Powerful savings – Electricity supply aggregation could reduce costs by $75,000

MEREDITH — A regional purchasing agreement could reduce the cost of electricity by $75,000 for the towns interested in participating.
The Lakes Region Planning Commission sent out letters on Wednesday announcing the negotiated rate of 7.3 cents per kilowatt-hour, which is well below Eversource’s current rates but only slightly lower than the rate that the New Hampshire Electric Cooperative charges.

The agreement would cover power purchased by municipalities and school districts. Individual homeowners’ electric rates would be unaffected by the agreement.

Last April, the regional planning commission conducted a survey of member towns to determine what services they might have an interest in. Energy purchasing and a health insurance cooperative topped the list.

Barnstead, Center Harbor, Danbury, Moultonborough, Northfield, Sanbornton and Tuftonboro were “very interested” in bulk energy purchasing, while Alton, Belmont, Effingham, Gilford, Meredith, Tilton and Wolfeboro were “somewhat interested.”
Jeff Hayes, executive director of the Lakes Region Planning Commission, said the Nashua Region electricity supply aggregation provided $1,357,522 in savings between 2012 and 2016. The success of that program proved that a regional approach could save a significant amount of money for participants.
Based on community interest, the Lakes Region Planning Commission filed with the state Public Utilities Commission on June 28 to provide electric aggregation services, and in August issued memoranda of understanding to the region’s towns and school districts. The MOUs explained the scope of the work to be done by LRPC and the contracting agencies, as well as governing rules for the agreement.
Hayes said 18 towns and six school districts expressed an interest in the program. Twelve others want to wait and see what happens. Some are already under contract with suppliers, and both Ashland and Wolfeboro have their own municipal electricity systems.
Electricity costs fluctuate on a daily basis, due to demand, fuel costs, and other factors, and any time a rate is locked in, it’s a gamble, Hayes said. The rate may go down and a community on a contract ends up paying above the market rate, while if rates go up, the community benefits from its contract.
In the case of electricity aggregation, the theory is that, by representing a larger pool of communities, it is possible to negotiate lower rates than what a single community would be able to achieve. However, if the timing is right, a community might lock in a low rate that even an aggregate could not reach.
The bid requests went out on Aug. 31, setting a period for vendor questions and responses, with a bid due date of Sept. 29. Hayes said they extended the deadline because of the difficulty of obtaining all of the necessary information from the utilities.
“It didn’t go as smoothly as we’d like, so we extended it about a week, but in the end we got three bids,” Hayes said. “We were hoping to save upwards of $100,000, but it’s still very worthwhile, and some communities are saving substantially.”
The bids came in about a half-cent more than last year’s projections, putting the figure close to what the New Hampshire Electric Cooperative has set for rates.
“The co-op rate is 7.47 cents, so it’s about a 2 percent savings over the co-op, but it’s a 48 percent savings over Eversource,” Hayes said.
He noted that the negotiated rate of 7.3 cents per kilowatt-hour still could change by the time a contract is signed.
“It’s an estimated price right now,” Hayes said. “I have to first say that this pricing looks good, and a review showed that it’s favorable to our membership. But it could change by the 25th when we lock the price in.”
Municipalities will need to vote on the preferred bidder by Oct. 17, and contract execution will occur simultaneously in all participating communities on Oct. 25. All must sign on the same day because of the daily market rate changes.
Although the pricing is based on the number of customers participating, Hayes said that, if a community decides not to sign a contract, it should not affect the rate, unless a large number of them drop out of the program.
The negotiated contract is for 12 months of service.
“There are pros and cons of going longer,” said Hayes, “but 12 is the minimum you need.”
Should the program prove to be successful, other communities might want to join. That happened in Nashua, where 11 joined in 2017.
Hayes said oil purchases and catch basin cleaning are other areas where a regional agreement might save money to participants in the future.