Lebanon Makes Efforts to Go Greener with Community Power
In early 2022, Lebanon may be able to provide greener energy to its residents while saving them money through an electric aggregation plan called Lebanon Community Power (LCP). The project, which has been spearheaded by Assistant Mayor Clifton Below, takes advantage of a state law that allows municipalities to become electricity suppliers, negotiating lower electricity rates, and clean, sustainable energy on behalf of their communities.
Keene became the first municipality in New Hampshire to adopt a Community Power Plan in May of this year; since then, Hanover and Harrisville have adopted their own plans, and Derry, Dover, Exeter, Nashua, and Portsmouth are in the process. In September, the Lebanon City Council will consider whether to adopt Lebanon’s plan. There appear to be no downsides to adopting the plan; there’s no cost to join the Community Power Coalition of New Hampshire, the Joint Powers Agency formed to share administrative and electricity procurement services between municipalities in the state, and the plan explicitly states that LCP will not launch unless it can provide rates that are competitive with or lower than those currently available to residents. Liberty, the current default supplier, will still provide and maintain the power grid, so there is no need to build additional infrastructure. Further, the program is voluntary, allowing residents to opt out for any reason.
Jon Chaffee, a member of the Lebanon Energy Advisory Committee (LEAC), is excited about the opportunity the plan provides. “There’s a geek factor,” he says, of the many reasons to support LCP. The possibility of supporting the development of numerous regional renewable sources of electricity is a substantial draw. “The utilities can’t do that, but community power can actively support renewable generation.” Opportunities abound, such as the project currently underway that hopes to convert methane gas emissions from the landfill to electricity that would help the city to meet its emission reduction goals in the energy chapter of the Master Plan. Buying power from regional generators helps the local economy, makes the grid greener and more resilient, and lowers the cost of transmitting electricity from distant fossil fuel powered generators. Transmission charges are a significant portion of the electric bill and savings benefit all rate payers.
Two other great opportunities, Jon says, are that LCP can offer simplified Community net metering, and LCP can offer an optional pilot of time-of-use (TOU) rates – a long-standing aspiration shared by Jon and other members of LEAC, as well as other residents. With TOU rates, customers can save electric costs by limiting their use during peak hours and shifting that burden to other times when the demand for electricity is lower.
The idea of TOU rates may sound minor, but it’s not: the City of Lebanon has saved tens of thousands of dollars per year by paying attention to its peak usage and reducing its capacity charges – the charge in everyone’s electric bill that provides the generation capacity to cover peak power usage. Meanwhile, the capacity charges on all NH ratepayers’ bills are going up year after year because of lack of attention to reducing the NH share of electricity use, compared to neighboring states, on the one peak use day of the year that is the basis for calculating the capacity charge. As such, by providing residents the opportunity to see when their electricity consumption is more costly, LCP can not only help them to reduce their costs but help all rate payers in the state by decreasing peak usage. Jon mentions that Lebanon has reduced its capacity significantly by shutting down its water treatment and wastewater pumps at peak times, running them when usage is low otherwise, and is planning to install air conditioners that chill during off-peak hours. “We want to give those benefits to people more broadly,” he says, by allowing users to opt in to TOU rates.
LEAC is confident that community power can provide a better product for Lebanon’s residents. In a pair of public hearings over the summer, Clifton Below and LEAC member Meghan Butts explained the plan and answered questions. “Think of it as a buying club for electricity,” says Meghan: the statewide coalition will be able to leverage the needs of multiple communities to procure electricity at competitive rates and incorporate renewable energy at levels set by the municipalities themselves. For LCP, Clifton envisions a tiered system, starting with a base product that provides cheap rates and a moderate amount of renewable energy that’s still greater than what the existing default supplier provides. For an additional cost, bringing the price in line with or above that of Liberty’s supply, a customer can increase the percentage of renewable energy, up to 100% renewable. This system would allow LCP to meet the needs of a variety of consumers while supporting real renewable energy.
How will community power beat the rates of existing suppliers?
Again, the answer lies in the locally controlled coalition. Rather than going to bid twice a year, locking in rates for six-month periods with a buffer to hedge against volatility during that long window, the plan will build a rolling portfolio of short-term contracts while procurement professionals seek out good deals and evaluate the risk and return of longer term options. Rather than increasing volatility, Jon believes the shorter contracts will stabilize rates for customers by decreasing the length of a price increase and allowing LCP to cover short-term changes with a reserve fund. And with the expertise of those professionals, the buying power of the coalition can ensure LCP caters to the needs of its customers. Hundreds of businesses and residents already buy their power from competitive suppliers and commercial brokers; as Jon says, “it’s been an advantage for the businesses that can afford it, so we’re offering those advantages to the 6000 residential and 1000 business customers that still use Liberty default service.”
Community power will be a great opportunity to support grid modernization. The existing system relies on massive peak generation capacity, much of which is only used in a very small time slot over the course of a year but still needs to be available for that time. By coordinating usage and production regionally, we can balance the needs of Lebanon effectively and sustainably. Lebanon Community Power will perform the analysis of rates, products, and contracts for us, getting us the energy we need, and doing it with our interests in mind.
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