Consumer Advocate Calls for Investigation of N.H. Electric Cooperative

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Don Kreis, NH's Consumer Advocate

It’s all about the Principles: Co-op Principles and Electric Restructuring Principles

Consumer Advocate Donald Kreis has formally asked the state’s utility regulators to conduct an investigation of the New Hampshire Electric Cooperative (NHEC).

In a letter to Chairman Daniel Goldner of the Public Utilities Commission, Kreis cited recent turmoil within the electric cooperative’s eleven-member board of directors and its potential effect on procurement of power for the Co-op’s members.

“I was extremely concerned to learn about today’s resignation of two veteran directors, who allege they have been the victims of sexism and bullying,” said the Consumer Advocate.  “That’s deeply troubling in any circumstances, but in this instance it may threaten the ability of the Co-op to provide default energy service in an affordable and stable manner.”

Under the state’s Electric Utility Restructuring Act, “default energy service” is available from New Hampshire’s four electric distribution utilities – the NHEC, Eversource, Liberty, and Unitil – who do not acquire electricity from a community power aggregation program or a competitive supplier.  At the NHEC, default energy service is marketed as “Co-op Power.”

During the past several years, when default energy service rates offered by investor-owned utilities have been volatile and unusually high, Co-op Power rates have been notably low and notably stable,” said Kreis in his letter to the PUC.  “The NHEC has achieved this laudable record by actively managing its wholesale power portfolio so that it includes a range of resources from very short-term to very long-term.”

At the June 25 meeting of the NHEC Board or Directors, newly elected Chair William Darcy said he favored increasing reliance on so-called “spot” purchases – electricity bought in real time from the wholesale market at prices that can vary sharply.  Under the applicable market rules, the spot price of electricity in New England can go as high as $2,000 a megawatt-hour – the equivalent of two dollars per kilowatt-hour, versus a price that is more commonly around ten cents.

The interest in more reliance on spot purchases for default energy service — perhaps even total reliance — is not unique to the NHEC.  As Darcy noted at the June 25 Board meeting, the PUC itself has been nudging Eversource, Liberty, and Unitil — the state’s other three electric utilities — in the same direction.

“Whether it’s the electric co-op, or whether it’s an investor-owned utility acting with the encouragement of the PUC, total reliance on the spot market for default energy service is a dangerous game.  The near-term savings are tempting, but in an extended cold snap or in an extended grid-failure scenario such as the one that occurred in Texas three winters ago, the consequences can be devastating,” said the Consumer Advocate.

The Consumer Advocate acknowledged that, because NHEC members voted more than 20 years ago to opt their utility out of most PUC regulation – a right they enjoy by statute as a customer-owned utility – the Commission has little if any authority to oversee what occurs in the NHEC Board room.  But he urged regulators to invoke language in the Electric Utility Restructuring Act – found at RSA 374-F:4, XII, authorizing PUC intervention when the agency “finds, after notice and hearing, that such action is required to ensure that such deregulated rural electric cooperatives do not act in a manner which is inconsistent with the restructuring policy principles of RSA 374-F:3.”

RSA 374-F:3 lists 15 specific and detailed policy principles that are supposed to guide electric industry restructuring – i.e., the transition from vertically integrated monopolies to an electric industry in which customers are free to buy electricity from anywhere (while still relying on the local utility to supply the poles and wires).  In his letter, Kreis referred specifically to the policy principles related to customer choice (RSA 374-F:3, II), universal service (RSA 374-F:3, V), benefits for all consumers (RSA 374-F:3, VI), full and fair competition (RSA 374-F:VII), and near term rate relief (RSA 374-F:XI).

Against that backdrop, the Office of the Consumer Advocate is concerned about the Board of the electric cooperative substituting its judgment for that of the power procurement professionals on the payroll of the NHEC who have done just an exemplary job of keeping Co-op Power rates both low and stable in times of volatile wholesale power markets.  In that regard, remarks made by Madeleine McElaney – then the vice chair of the NHEC Board – at the June 18 annual meeting of the Co-op are especially troubling.

“Together with [then-Board Chair] Sharon Davis and [CEO] Alyssa Clemsen Roberts, we’re the first female leadership team at NHEC,” McElaney told her fellow co-op members.  “It has not been an easy road.  In fact, I believe there is a double standard for female leaders at NHEC.

“We’re questioned, interrupted, dismissed, more easily than our male counterparts,” McElaney continued.  “This behavior is wrong and at odds with our values and cooperative principles.  We have tried repeatedly to find a better path, but to no avail.  Sharon and I are not returning to our leadership roles next year because we have spent the last year being attacked and bullied by other board members.”

“I hope we can do better,” McElaney said on June 18.  One week later, apparently after the Board held its initial organizational meeting after the annual election that concluded on June 18, Davis and McEleney simply quit.  Davis was not present, McElaney left the meeting, and then the Board when on to discuss plans to rein in the authority of Clemsen Roberts to maintain the Co-op’s diverse portfolio of short- and long-term power purchase arrangements.

In response to all of this, the Consumer Advocate noted that regardless of any Certificate of Deregulation that may have been filed decades ago, the enabling statute of the Office of the Consumer Advocate authorizes the OCA to defend the interests of all New Hampshire residential electric customers – even members of the NHEC.

“As it happens, I have a deep background in cooperatives myself,” said Consumer Advocate Kreis, including three years chairing the board of the state’s largest cooperative grocer, and several years of private law practice representing worker and consumer cooperatives.  “I will do everything in my power to hold our state’s only electric cooperative to the cooperative values and principles, and to make sure NHEC members get the default energy service they deserve,” added the Consumer Advocate.  “This situation screams out for public scrutiny.”

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