HANSON — The Select Board met virtually with Sprague Energy regarding the town’s municipal electricity supply contract for municipal buildings while an aggregate plan is explored to offer a group price for all town residents.
The board voted to authorize Town Administrator Lisa Green to negotiate a 36-month electricity contract with Sprague to get the town through the period before the aggregation goes into effect — during which energy costs pose a concern.
“I don’t blame you for looking into aggregation, but because that’s not going to happen for another year and a half to two years, it’ll leave you extremely vulnerable where the town could [end up paying] double, triple, potentially quadruple the supply rates that they’re paying right now,” Sprague Energy Portfolio Manager Robert Savary said, in reaching out to Green regarding the town’ electricity purchasing.
Green noted that the town has been working with in regard to a plan to join a bulk-purchasing arrangement — an energy aggregate — with the aim of saving money on natural gas costs.
“We are entering an aggregate group, but that’s still a year to two years out,” Green said. “We thought it would be a good idea, since energy costs are expected to sky rocket over the next few months, to have Sprague give us a presentation and see what they can do to save money on our electricity.”
Select Board member Ed Heal asked what Savary if the town entered into a short-term contract, would it also renew in December and what would that financial impact be.
Savary stressed he was discussing one-, two- and three-year contracts.
“You don’t want to sign a one-, two- and three-month contract, because that would put you absolutely in the middle of winter, which would be devastating,” he said.
Savary said the Mass. Public Utilities Commission (PUC) website can provide a list of alternative energy suppliers residents can contact and what their rates are.
“Make sure if you are going to do that, when you check off the boxes, that you check off “fixed rate,” not variable, that’s the most important thing,” he said. Early termination fees is another benefit residents should look for.
“If you could put something together that we could pop up on our website, that would be amazing,” Select Board Chair Laura FitzGerald-Kemmett said. “This is going to hit a lot of people in the pocketbook.”
Headquartered out of Portsmouth, N.H., Sprague has been in business since the late 1800s, said Savary, who has worked with the company for about 13 years.
“Because we are so big — we’ve got 10,000 customers — we’ve developed such a great relationship with every electric supplier out there,” he said. “I do mean every legitimate electric supplier.”
He said his job is to help customers navigate upcoming changes in energy costs. Those changes can have roots in power plant costs, transmission and distribution systems, weather conditions, regulations and international upheavals, according to the U.S. Energy Information Administration.
He addressed natural gas and electricity costs, specifically.
“We are in a really precarious situation right now in New England with regard to natural gas electricity costs,” Savary said. “If you haven’t heard, or you haven’t seen pricing already, it’s going to get real bad real soon.”
The U.S. House passed the Consumer Price Gouging Prevention Act in May, with every Republican and four Democrats voting against it, but it stalled and is unlikely to pass in the evenly divided Senate.
Both versions of the bill seek greater transparency around gas prices and would give the Federal Trade Commission additional authority to monitor and crack down on allegations of price gouging by energy companies and the Senate version would require the U.S. Energy Information Administration to publish more information about markets to help ensure fair competition and transparency.
Savary forecast that natural gas, where Hanson is now paying 81 cents per therm with the utility, has contracted rate Hanson signed for in January is 70.8 cents per therm.
That contract expires in April 2024.
“On the gas side, you’re very well protected right now,” he said, recommending they talk again about six to eight months before that contract expires.
Natural gas, traded on the NYNEX, and was trading at $5.44 per unit, but two weeks ago that price per unit was $9.30. This week it was back to about $6.30 due to influences such as an explosion at a CNG terminal in the Gulf of Mexico, which forced natural gas back into the pipeline before it could be converted to liquefied natural gas (LNG), offering a temporary supply boost.
“We do not expect that it’s going to stay there,” he said.
Hanson is currently saving about $3,200 on it’s annual natural gas costs within its contract.
“That savings is going to grow tremendously over this next coming winter,” he said.
Electricity is another story, Savary said.
The current utility rate is 10.37 cents per kilowatt hour (KHW), with the current contracted rate of 9.6 per KHW, which is good until December 2022.
National Grid has already announced its new rate is going to be 21.01 cents per KWH by August.
“That is a huge jump,” he said. “August, September and October are traditionally some of the least expensive months of a year for traditional electricity costs. That tells us that we are prepared to go into a winter and there’s going to be some crazy, crazy rates.”
He said Eversource Massachusetts, last winter, was charging 31 per KHW. Since New England utilities generally follow each other’s rates, Eversource New Hampshire has informed its large accounts that their rate in January will be 48 cents per KHW — their current rate is about 12 cents per KHW.
“That just shows you what’s happening in the future and why you want to go ahead and get things under control now,” Savary said, noting his customers are all going for 36-month contracts (with a current rate of 15.3 cents per KHW, which allows a price that can help them weather the energy price storm, as he called it, relatively unscathed. Had Hanson been ready to sign an agreement for 36 months in January 2022, the rate would have been locked in at 12.49 per KHW.
“The short-term is the most dangerous term,” he said. “There’s nothing on the horizon that tells us the market is going to take a dip anytime soon.”
He said the Russian war on Ukraine, the Gulf explosion — with gas reversing in the pipeline and being transformed into LNG for shipment to Europe — as key price factors.
Sprague is not permitted to contract with residents for their electricity rates, but noted the rate increases would hit residents and said he would make himself available to the board in case they wished to look at their residential rates as a courtesy.
“I appreciate that, but I do question whether we should be afforded a privledge that isn’t afforded to the rest of the citizens in town,” FitzGerald-Kemmett said. “There may be pitfalls for the unwary in that.”