What is Community Power?
Listen to this explainer to learn more about how community power works and how communities can use them to meet their goals.
Denis MacDougall is an Environmental Agent for the City of Medford, Massachusetts. When it comes to people’s energy bills, he heard two common concerns.
"One is that people are like, 'My bill’s too high. Is there anything the city can do to help?'"
And the other was surprise price jumps in people’s energy bills.
Medford may be two hours away from Keene, but our cities have a similar energy system.
If you take a look at your Eversource bill, you’ll see two separate charges. One is for the cost of delivering the energy you use, and the other is for the actual energy that keeps your lights on.
Eversource is a utility, so its job is to deliver energy to customers like you on its poles and wires. But Eversource doesn’t generate energy. It buys energy on behalf of customers and negotiates a rate for this energy supply every six months.
New Hampshire and Massachusetts allow third-party suppliers to sell energy. They compete with the utility. In Keene, for example, Eversource always delivers energy here, but you don’t have to buy Eversource’s energy supply. You can choose to buy energy from competitive suppliers.
It’s the same story in Medford. Denis said, "There are some companies out there that provide energy that are great. They’re 100 percent reputable and they’re fine."
But… not all of them.
"There are a lot out there that say, 'Hey, would you like to save energy?'" said Denis. "'You just gotta sign here, give us your information, and your energy rate is gonna drop for the next year----five cents per kilowatt.' Which is great. What they don’t realize in the small print is that your energy rate will double. And it happens all the time."
This is a big issue in Massachusetts. The state Attorney General launched an investigation of these third-party energy companies. The ratepayers who went with competitive suppliers from 2017 to 2018 collectively spent over 76 million dollars more than if they had just stayed with the utility. Low-income and elderly customers were hit hardest.
So pricy energy bills and the predatory practices from some third-party suppliers made Medford consider other options. Was there anything the city could do to help? That’s why Medford started a community power program.
"I put it in the context of BJs or Costco or Sam’s Club," Denis said. "They buy in such tremendous amounts of large quantities in bulk that when they’re selling it to you, they sell it at a discount. So you get it cheaper."
In a community power program, a local government like Medford pools its total energy demand. Then it makes a bulk energy purchase for its residents and businesses. Bulk purchasing power can help towns get lower energy rates, and lower rates mean lower bills.
Patrick Roche works for Good Energy, a company that acts as a broker to help communities get competitive energy rates for their power programs."People say, 'Well, the utility must have the biggest buying power, so how could we even as a town or a city beat that?'" said Patrick.
That question—How on earth can our city get a better energy rate than Eversource?—it’s one Patrick gets a lot.
Here’s the answer: bulk purchasing power does play a big role in energy pricing, but so does the timing of when you buy energy.
Community power programs allow towns to buy energy when rates are good. Then those rates are fixed for a longer term, like three years. Steady, long-term rates are more predictable than utility prices that fluctuate every six months. Stable rates set by the city won’t have surprise price jumps like what Denis saw in Medford where a third-party supplier promises really low rates for the first six months, and then... gotcha! The rate doubles. So Medford’s community power program helps protect their ratepayers.
It’s important to remember that you can’t guarantee a community power program will always get better rates than the utility. Again, utility rates change every six months----up and down, up and down. Sometimes the utility price might be lower than the power program.
But if you look at energy pricing over the long term, Patrick Roche says the community power programs that Good Energy works with do see savings.
"Communities are showing that, over multiple contracts, so three years, four years, they are delivering cost savings to their residents," he said. "And the programs that we’ve run in Massachusetts, we have forty-one active programs, and all of them have saved money over that term."
He says a typical household saves about 60 dollars per year by being part of a power program. If you multiply that amount by the number of ratepayers participating in the power program, that’s a lot of money that stays in a community.
But beyond price stability and consumer protection, community power programs give towns a choice in where their energy comes from. Here’s how community power connects to Keene’s Sustainability Resolution.
The energy electrons that Eversource brings on its wires to your home are exactly the same, whether they come from a renewable energy source or a fossil fuel source.
The Green Energy Consumers Alliance puts it like this: “As much as we’d like for it to happen, renewable energy-generated electrons are not green and fossil fuel-generated electrons are not black.”
Until the day when electrons can be color-coded, we count renewable energy through a credit system. Every megawatt hour of electricity generated from a renewable source counts as one REC. That stands for Renewable Energy Credit.
New Hampshire has a renewable energy requirement. This year, in 2020, just about 20 percent of New Hampshire’s energy supply needs to come from renewable sources in the form of RECs. This requirement is called a renewable portfolio standard, shortened as RPS.
New Hampshire’s RPS requirement applies to any energy supplier. So whether your energy comes from Eversource’s default or a competitive supplier, renewable sources need to make up at least 20 percent of the total energy supply.
Patrick Roche from Good Energy sees community power programs as a way to go above and beyond the RPS.
"There are a lot of towns that want to go further, faster," he said. "And this allows them the ability to do that. And we can do this while saving ratepayers money."
So a power program means a city like Keene can decide it wants more of its energy to come from renewables than the minimum state requirement. Keene would have a say in the energy portfolio.
Let’s look at Medford as an example. Its power program offers two different options. Ratepayers who were connected to the default utility got automatically enrolled in Medford’s power program, which has an energy mix with 5 percent more renewables than the Massachusetts minimum requirement. Ratepayers can also choose to upgrade to a portfolio with energy sourced from 100 percent local renewables. Denis says close to 5 percent of households choose this.
"That’s 5 percent more in 100 percent renewable than we would have gotten if we weren’t in the program. We think of it as a win," he said.
Like Medford, New Hampshire’s community power programs would also have automatic enrollment. You wouldn’t have to do anything to participate. Your town would send you a letter about the power program before it starts and then you could opt out without fees or penalties.
That means you could keep buying energy through Eversource, or you could go with a competitive supplier. You could also stay with the community power program but leave whenever you want to. The point is that you, the ratepayer, would have more options.
A lot stays the same with a power program. You would still get your bill from Eversource because it would still deliver your power. And you’d still call Eversource when the power goes out because it would still operate the poles and wires. Power programs are actually a lot like what’s already happening.
Denis said, "We’re buying the electricity in bulk for the entire city. The city basically does that for your water. Why can’t they do it for your electricity?"
As Keene considers ways to meet its renewable goals, community power programs may be one way to help us get there.
Note: Thank you to Denis MacDougall of Medford, MA; Patrick Roche of Good Energy; and Bart Fromuth and Thomas Carter of Freedom Energy for interviews on Community Power that contributed to this story.