How electricity is supplied to New Hampshire customers is currently undergoing a significant transformation through the adoption of community power programs, also known as municipal aggregation. This movement was triggered by a key change in state law (amending RSA 53-E) and is motivated by communities’ desire to respond to high retail electricity prices and appetite to take significant climate action.
Traditionally, most New Hampshire customers have received their electricity supply from their electric utility, with some customers electing to receive power from a competitive electricity supplier. Under community power, a municipality or county chooses the source of electricity supply for customers within its borders. The electric utility still provides transmission and distribution services, and customers receive one bill from the utility that reflects both the electricity supply chosen by the municipality and the services provided by the utility.
Since 2021, a significant and increasing number of New Hampshire municipalities have been preparing to move to community power. Many municipalities have community power programs under development, the first programs launched in the spring of 2023, and as of this writing 16[i] municipalities have begun to supply community power to their residents.
Why are municipalities choosing community power? There appears to be two main drivers: high energy prices and a desire for greater integration of renewable energy.
First, community power enables municipalities to obtain potentially lower electricity rates for their constituents. Utilities are required by state law to buy electricity supply in 6-month increments, which entails using wholesale electricity markets where the clearing price is set by suppliers. Natural gas prices have been volatile in recent years, particularly during winter months, and are subject to international market forces (such as the Russia-Ukraine conflict). Under community power programs, municipalities are not similarly restricted – they can access medium or long-term supply arrangements as they deem advantageous. This enables municipalities to lock in lower prices and minimize exposure to fossil fuel price fluctuations.
Second, community power enables municipalities to include a greater amount of renewables in their electricity supply mix than what the utility would supply. This consideration is taking on greater importance given the urgent need to address climate change and dissatisfaction by some with the state’s climate response. Some New Hampshire cities and towns have adopted 100% renewable energy or net zero carbon emission goals and wish to take action to achieve those goals. New Hampshire’s renewable portfolio standard law (RSA 362-F) requires utilities to obtain 23.4% of their electricity from renewable sources or to purchase renewable energy certificates to meet the metric. This figure rises to 25.2% in 2025 but does not increase thereafter. Community power enables municipalities to go beyond these limited state renewable energy targets.
Another key factor driving the adoption of community power is that RSA 53-E now allows municipalities to set up community power on an “opt-out” basis. Prior to a statutory amendment enacted in 2019, community power was only allowed on an opt-in basis. Under “opt-in,” a customer is not in the community power program unless they affirmatively choose to be. Under “opt-out,” a customer is deemed to be in the community power program unless they affirmatively chose not to be, except that customers of competitive electricity suppliers will be included in the community power program only if they opt in. Because most customers will not make an election under either approach, a municipality is better able to serve more customers and achieve its policy goals (e.g., cost savings and/or more renewable energy) with an opt-out program rather than an opt-in program.
In order to establish a community power program, a municipality must adopt an electric aggregation plan that includes statutorily-required information regarding operation and funding, rate setting and costs, and participants’ rights and responsibilities. The plan is drafted by a community power committee that will seek public input at public hearings, and then the plan is submitted to the city/town legislative body to be approved by majority vote. The municipality must submit the plan to the Public Utilities Commission (“PUC”) for review, which is limited to ensuring the plan for “conforms to the requirements of [RSA 53-E] and applicable rules.”[ii] The municipality must also submit the plan to the Office of the Consumer Advocate and any electric utility providing service in the municipality. Once plans are approved, municipalities are required to mail notice of the commencement of an opt-out program to each retail electric customer in the community, allowing the customer at least 30 days to make an election to opt out.
Municipalities can develop community power plans either on their own or in collaboration with other communities. So far, most are doing so either as members of the Community Power Coalition of New Hampshire (the “Coalition”) or by working with an energy services broker. Formed in 2021, the Coalition had 35 municipal members and one county member (Cheshire County) as of June 30, 2023[iii], and continues to grow. The Coalition currently has 12 operating community power programs representing about 75,000 customers, making it a larger electricity supplier than Liberty/Granite State Electric or Unitil.[iv] At least 15 other communities have or will launch their programs while working directly with a broker such as Good Energy/Standard Power, and Colonial Power.
Many municipalities are structuring their community power programs to provide a default offering along with the option to choose another offering with a different amount of renewable energy included. Coalition members offer “Granite Basic” as their default service (with 5-10% more renewable energy than the utilities), while allowing customers three other options – no increase in renewable energy, 50% renewable energy and 100% renewable energy. Keene, working with Good Energy and Standard Power, offers Keene Local Green (5 to 10% more renewable energy with an emphasis on local sources) as its default service, with the same other options as the Coalition.
The municipalities that have launched their programs are offering cost savings to their customers, at least at the outset. The Coalition’s “Granite Basic” rate is currently 10.9 cents/kWh[v] and the Keene Local Green rate is 11.47 cents/kWh,[vi] both of which are lower than the default energy service rates currently charged to residential customers by Eversource (12.582 cents/kWh), Unitil (13.257 cents/kWh) and Granite State Electric (12.612 cents/kWh).[vii]
There is no guarantee that community power supply rates will be lower than utility default energy service rates at all times, but community power appears to offer the opportunity to reduce and stabilize electric supply rates for residents in most cases. Importantly, each municipality has the flexibility to offer the options it believes will best serve its residents, whether to realize lower prices, more renewable energy, more local energy, or another objective.
There are some practical issues with implementing a community power program that are not yet fully resolved. For example, net metering consumers with onsite generation will not receive a monetary credit for any energy they export to the grid while participating in community power programs, largely due to barriers in data exchange with utilities. Supporters of community power are working with the PUC to address this issue, as RSA 53-E contemplates integrating net metering consumers into community power.
Community power is here to stay. The 16 municipalities that have launched programs so far represent about 16% of New Hampshire’s population. With many more communities expected to launch programs later this year or in the first half of 2024, it is possible that up to half of the state’s population may be served by community power by the middle of 2024.
Katherine Hedges and Lauren Kilmester are members of the Energy and Utilities Practice Group at Rath, Young & Pignatelli, P.C., where they work with developers, owners, operators, investors, and lenders involved in the production of power and fuels from biomass, hydropower, wind, solar, cogeneration, landfill and bio-gas, and alternative fuel feedstocks on a wide-range of legal issues. The Energy and Utilities Practice Group also has expertise in assisting governmental entities in developing renewable energy policies.
[i] The 16 municipalities are the Cities of Keene, Lebanon, Nashua, and Portsmouth, and the Towns of Canterbury, Enfield, Exeter, Hanover, Harrisville, Marlborough, Peterborough, Plainfield, Rye, Swanzey, Walpole, and Wilton.
[ii] RSA 53-E7, II.
[iv] 2023 Quarter 2 Coalition Launch Addendum, Community Power Coalition of New Hampshire, available at https://www.cpcnh.org/_files/ugd/202f2e_ca0ad97e3dac4f57b7db3008344e6954.pdf.
[v] Community power group sets energy prices for customers in 12 NH municipalities, New Hampshire Public Radio, available at https://www.nhpr.org/nh-news/2023-07-29/community-power-group-sets-energy-prices-for-customers-in-14-n-h-municipalities (July 2, 2023).
[vi] Products & Pricing, Keene Community Power, available at https://keenecommunitypower.com/electricity-choices/ (last visited August 28, 2023).
[vii] Shop for Electric Rates, New Hampshire Department of Energy, available at https://www.energy.nh.gov/engyapps/ceps/shop.aspx (last visited August 28, 2023)(detailing rates effective August 1, 2023-January 31, 2024).