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State Denies Consortium of 35 Municipal Aggregations Citing "Numerous Misrepresentations" To Citizens (Notes Savings Promised When No Guarantee Exists)

September 15, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The Massachusetts DPU has denied petition from 35 municipalities to create, under the Hampshire Council of Governments, opt-out municipal aggregation programs, citing, among other reasons, what the DPU termed, "numerous misrepresentations by Hampshire Council to the Municipalities and their citizens regarding the process of municipal aggregation, the status of each Plan, and the various details regarding the implementation and contractual obligations of each Municipality upon approval of and execution of each Plan."

Each of the 35 municipalities had retained Hampshire Council of Governments to serve as its agent and consultant to assist in the design, implementation, and administration of each plan. Hampshire Council had retained Colonial Power Group, Inc. as a third-party independent consultant to provide additional analysis and recommendations when needed

According to the DPU's order, "the Department has reviewed and determined that the responses of the Municipalities and Hampshire Council to the Department’s questions have been inconsistent, confusing, or non-responsive, and have often raised questions as to the viability of the Plans in these proceedings, as well as to Hampshire Council’s intentions to fully comply with the Municipal Aggregation Statute and the Department’s precedent regarding these Plans. As noted in detail below, the records of these proceedings raise questions as to the adequacy of notice and review for residents of the Municipalities, the sufficiency of the educational materials made available to the Municipalities, and the accuracy of the representations made by Hampshire Council to the Municipalities regarding the Plans."

"[T]he Department has continuing concerns regarding the education materials that Hampshire Council has disseminated regarding the Programs and upon review finds that several of the education, marketing, and briefing materials regarding the Plans contain inaccurate statements. For example, in the customer education materials provided in Exhibit DPU-HCOG 1-9(a), there are numerous references to customer benefits acquired through municipal aggregation, which are portrayed often as: guaranteed benefits, including taxpayer savings; proven or consistent savings; lower electricity prices; unbeatable prices; and buying in bulk is cheaper," the DPU said.

Specifically, the DPU noted that Hampshire Council’s newsletters and information regarding municipal aggregation include the following statements:

'Our Municipal Electricity Aggregation now contains over 100,000 people and 28 communities with more joining every month. This program will save between $3-6 million and keep that money in our local economy' (emphasis by DPU);
'Proven Savings. CCA [Community Choice Aggregation] towns see consistent savings when compared to the Utility price' (emphasis by DPU);
'Buy power in bulk: it’s cheaper per unit' (emphasis by DPU).

"During the evidentiary hearing, Hampshire Council stated that it could not guarantee taxpayer savings or customer savings as a benefit of municipal aggregation, nor could it guarantee that buying in bulk is cheaper. This is in clear conflict with representations provided in written materials," the DPU said

The DPU also found that, "Throughout the course of these proceedings, there have been several instances where conflicting information has been offered regarding whether the Municipalities’ Plans include energy efficiency, renewable energy, and green power products. Specifically, Hampshire Council submitted a letter on March 12, 2014 to each Municipality regarding its municipal aggregation program featuring energy efficiency, renewable energy, and optional green power products. In response to discovery and during the evidentiary hearing, the Municipalities’ witness stated that these products are not being offered within the scope of their Plans. Further, at hearings Hampshire Council stated that 'the inclusion of that language in that letter was a clumsy attempt at describing the potential of ESAs to seek green electricity in the private supply market, but we regret that it was done in that clumsy manner.'"

"Although Hampshire Council and the Municipalities contend that these product offerings are outside the scope of the Plans, several sections of the Plans and the Reports still contain references to these products. In particular, in Exhibit DPU-HCOG-1-4, Hampshire Council stated that Section 2.4 of the Plans would be revised to remove the references to renewable energy and green power products. However, the revised Plans submitted to the Department on October 17, 2014 still include these references. Moreover, the educational materials (e.g., website and newsletters) distributed by Hampshire Council, which are used to market municipal aggregation, emphasize the benefits of renewable energy and green power products," the DPU said

"When the Department questioned Hampshire Council about its response to information request DPU-HCOG-2-7, compared with its conflicting response to information request DPU-HCOG-1-9(a), at 39 of 58, which states, '[t]he Hampshire Council will offer an entirely voluntary option to all customers, which will provide funds directly to town governments for renewable energy and conservation programs,' Hampshire Council stated that it did not have firm plans to offer voluntary green power options. As of the date of this Order, Hampshire Council’s website states that Municipalities participating in its aggregation program will be offered an optional green energy program," the DPU said

"Given this continual disconnect between the representations made to the Department during the course of the proceedings, and the representations made to the public through educational materials and media offerings, the Department finds that the Plans and materials offered in support of the Plans do not accurately reflect the Municipalities’ actual product offerings to program participants," the DPU said.

The DPU also rejected the aggregation plans over concerns that citizens did not have adequate notice of the opt-out programs. In particular, the DPU noted that certain of the municipalities' authorization for aggregations dated back to 1999, and such authorization had been dormant until recently seeking to institute an aggregation.

"Although the municipal votes to initiate the process appear legally valid, the Department has concerns about the length of time between the municipal vote authorizing pursuit of the municipal aggregation process and the date the Plans were submitted to the Department for review and approval, as some of the municipal votes are dated as long ago as 1999. The Department is not convinced that the local approvals filed in these dockets in all instances reflect the current intentions of the Municipalities. When there is a significant lapse of time between a municipality’s vote to initiate the aggregation process and the filing of a Petition with the Department, the Department expects the petitioning municipality to demonstrate that citizens and local officials are engaged in the process of municipal aggregation (e.g., through participation in the DOER consultation and/or public hearing)," the DPU said.

The DPU also said that the municipalities failed to file sufficient evidence of notices, meeting minutes or other materials to demonstrate that the plans were made available for citizen review.

While some towns showed evidence of citizen review, the DPU noted that those minutes referred to the review of an Amended and Restated Electricity Aggregation Agreement between Hampshire Council and the individual Municipalities, and not the aggregation plan itself.

"In addition, Department review of several of the minutes shows evidence of false and misleading statements by Hampshire Council to the Municipalities, including statements that: (a) some Plans were already approved and are operating; (b) the Agreement was revised at the request of the Attorney General’s Office; (c) the Agreement simply allowed residents to receive a lower electricity supply rate; (d) the Municipalities could opt-out if the rate was not below basic service; and (e) that the Plans are 'green' opt-in programs designed to save money," the DPU said

The DPU also expressed concern with how procurements would work, especially where the Hampshire Council's competitive supply arm, Hampshire Power, submits a bid.

"As the Municipalities are not governed by an Intermunicipal Agreement, and some of the Municipalities are not members of Hampshire Council, it is important that the Plans explain the process for joint procurement and how each Municipality will be represented. Due to conflicts between the Plans, responses to discovery, and testimony, it is unclear who will be responsible for signing ESAs and how Municipalities will decide whether to jointly procure electricity, or convey their goals and objectives to Hampshire Council. For the reasons discussed above, the Department finds that the Plans do not include a full and accurate description of the organizational structure of the Programs, their operations and funding," the DPU said.

The DPU also criticized municipalities for relying on their consultant Hampshire Power to address the DPU proceedings, rather than file information themselves.

"The Department notes that Hampshire Council responded to discovery questions indicating that Hampshire Council will execute all ESAs. However, after the Department mandated that the Municipalities, rather than Hampshire Council, respond to information requests issued to the Municipalities, the Municipalities indicated that municipal officials may execute ESAs or direct Hampshire Council to sign on behalf of each Municipality, subject to a municipal official’s confirmatory signature. The Department takes this opportunity to emphasize its strong preference for municipal representatives to participate in the proceedings and respond to information requests, and further notes the importance of hearing directly from the municipalities, not the consultants, in the context of their expectations regarding the implementation of municipal aggregation plans," the DPU said

The DPU also denied the plans as they allow the aggregations to be "suspended" when returning customers to basic service. The DPU said that its precedent requires aggregations programs to be considered terminated when such a return to basic service occurs.

The specific aggregations denied by the DPU were those filed by the Town of Barre, Town of Brookfield, Town of Charlemont, Town of East Brookfield, Town of Goshen, Town of Granby, Town of Great Barrington, Town of Heath, Town of Mendon, Town of New Braintree, Town of North Brookfield, City of Northampton, Town of Rowe, Town of Upton, Town of Warwick, Town of Wendell, Town of West Brookfield, Town of Williamsburg, Town of Hampden, Town of Chesterfield, Town of Conway, Town of Cummington, Town of Deerfield, Town of Gill, Town of Hadley, Town of Hatfield, Town of Huntington, Town of Leverett, Town of Middlefield, Town of Montague, Town of Northfield, Town of Pelham, Town of Plainfield, Town of Westhampton, and Town of Whately

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