NORTHAMPTON – State regulators have denied plans by 35 area communities to buy cheaper electricity through a collective buying program run by the Hampshire Council of Governments, citing failures of cities and towns to properly inform citizens of the plans, evidence of false and misleading statements in program marketing materials, and other steps in the process that failed to meet state law and regulations.
Friday’s decision by the state Department of Public Utilities deals a blow to the Hampshire Council of Governments’ long-running bid to start a municipal aggregation program – called Community Choice Aggregation – which was designed to save as many as 125,000 residents in 35 communities money on their electricity bills.
The decision also marks the first time municipal aggregation plans have been denied by the DPU, which has previously reviewed and approved 19 such programs servicing over 39 municipalities, according to the state agency.
In a statement, the DPU wrote that its order “identifies serious procedural and substantive concerns” regarding the municipal aggregation plans filed. The agency’s two main concerns were regarding what officials described as inconsistent information about how the plans would operate and a lack of information provided to citizens about their rights and obligations.
“Throughout the proceedings, DPU repeatedly requested information to address these deficiencies,” the DPU stated, adding that its ruling “protects the rights and interests of ratepayers in these 35 communities.”
The state’s municipal aggregation statute requires the DPU to determine whether a community’s plan is consistent with the laws and policies relating to aggregated services and competitive supply. The statute allows cities and towns to add together the electric demand of their residents and businesses and enter into competitive electric supply contracts on behalf of those customers. Municipal officials are responsible for the design and operation of a municipal aggregation plan. Once a plan is approved, eligible customers are enrolled automatically – but, they have a right to opt out.
Todd Ford, executive director of the Hampshire Council of Governments, was traveling out of the country and not available for comment Monday, but the council issued a statement saying the organization was “committed to learning from and addressing each of the issues DPU raised regarding the preparation of these petitions.”
The cities and towns that submitted plans have 20 days to appeal the DPU’s ruling with the Supreme Judicial Court.
“The staff and councilors of the Hampshire Council of Governments share the disappointment of the 35 western Massachusetts municipalities whose petitions for Community Choice Aggregation were denied by the Department of Public Utilities (DPU) last Friday,” the council’s statement read. “These petitions were originally filed in March 2014, and we are grateful to each of the local governments for their patience with the regulatory process.”
Of the 35 municipalities involved, Northampton and 11 other towns in Hampshire County had petitioned the DPU to approve their plans, with the Hampshire Council of Governments acting as the agent. In Franklin County, 11 more communities also petitioned the state agency.
The council’s role was to help secure cheaper electricity for residents by bundling the demand in participating communities and making electricity suppliers competitively bid for a contract.
The Northampton-based Hampshire Council of Governments already runs a bulk electricity purchasing program – primarily for municipal governments and school districts – through Hampshire Power, its licensed competitive electricity supplier. Hampshire Power last year signed a deal to supply power to about 31,000 residential and 4,200 commercial ratepayers in Lowell solely through renewable energy produced in New England.
Officials react to ruling
Local officials said they were expecting a decision earlier this year and were disappointed with the ruling.
“The longer it went on, the less confident I was in receiving a good result,” Hadley Town Administrator David G. Nixon said. “The program really is an opportunity for homeowners to save some money. We’re disappointed it didn’t happen on their behalf.”
Hadley was among the 35 municipalities that petitioned the state. The town already participates in Hampshire Council of Governments’ bulk electricity purchasing program for municipal savings.
Nixon said he can understand the concerns the DPU outlined in its 39-page decision, including what it found to be a deficient citizen review process.
“We could have reached out more to ratepayers to make sure they understood the program,” he said.
Northampton Mayor David J. Narkewicz also said he was disappointed with the ruling but defended the city’s process for citizen input, noting that Energy and Sustainability Commission meetings were held about the program. The plan was also put before the City Council for its support.
“It seems like we went through a thoughtful and deliberative internal process,” Narkewicz said. “It’s obviously disappointing, at least in the near term, that Northampton residents won’t have access to the buying power that this kind of aggregation would afford them.”
Narkewicz noted that the regulatory process was particularly lengthy and that, as of Monday, he had not yet fully reviewed the DPU’s decision.
“It seemed like it went into a black hole for a considerable amount of time,” he said of the state’s review.
According to the ruling, the DPU found in its review that responses by municipalities and the Hampshire Council of Governments to the agency’s questions were “inconsistent, confusing, or non-responsive, and have often raised questions as to the viability of the plans.” Moreover, the ruling noted, records of regulatory proceedings “raise questions as to the adequacy of notice and review of residents of the municipalities, the sufficiency of the educational materials made available to the municipalities, and the accuracy of representations made by Hampshire Council to the municipalities regarding the plans.”
As examples, the DPU cited significant lapses in time between city and town votes authorizing the pursuit of aggregation programs and when those community’s plans were actually submitted to the state. One local vote occurred in 1999, raising questions about whether citizens and local officials were recently engaged in the process of establishing a municipal aggregation program.
In a series of information requests, the DPU asked each municipality how its aggregation plan was made available for citizen review; the agency requested copies of notices, meeting minutes, or other documents for support. Apart from two letters dated Sept. 12, 2013, and March 12, 2014, from the Hampshire Council of Governments to municipalities asking that they make their plans available for citizen review, the ruling states that “no evidence of notices, meeting minutes or other materials were provided to demonstrate that the plans were made available for citizen review.”
The state review also found evidence of “false and misleading statements” the Hampshire Council of Governments allegedly made to municipalities, including statements indicating that some plans were already approved and operating; that the agreement between the Hampshire Council of Governments and the municipalities was revised at the request of the attorney general’s office; and that the agreement simply allowed residents to receive a lower electricity supply rate.
The attorney general’s office also intervened in the DPU review, raising questions about conflicts of interest relative to Hampshire Power – which is operated by the Hampshire Council of Governments – potentially bidding on electricity supply contracts administered by the council.
For its part, the council and the municipalities asserted that Hampshire Power’s ability to bid would provide participants with “greater access to the wholesale electricity market and, hopefully, more attractive prices,” according to the decision.
The DPU also found that the plans submitted do not accurately describe details such as the organizational structure of the aggregation program, funding and the roles and responsibilities of municipalities. The DPU “cannot determine if the plans accurately describe rate setting and other costs to participants,” the agency found.
The agency also cited “conflicting information” regarding whether municipalities’ plans include renewable energy projects and a so-called “optional green power program.”
And, according to the ruling, marketing and other informational materials about the program distributed by the Hampshire Council of Governments contained “inaccurate statements” implying that the program would deliver guaranteed benefits and savings. The agency noted that in an evidentiary hearing council officials said they could not guarantee taxpayer savings, and could not back up claims made in marketing materials that “buying in bulk is cheaper.”
“This is in clear conflict with representations provided in written materials,” the ruling states.
HCOG officials said Monday that they are currently working with consultants and attorneys to carefully review the DPU’s order and said the council remains committed to providing municipalities with cost-effective electricity services for local residents and businesses.
“We’re still digesting the whole thing,” said Lee Frankl, deputy director of operations at the Hampshire Council of Governments. “Our goal is to get back to municipalities, to advise them on moving forward. We should have more to discuss as we understand more of it in the days and weeks ahead.”
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