning Schiller Station in Portsmouth, once the property of Eversource, divested in 2018, and now closed.]