Ye Olde Electric Utility Fights the Paradigm Shift

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Donald M. Kreis, New Hampshire's Consumer Advocate

Power to the People is a column by Donald M. Kreis, New Hampshire’s Consumer Advocate. Kreis and his staff of four represent the interests of residential utility customers before the NH Public Utilities Commission and elsewhere.

By DONALD M. KREIS, Power to the People

We interrupt this program to take you back to June 7, 1898 – a fateful day if you use electricity.

It was on that date that electricity magnate Samuel Insull delivered a speech to the trade association of which he was president, the National Electric Light Association.

Insull had a counterintuitive proposition for his fellow utility moguls in what was then still an up-and-coming industry.  He argued, forcefully, in favor of regulation – specifically, for state bureaucrats to determine the prices these companies could charge for their electricity.

Of course there was a catch.  Insull proposed that in exchange for price regulation, the states grant each electric company the exclusive right to produce and deliver electricity in its designated franchise territory.  The alternative, back then, was going city by city and town by town, seeking permission from the local pols to string utility wires and erect poles, a process that often involved (and, beware, this may really shock you) bribery and other forms of graft that are (from a business perspective) difficult to predict and control.

His fellow electric industry leaders bought Insull’s pitch and, today, all 50 states and the District of Columbia have regulatory agencies that treat electric utilities as regulated monopolies.  Here in New Hampshire we, of course, have the Public Utilities Commission.

It is time – well past time, in fact – to transcend this paradigm once and for all.  Poles and wires remain a natural monopoly but nothing else about electricity deserves such treatment – not generation, not meters, not billing, nor anything else necessary for people and business to obtain and use electricity.  Electric utilities no longer deserve the guaranteed profits and legally protected hegemony that Insull successfully grabbed 123 years ago.

New Hampshire has understood this since at least 1996, when the General Court passed (and Governor Merrill signed) the Electric Industry Restructuring Act.  But – for essentially the same reason Ye Olde Nantucket and New Bedford Whale Oil Company (or whatever the spermaceti cartel called itself) yielded the job of lighting the nation to Insull and his buddies rather than adapt – our electric utilities continue to resist the paradigm shift.

As the latest evidence of this resistance, consider House Bill 315, which has yet to be scheduled for a hearing before the House Committee on Science, Technology and Energy.  The state’s investor-owned electric utilities are pushing this measure in an effort to thwart Community Power Aggregation (CPA).

After paying hundreds of million dollars in stranded cost payments to the utilities, which were forced by restructuring to sell off their generation assets at a loss, residential ratepayers might just start to enjoy the benefits of restructuring thanks to CPA.  Your municipality now has the right to manage the electricity load within its borders.  The idea is poised to take off because, as of 2019, the Legislature authorized such aggregation programs to operate on an opt-out basis (rather than requiring the municipalities to sign up customers one by one).

Offering up an entire municipality’s electric load to the lowest bidder is calculated to save more money for individual residents than would their continued reliance on tiny individual deals with competitive suppliers.  But that’s just the beginning, at least for the savviest cities and towns.

Communities like Lebanon and Hanover plan to use CPA as the basis for a comprehensive suite of energy services, calculated to make electricity more flexible, efficient, and carbon neutral.  Elsewhere, cities like Boulder, Austin, and Burlington are famous for their evolved approach as electricity providers; CPA could free up New Hampshire municipalities to do similar things while limiting the utilities to their natural monopoly in poles and wires.

Indeed, some New Hampshire municipalities are busy organizing a “joint action agency” to do wholesale energy procurement and provide energy services at a much grander scale than even individual cities could manage alone.  Might this be an existential threat to legacy companies like Eversource, Liberty, and Unitil?

They have not said, but their actions – seeking passage of House Bill 315 – speak louder than words.  Supporters of CPA describe HB 315 as a “poison pill.”  It would limit the ability of CPA programs to get the customer lists they need to make legally required notifications of their plans to all affected users.  It would preclude CPAs from doing anything themselves, as opposed to hiring outside companies.  It would limit or even prohibit CPA access to customer meter data.  It would require explicit PUC approval for every little move a CPA makes.

Theoretically, the legacy utilities should be indifferent to the development of Community Power Aggregation.  The utilities provide “default” energy service to customers not choosing a non-utility electricity provider; they earn no profit on this service and act, more or less, as little more than a wholesale broker.

But the utilities know better than to be indifferent.  They realize that if whole towns full of electricity demand migrate away and decide to rely on the utility for as little as possible, perhaps even via joint action agencies whose load could eclipse that of the smaller utilities, the hegemony they started to grab in 1898 might finally come to an end.  This is potentially an extinction-level event and I can’t really blame the management of our utilities for secretly thinking so.

They, of course, won’t say that when this bill comes up for hearing.
They’ll claim they are just trying to make municipal aggregation more reasonable and more fair to residents of communities that won’t move to aggregation.  Most residential customers in such places will stick with default service; the utilities will say they want to keep that as affordable as possible.

If that’s truly their objective, they should stand down and await the text of three Senate bills (all with Republican lead sponsors) that are intended to fix and improve Community Power Aggregation rather than kill it.

While we await that, consider what eventually happened to Samuel Insull.  Though at one point he controlled much of the electric industry (including Public Service Company of New Hampshire) the collapse of the stock market in 1929 was his undoing.  Insull fled to Europe and died in the Place de la Concorde Metro Station in Paris in 1938.  He was not carrying a wallet and he had 30 francs in his pocket.

In the interest of protecting your wallet, please write to and ask them to reject House Bill 315.

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