New Electricity Pricing Plan Expected to Save Money for Lebanon
By Tim Camerato Valley News Staff Writer
Tuesday, July 10, 2018
Lebanon — City officials say a new purchase program that allows Lebanon to pay real-time prices for electricity could save the municipality thousands on its annual utility bills.
The city recently signed an agreement with Auburn, N.H.-based Freedom Energy Logistics to provide power at prices just above wholesale rates. The deal, which took effect this month, replaces a system where Lebanon would purchase its electricity at yearly, fixed rates.
The switch will result in the city buying its power from a market that varies in price from hour to hour, as the demand for energy changes throughout the day. While there is the chance for volatility in the marketplace, city officials estimate they will find savings.
If Lebanon had moved to real-time pricing in January 2015, it could have saved $220,000 to date, according to Tad Montgomery, the city’s Energy and Facilities Manager.
That’s significant, he said, especially when considering that Lebanon’s annual electric bill amounted to $200,000 last year.
“In (the last) 42 months, there are only four where we would have paid more for electricity under the real-time prices versus fixed rate,” Montgomery said in an interview on Tuesday.
Lebanon officials decided to change pricing strategies after seeing neighboring Hanover succeed under a similar model. In 2014, the town became a member of the New England Power Pool, which allows it to buy energy directly from the wholesale marketplace.
The arrangement “saves us a ton of money on electricity pricing,” while also giving Hanover the power to purchase renewable energy certificates, Town Manager Julia Griffin said on Tuesday.
The community hopes to transition its electricity to 100 percent renewable sources by 2030, and Hanover’s ability to determine how it purchases power will play a role in the transition, Griffin said.
Over a period of 12 months ending in February, Hanover paid roughly 6.7 cents per kilowatt hour for its municipal electricity, according to Lebanon City Councilor Clifton Below.
By comparison, he said, Lebanon’s fixed agreement resulted in the city paying 8.3 cents.
“Even with the price spike from early this winter, they still ended up paying less,” said Below, who is also chairman of the Lebanon Energy Advisory Committee. “That just sort of shows the potential for savings that are there.”
Although the city won’t know energy prices in advance, it can predict when rates will be highest, Below said.
Demand for electricity usually grows from a low point around 5 a.m. to a peak between 6-7 p.m. in the summer months, according to ISO New England, which operates the region’s electric grid.
And Lebanon already has begun to shift some services in response, said Montgomery. During last week’s heat wave, operations at both the city’s water and wastewater plants were moved to use less energy.
“Both plants are developing protocols to do this to the maximum degree possible,” Montgomery said. “This is the start of our program to reduce electric costs, and the plant managers and DPW staff have been very helpful within the constraints of needing to keep their plants running.”
Although beneficial, the city’s agreement with Freedom Energy Logistics isn’t designed to be a long-term path to low energy bills. The city is on a month-to-month contract with the broker, largely because it soon hopes to be generating its own energy.
With plans to expand solar in Lebanon and generate electricity at the Lebanon landfill, the city expects to someday generate a surplus, which might become available to residents.
Both Below and Montgomery are working on a project called Lebanon Community Power, which would able to sell the excess energy and allow city residents the ability to buy electricity in real-time. Roll out of the power project is expected sometime next spring, Below said.
City officials are also awaiting a state decision regarding Liberty Utilities’ plans to install batteries in about 300 city homes this fall. That project would see Liberty customers paying $1,000 upfront or $10 a month for 10 years for a Tesla Powerwall, and could be incorporated into the Lebanon Community Power model, said Below.
Settlement negotiations on the Liberty proposal are ongoing before the state Public Utilities Commission. It’s not clear when a decision will be delivered.