CLAREMONT — The Claremont City Council said it wants to explore the risks and benefits to forming a community power aggregation, which would enable the city to procure energy sources for electricity used by city residents and businesses.
A 2019 state law, NH RSA 53-E:2 allows local governments, including municipalities and counties, to procure and provide electricity in bulk on behalf of its residents and buildings in an effort to give such communities more control over its electrical costs and energy sources.
The various potential benefits to communities include more affordable electricity or cost-competitive rates as well as opportunities to procure green electricity or invest in new renewables, according to Henry Herndon from Clean Energy of New Hampshire, a nonprofit energy advocacy group.
Herndon met with the council on Wednesday to discuss the new program.
Officials from 66 municipalities or counties have signed a letter expressing their interest to state energy regulators about this program. Interested communities include Hanover, Keene and Lebanon.
Under the program, residents would still receive their electrical services through their public utility company, such as Eversource Energy. The utility would maintain their same prices for delivery. The potential cost difference for consumers would be based on the price of the energy source.
Claremont City Councilor Andrew O’Hearne expressed concern about these types of choice programs, because sometimes the savings to the consumer fail to transpire.
“I feel like we’re potentially going to get into something that a year later we’re going to be getting complaints from residents that the costs are going out of control,” O’Hearne said.
O’Hearne pointed to a friend of his who joined one of these energy choice plans through a private company. O’Hearne said his friend’s electric bill jumped from $100 per month to $600.
Herndon said that municipalities have a greater purchasing power and resources to benefit from energy choice programs than an individual customer.
“Rather than having an individual customer with a very small electric load and purchasing power, you’re pooling all your power resources together to get more attractive rates,” Herndon said.
Municipal programs can also contract administrative services that assist local aggregations with program oversight and expertise to understand the power sector, which individuals generally lack as a resource, Herndon said.
Councilor Jon Stone questioned the cost-benefit of renewable energy sources and noted that many cost more than traditional fossil fuels.
Herndon said that the actual cost of renewable sources is more “complicated.”
Overall electricity prices are presently lower because of the market, Herndon explained. There is an oversupply of natural gas, a cheaper fuel, and there are more renewable sources competing in the region today.
As for the cost of renewables, there is usually an upfront capital cost to invest in renewables that drives up their price, according to Herndon. However, renewables carry lower rates for peak hours than traditional fossil fuels and a zero marginal cost to produce, which recoups savings over the long term.
The process to form a municipal choice aggregation is to first create an energy choice committee, Herndon said. This committee would be tasked with creating an energy procurement plan, which would need approval from the city council. Once approved by the council, that committee could begin the implementation, such as negotiate energy agreements.
The council did not vote on Wednesday to create a new energy choice council, members indicated they would like to vote on forming a study committee at their next meeting, scheduled for Wednesday, Oct. 7.
Councilor Erica Rae, who sits on the Claremont Energy Advisory Committee, said the Committee would like to gather information from municipalities who are already pursuing energy choice plans to determine whether this opportunity would be reasonable for Claremont to pursue.
City Manager Ed Morris said that forming a committee does not obligate the city to participate in the program. However, having a committee would enable Claremont to join discussions with these other municipalities and track their progress and experiences.
“I think by delaying the committee, we will wind up losing a lot of the information that we would need to discuss,” Morris said. “There’s a lot of information coming out right now and I would like Claremont to be involved in the conversation and know what’s going on.”
The council asked Morris to return in October with more details regarding how to form this committee, including the proposed number and makeup of the members.
O’Hearne said he feels the Energy Advisory Committee should be the one to form this study through a subcommittee, since they are the ones gathering the information for the council. If the council approves this study committee, that committee would only answer to the city council.
Morris said the guidelines of the program require the city council to authorize the committee. An energy sub-committee may not have the same access to other municipal groups.
The city council also voted 6-2 to sign the multi-community letter being sent to the state indicating their interest in the energy-choice program.
Herndon said the letter’s intent is to encourage state regulators to create more flexibility to negotiate energy agreements.
O’Hearne and Stone cast the two opposing votes. Mayor Charlene Lovett was absent.