ORDER-2018-161 : Approval of the proposed Municipal Aggregation Plan and authorization of the Mayor to execute and submit the plan to the Massachusetts Department of Public Utilities for review and approval.

Transcript (~1 h 1 min @ 17:32)

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▶ 17:34 Jennifer L. Lemmerman: for coming down thank you thank you the second item on our agenda this evening is order 2018-161 approval of the proposed municipal aggregation plan and authorization of the mayor to execute and submit the plan to the massachusetts department of public utilities for review and approval we are under suspension of rules already so um we can invite forward our energy efficiency manager martha grover she's joined by philip carr who is our energy consultant from good energy

▶ 18:09 Speaker 4: come forward thank you mr river good evening stay in your seat there i'm good thank you

▶ 18:14 Speaker 5: Thank you. I don't know. I've had a rough day, so I just finished my presentation at 5, so it might not be on their

▶ 18:26 Speaker 6: devices. I added it, yeah.

▶ 18:31 Speaker 3: Thank you.

▶ 18:37 Speaker 4: Thank you.

▶ 18:39 Speaker 3: Next one.

▶ 18:46 Speaker 5: So this was, I'm not going to go through this whole thing. This is actually the presentation that I've been making to Melroseans, to the public for the last couple of years with a few modifications and updates. So just to back up, my name's Martha Grover. energy efficiency manager for the city of Melrose this is our consultant from good energy Philip Carr and we are here tonight to seek your approval to submit an aggregation plan that you have in your that you've reviewed to the Department of Public Utilities for their review and approval this is our second doing this and I want to just back up a little bit and explain for those of you who weren't here in 2014 and 15 what aggregation is it's the process by which a municipality purchases electricity or arranges for the purchase of electricity in bulk from a competitive electricity supplier on behalf of the residents and small businesses in in the community this is something that was set up in 1997 through deregulation process of the electricity industry that created a competitive marketplace for electricity supply and we decided to take advantage of this opportunity on behalf of residents and small businesses a few years ago by design and regulation if if approved and put place these programs are opt out meaning residents are automatically included in the program unless they opt out but I'll get into that more and the reason for that is to incentivize incentivize the suppliers to offer the best price knowing that they're going to get most of the market and I just want to be

▶ 20:46 Speaker 5: clear here I have I always show people or I ask them to bring their electric bills to my to my um session so they can understand what we're talking about on your electricity bill there are two components to what you pay the first component is is um delivery services and those are the fees that national grid charges us to bring power to our homes it's the transmission the infrastructure the billing services customer service it's all all of the things energy efficiency, et cetera, that National Grid delivers. The other piece of it, usually about the other half, is the actual electricity supply that we all use.

▶ 21:30 Speaker 5: Both factors are multiplied by the amount of electricity kilowatt hours that you use each month. So what we're talking about in this program is just the supply portion. So we go over this again and again, that the utility that we all have is still National Grid. National Grid is still on the hook for outages, and we'd still get a National Grid bill. It's just that the supplier is somebody else. So just a very brief history. We introduced this concept in May of 2014. We submitted our first plan for approval in March of 2015. We got DPU approval later that year. We went out to bid. We got some bids at the time that were very good, and we decided to lock into a 12-month contract with Constellation. Postcards were mailed, opt-out letters were mailed, and then we had a 30-day opt-out period where residents had the chance to take themselves out of the program.

▶ 22:45 Speaker 5: Anyone who was not, who did not opt out was automatically enrolled in the program in January of 2016. So that went on for 12 months very successfully. We extended the contract for another six months with Constellation. Last June, well, really earlier than that, we started to get indicative pricing the market and started to see that the prices that we were getting from the market were not and we're not less than the basic service price with National Grid and the choice the decision that that I and the mayor and with the advice of good energy was to let the contract end and send all residents back to basic service the reason that we were unable to get a competitive price at the time it's the reason why most cities who are in aggregations who are in national grid territory in what's called the NEMA region which is the Northeast Massachusetts region of Massachusetts there is a market dynamic that we're in right now that started of June of last year and is going to go through May of this year and there's a component of what we pay for electricity supply called capacity it's like

▶ 24:13 Speaker 5: a reliability charge this capacity is is auctioned three years in advance so three years ago the ford capacity market predicted that the reliability charge and the the ability of generators to supply enough power for us um the auction prices went really high they went from three dollars per kw to 15 for for this one year it's this huge spike that we're all paying right now and that component is is a pretty it's about almost 30 to 40 percent of what we're paying for electricity supplies just for the capacity cost it comes down and it's con it's continuing to go down and forward forward auctions future auctions so this is just a one-year thing national grid because they do business in the entire state when they when they go out and bid for their supply prices to suppliers they're able to average or spread those costs across the entire state so they they're looking at very very low capacity costs out in western mass lower costs in southern mass higher costs here but they you know they average it out so they were able to offer and that we have been enjoying that ability for for them to average out that price um but when a supplier bids on just us in the nema zone they're they're just they're not able to um socialize that cost they're just

▶ 25:40 Speaker 5: they're just bidding on the nema zone so that's why it's all higher here um so in any case i think that was the right thing to do we did the right thing by residents we've been playing it out and waiting for it to end and here we are ready to restart the program and resubmit the plan just an update since there are now 145 aggregations in the state of massachusetts which which is pretty amazing. And we, in 2015, started this fantastic trend that now even cities like Boston, Medford, Arlington, even Stoneham next door is following our lead, doing these aggregation programs and adding that additional renewable energy piece that we added, which is an additional 5% renewable energy on top of the state mandated at a very, very affordable price. So it's really exciting that we started that trend. The reasons for doing aggregation, this slide is exactly the same as it was 2015. We're offering consumers a choice. We're providing rate stability. We're offering them protections, no termination fees, transparent fixed rates for a period of time. There are savings. There modest savings in our first first 18 months there's no guarantee of it but the study was just done of I think five or six communities and show that they all are saving money for their for their communities the piece I love the most is the community education piece I I'm still being asked to do my electricity bill 101 I just was at the cephalo complex last month to talk to all their residents about about their bills and how it all works and then of course the other benefit is the renewable energy piece so I talked a little bit about how

▶ 27:44 Speaker 5: this whole thing goes about if you approve tonight and then in the second

▶ 27:50 Speaker 5: vote we will submit the plan to the Department of Public Utilities and we'll sit and wait hopefully they'll review it quickly it'll go to the Department of energy resources and then we'll go through that process again if it's approved by DPU going out to bid seeing if we get some bids and rates that are competitive and then launch the program just like we did before the exciting thing is that before we were good energies first client this time where you're we're in a group of 43 they learned a lot from us the first time you've learned a lot from the other 43 so the outreach will be the same and better I think we did a great job the first time around we hit everybody with just about every method and mechanism you can reach out to them in the city the newspapers the blog a website social media postcards the opt-out letter I did at least a dozen public information sessions and I still do we had a thing on MTV we did water bill inserts I'm tabling it at the senior discount fair

▶ 29:10 Speaker 5: and other places and there's always those cryptic messages on the national grid bills which I guess that's outreach but I would probably write them a little differently in any case all of the features are the same as you know we've

▶ 29:23 Speaker 5: said before you're out any all eligible accounts are automatically enrolled unless they opt out during that 30-day window and they can opt out at any point after the program starts with no termination fees continue to get one bill from National Grid send their payments to National Grid National Grid response to emergencies and outages so their reliability and quality of service will remain the same budget plans continue and the other the other question is that anyone who's on the low income discount rate will continue to receive that and again in this program we're proposing the exact same renewable energy mix an additional five percent of local renewable energy which came out to about a buck and a half a month per household

▶ 30:14 Speaker 5: less than twenty dollars a year as a community to invest in local renewable energy which is

▶ 30:24 Speaker 5: which is a really great option for us. So, I'm here for questions if anybody has any.

▶ 30:32 Speaker 1: Alderman Tramontozzi.

▶ 30:37 Speaker 2: Thank you for the presentation.

▶ 30:44 John N. Tramontozzi: So if I remember when we agreed to do this in 2014 was the initial contract for one year was it?

▶ 30:48 Speaker 7: Yeah, 12 months.

▶ 30:49 John N. Tramontozzi: And is that going to be the same with this one, the 12 month contract?

▶ 30:57 Speaker 5: Well, we're going to look, what we do is we get different prices for different time periods.

▶ 31:01 Speaker 7: Are you finding, Philip, that are most doing longer?

▶ 31:05 Speaker 6: The average is most do two years, but then it'll end up, often they'll end up doing three years.

▶ 31:14 Speaker 2: But we present a variety of pricing, so 12, 18, 24, 36 months.

▶ 31:19 Speaker 7: Depending on the market, the longer you go out, the prices can look better.

▶ 31:25 Speaker 5: can get start going up so you might you know go out just 12 or 24 months but if

▶ 31:30 John N. Tramontozzi: the delivery the supplier class goes up any time yeah but it would be it we

▶ 31:37 Speaker 7: would we would lock in a fixed rate for 12 to 24 months with the possibility of

▶ 31:44 Speaker 7: an extension that where the rate might change at that point but so you get

▶ 31:47 John N. Tramontozzi: customer at the time that then you enter into the contract the customer would see see what that rate is compared to what the national grid rate would be, make a decision. The national grid rate, six months after entering into this, the market is such that the rate drops significantly. A customer can opt out and say, I'm going back to national grid. Yep. It's, you know, does this stop the other suppliers that are out there calling customers? I know when, I mean, you get calls all the time from suppliers, it doesn't prevent that from happening.

▶ 32:22 Speaker 5: In fact, my experience was that it got worse, that a lot of suppliers came into town, started calling and implying that they were from the city, were somehow confusing residents, which was unfortunate.

▶ 32:38 Speaker 2: Do we have any control over that or the government?

▶ 32:44 Speaker 5: You know, other than just hammering away, you know, I've been putting things in the paper, and every time I get a group of, especially seniors, I explain to them what to look out for and when to hang up, which is most of the time.

▶ 32:58 John N. Tramontozzi: See, the first time, the opt-out period, did you keep track? How many customers opted out, percentage-wise?

▶ 33:07 Speaker 8: Five percent. Just five percent? Very low.

▶ 33:10 Speaker 5: some communities it's it's higher ten percent um but but here it was five percent i think we

▶ 33:21 Speaker 5: did a great job with with the outreach um and i think that we just have a well i don't really

▶ 33:26 John N. Tramontozzi: know actually why it seemed like it was a very favorable response from very and i i get calls

▶ 33:31 Speaker 7: probably every day ask me when it's going to come back okay thank you thank you alderman peter

▶ 33:43 Manisha Bewtra: thank you um thanks uh for for all of you for coming in and thank you martha for your creativity and dedication to this program um it's a real point of pride for melrose that we were the first in 2015 and i'm really excited that we're going to be hopefully resuming this program again going forward i had a couple questions one was with that additional five percent local renewable energy that would be purchased through this program what kind of difference does that make in terms of creating a market for renewables and like what difference

▶ 34:22 Speaker 7: does that make on the ground for either of you I'll answer it first and you can fill in the largest of it before our programs so the state mandates a certain

▶ 34:30 Speaker 7: amount it's called the renewable portfolio standard it's the RPS a certain amount of our supply that we all purchase come from Massachusetts class one renewable energy credits this year we're at 14% and so what we're what

▶ 34:49 Speaker 7: we're proposing and what we did for that the 18 months was we were five years ahead of the rest of the state and just adding another 5% before our program there were probably a hundred maybe a hundred people residents in Melrose who already elected to buy additional renewable renewable energies through the mass energy green-up program it's like a hundred people who maybe were buying 25 50 hundred percent when you have which is great but when you have 9,000

▶ 35:26 Speaker 7: customers at just only 5% of their usage it's a game changer that's huge and what that does is for the for the suppliers who are required to buy it it creates it creates a market for for that and then it makes it adds value to those credits so that somebody's considered building a wind a wind farm or it's usually when there's some hydro and biomass it just makes that a better financial proposition for them and when you have now more and more communities doing this it's just a it's it's a huge game changer. I don't know if you want to say a few more. Yeah, I think you explained it well. So,

▶ 36:08 Speaker 2: no, it's just this incredible force multiplier. You know, when you have a community 5% additional to what's mandated by state law, and then you multiply that across all the communities that are now doing this in Massachusetts or are about to do it, it fundamentally pushes the needle on helping to get projects built right here in New England and particularly in Massachusetts. But I would emphasize that Melrose really, really, really pioneered in a big way here.

▶ 36:41 Speaker 2: When you see Boston moving forward at 5 percent, you started that right here.

▶ 36:45 Speaker 6: And that's a fact.

▶ 36:50 Speaker 2: So I think it's something that you can all be proud of, for sure. And now you see other communities that maybe are doing more than 5 percent, and that's a case-by-case basis. Most are doing just five, some are doing more than that, but you can dial it up or down. For example, the renewable energy, the REC market goes down in the future. The great thing about this product as a community is you could increase the percentage of renewable energy that you buy for the same price you were paying before, so you are helping to stimulate demand for renewable energy here in New England, and that's also jobs as well. And we've actually commissioned a white paper with a partner of ours, Sustainable Energy Advantage, who are the leading experts. They produce a market forecast on renewable energy every quarter. And we've commissioned from them a white paper to really try to quantify exactly how REC

▶ 37:46 Speaker 2: certificates through municipal aggregation are genuinely creating additional demand within the Commonwealth. So we really want to quantify that impact, so we've commissioned that.

▶ 37:55 Speaker 7: The other nice thing is that I think that a lot of people equate renewable energy is costing more, and what we've been able to demonstrate in this is that for very small and much of the year we were able to do it at even less than basic service, we were able to still make a difference.

▶ 38:12 Manisha Bewtra: Great. My other question was regarding the Melrose premium green option, which it states that that offers 100% renewable. How would a household go about opting into that?

▶ 38:26 Speaker 7: They opt up to that. base the base plan that everyone is enrolled in is the additional 5% if I were going to do anything differently this time around and first time I guess I was mostly catching my breath I would do a better job of promoting 100% option and just really get the word out I think there is a market for that in Melrose I don't think enough people knew about it we had maybe 70 or so people sign up for that i i would educate people more about that i think there are some people but i think for the most part folks were happy with getting the best price they could get great thank you thank you

▶ 39:14 Michael P. Zwirko: president's workup thank you madam chair thanks again for uh being here this evening and for this presentation uh it's a very good job and it's always nice to see uh what we're doing and and leading as Alderman Bewtra raised so and also I do want to say that you've helped me personally understanding some of these bills so thanks for the time I know you do a lot of that in the office and a lot of walk-ins come your way so

▶ 39:39 Speaker 7: appreciate my favorite parts of my job actually people coming in and just being able to explain something and help them out and you know demystify something

▶ 39:48 Michael P. Zwirko: it's a great service so I just have a couple of questions one is why do you feel that it's different now what would be the why today or this month or two months from now why are we jumping back in do we feel that there's some sort of a market pullback that's beneficial to us obviously it's just going out to bid but what you know we kind of hesitated a little bit we let go of the reins and

▶ 40:22 Speaker 2: now so is that markets are in our favor yeah so uh thank you for the question um so yes so so there was this really unprecedented capacity spike um and in in the nema load zone in particular

▶ 40:35 Speaker 2: and it's kind of like you're an airplane going over a mountain range you're kind of coming down

▶ 40:42 Speaker 6: the other side of that now and and you are uniquely disadvantaged from a pricing perspective

▶ 40:44 Speaker 2: And you weren't alone in that. We have communities that have had their plans approved for a year now, such as Gloucester, who are also NIMA National Grid, that we have prevented from going out to bid because we thought they would be hurt by it. So the answer is the capacity spike in NIMA is subsiding. It's not subsiding to where it was before, but CIMA will now have a bit of a spike, so

▶ 41:15 Speaker 2: So in some ways you may have a slight advantage once your plan gets approved, in the same way that you were disadvantaged before. So, you know, hopefully we'll get these plans approved as quickly as possible and start testing the market.

▶ 41:27 Michael P. Zwirko: And that leads me into kind of my next line of questioning, and this may get a little outside of just the Commonwealth, but I looked up and Good Energy is represented in a couple of states. So I'm just curious, I mean, can you speak to the health of our grid? you know this I'm hearing that we get dangerously near capacity New England has very high electricity rates to begin with you hear about things like the northern pass and other initiatives that are you know through Quebec hydro and and the like to kind of ease some of those spike in capacity concerns but

▶ 42:04 Speaker 2: where do we stand yeah I mean it it's it's a big it's a big question where do

▶ 42:19 Speaker 2: we stand, it's like a shape-shifting scenario as various technologies move forward. What you're really witnessing here is something that's not just unique to mass, but unique

▶ 42:26 Speaker 6: to the whole country, is that we're all migrating ultimately to a lower carbon future, and how

▶ 42:36 Speaker 2: do you manage reliability in that context right because you have renewables but you need peakers to handle when they're not there but then maybe you can fix that with battery storage and what's happening is

▶ 42:48 Speaker 6: legislators don't want to over build but at the same time they don't want to

▶ 42:50 Speaker 2: under build and it's a really tough balance because they can't predict how

▶ 42:58 Speaker 6: quickly new technologies are going to come on board so so what I would my kind

▶ 43:00 Speaker 2: of ultimate story is volatility is here to stay for a decade, I would say. So I think

▶ 43:11 Speaker 2: we can expect, and I think that adds to the value of aggregation, because I think you're going to see these price swings. It's my personal opinion. These price swings are here to stay

▶ 43:20 Speaker 2: from a utility perspective. It's not their fault that they're mandated about how they procure. But the grid is perfectly healthy. What's happening though is, and the legislatures

▶ 43:38 Speaker 2: are doing the best they can and the DPU to help create an environment where there's reliability but also you're investing in future technologies. But it's a unique period in our history of

▶ 43:56 Speaker 2: energy supply that started fairly recently and is going to carry on for the next ten years. So what I would say is it's a complex – I mean, it doesn't sound like I'm making this

▶ 44:03 Speaker 6: up, but – MR. It's like a transition period.

▶ 44:06 Speaker 2: MR. But I genuinely believe that we're – as we migrate to a lower-carbon future and sort of manage all the possible mixes out there, your volatility is here to stay for a while. So the grid technically is healthy, but how do you manage reliability? MR.

▶ 44:18 Michael P. Zwirko: Would any alleviation on supply, you know, bring down further rates? I mean I hear a lot of the the water power from Canada and obviously there's there's hurdles there but is is I mean is it a supply problem supply from I see

▶ 44:37 Speaker 2: it as a reliability problem we're not a challenge we're about liability challenge slash opportunity I'm not an expert on the hydro situation but I do track very closely you know generally what's happening in in Massachusetts and and also nationally and it's if everybody because I hear it and as you mentioned operator states I hear it from like you know in different utilities Commission's from California to here to the Midwest and they're all talking about reliability so they're just really freaking out about how to to to you know incorporate the latest technology as well as keeping the lights on and and without over building and then they've got you've got you need you know guaranteed rate of return for certain utilities and then you've got and you've got like the holy grail of reserve margin and how much should your reserve margin be reserve margin is the percentage of overbuild you need to have or the percentage of capacity you need to have to make sure that you know fine you have a polar vortex but you don't want to be just making it you want to be full of vortex we've still got another 10 15 above that you don't want to have rolling blackouts like

▶ 45:40 Michael P. Zwirko: like we did in the early 2000s or, right?

▶ 45:42 Speaker 6: Yeah, so it's, professionally,

▶ 45:45 Speaker 2: it's a very interesting time to be in the market because there's a lot of opportunities out there in there and there's some exciting technologies

▶ 45:54 Speaker 6: and so, and the utilities right now

▶ 45:56 Speaker 2: are really encouraging the use of demand response programs, the power you don't use is a big deal.

▶ 46:02 Speaker 6: So, you know, that's part of it.

▶ 46:07 Speaker 2: We wanna, you know, gonna save people money, us a bedrock bringing local renewable energy programs but the next thing is let's try and how do we dial down the usage during those peak days so that that reserve margin could actually be less because you can rely on people to

▶ 46:21 Michael P. Zwirko: like cut their demand well and thank you for that and I think one of the most important takeaways is that you said you know you feel that it'll be volatile for the next decade or so and this is a program that's actually going to lock us in over you know and obviously when the bids come back we'll see but that will help kind of stem that that uncertainty so thank you for that and I didn't mean to get wonkish there it's just these are things that we're hearing about as we approach the summer months when people are gonna be using air conditioning and so and I just had one more one more question and actually alderman trim on toes he alluded to it in the beginning of his comments I noted that there was a

▶ 46:56 Michael P. Zwirko: recent I don't want to maybe it was a finding or a report that came out from the Attorney General's office with respect to the individual and residential markets and are there any consumer protections that are baked into municipal aggregation versus being an individual so if I opt out am I kind of at the whim of what occurs versus is there safety in numbers with the program can you can you talk about that and I don't know if the the report that the Attorney General had cheds any light on this but yeah I think the report is

▶ 47:25 Speaker 7: there are three main ways that we can get supply basic service the default through the utility through an aggregation that's that's becoming more widespread and then the third option is the individual competitive supply market and the Attorney General just did a two-year study of that just that market she excluded basic service and excluded aggregation because those already have baked in consumer protections transparency fixed rates etc and after looking at it for two years state of Massachusetts the impact on low-income folks in that individual residential electricity supply market is is pretty devastating there's been a loss of I think one hundred and seventy six million dollars over two years they've been overcharged for their power where they're lured in three month rates and or some people I keep hearing about it switched without being without knowing to it to another supplier and they come in to me with these bills and we're talking here 9 cents 10 11 they're paying upwards of 20 cents per kilowatt hour and it had no idea you've had

▶ 48:47 Speaker 7: incidents here in no yeah yeah I'm every day and and she's act the Attorney General is actually suggesting that that whole market just be done away with somehow next because of the abuses but I I think in that particular market there are not enough protections and it's really frustrating when I talk to somebody and see the extent of it which they've been overcharged and other than

▶ 49:17 Speaker 7: calling the Attorney General's office submitting a complaint and the DPU there's there's very little that they can do right now which is why you know

▶ 49:25 Speaker 7: alternative of another choice an aggregation I think is a great great

▶ 49:34 Michael P. Zwirko: option for them well thank you for that and again thanks for fielding those calls I've taken up a lot of time those are all the questions I had this evening

▶ 49:43 Monica C. Medeiros: thank you madam chair Alderman Medeiros thank you thank you both I want to in particular compliment you miss Grover and and mr. carbon is particularly you that you know I think you've done a great job of explaining something that's very complicated and putting it in a way that we can understand and especially you know I still get a lot of you know questions and and a lot of people still think we're kind of in this system right now about what's going on and I think think you know how do I explain why we had higher charges I think I can I can explain that now based on what you've told me so I really appreciate that myself I've been able to go to some of those at least one of your seminars before public information seminars and I found that very helpful and I definitely could tell the residents that the room was packed and to tell that they were

▶ 50:32 Speaker 7: interested and they found it helpful so eager to understand it and I'm happy to

▶ 50:35 Monica C. Medeiros: to explain it's I think very important so some of my questions are I was sort of looking at the draft agreement and I saw some of the references to other

▶ 50:57 Speaker 7: communities have requested a waiver of sending sending mail which is a standard

▶ 51:06 Speaker 7: part of aggregations that there's usually a granting of.

▶ 51:09 Speaker 2: Yeah, that's a standard clause in there. I'll be honest with you, I'd have to ask my attorney. We've spoken about it, it's come up before. I can't remember exactly what the reason is for that.

▶ 51:19 Speaker 7: It's not being required to provide, is it I think a quarterly fuel mix required?

▶ 51:24 Speaker 6: Oh, that's right, that one.

▶ 51:25 Speaker 2: Yeah, yeah, no, exactly, because there's an annual one already. There's an annual disclosure.

▶ 51:31 Speaker 6: I think it was this idea, it was,

▶ 51:34 Speaker 2: uh it wasn't seen as beneficial to every quarter you get an annual disclosure from the utility that's what it is so it's just a waiver of of something that is is that is that the okay so

▶ 51:44 Monica C. Medeiros: that's i i i had taken that to mean the opt out but i saw that we were going so that's that was you know primarily what i want to make sure that we get it i don't think i think it is important to maintain the mailers for the opt-out yes and um and i found that the postcard to be really

▶ 52:00 Speaker 7: helpful that kind of queued people up to say look for the letter it's not junk mail hmm you know we definitely will do that again that's that's important and I

▶ 52:13 Monica C. Medeiros: and I so one of my other questions is what happens to I think that the 5% for the regular you know 5% renewable mix for the regular average bill is probably the right thing to do but I do agree that I think there is definitely a market here in Melrose that would be willing to make that investment to go to 100% renewables that they have the means and they have the will to do that and we should try to maximize that and offer that to them what has happened with the people who did choose to take on the maximum 100% renewable option and then when we ended our contract do they go back to people we're back at basic

▶ 53:00 Monica C. Medeiros: service you're back at basic service so so you don't have any option and once

▶ 53:05 Speaker 7: you're on basic service you can you can opt into the like a green up or one of the other products you can get through your utility okay that's available we're already paying so much right now I didn't really want to yeah pay more because this this year has been really rough but you reminded me I thought you're gonna go the other direction there also is the option for people who don't want to pay the extra five percent and there is a Melrose basic rate which is an option to people and the number of people chose that as well so from the

▶ 53:40 Monica C. Medeiros: last aggregation if people had chosen that 100% renewables and then when the contract ended they automatically got switched back to national grid basic rate yeah okay and then if they have chosen to to opt up they won't move with the aggregation is that correct or or will they they'll still be moved with

▶ 54:09 Speaker 2: that chunk of account exactly they're old they're all part of it's kind of like they're all they're all on the boat yeah I mean those are the people who

▶ 54:18 Monica C. Medeiros: probably most will you know would benefit from so I think it's important to enter into this slowly which we did I'm glad that we did the one-year contract frankly so we could test it out and we were able to make sure that we we kind of opted out as a chunk when the rates got high and it looks like you said this would take about two or three months to be approved this new you know

▶ 54:51 Speaker 7: hopefully if we get approved by the year we get approved by the year when we

▶ 54:57 Speaker 7: could say so reintroducing a program in late 2018 early 19 realistically DPU is

▶ 55:04 Monica C. Medeiros: slowed down a bit so right now we are granting approval to submit this to DP you and then assuming it's approved then we could go out to bid and assuming you find something that you find favorable then we would begin a whole process of education and opt-out and anybody who had opt out opted out previously would have to opt out again because it's a new contract in a new situation and we'll make that clear to everybody when the time comes but we're talking probably a a year out before this comes into play it's hard to tell I'm hoping we'll be

▶ 55:46 Speaker 2: you know pricing this let's say January you're spending a bit hopefully if not

▶ 55:54 Speaker 6: before it read we'll see it could go either way the fact that you've been to

▶ 55:56 Speaker 2: the process before might make it faster or slower and you know it to volatility

▶ 56:13 Monica C. Medeiros: I mean, this one benefit that I think, you know, there's a lot of people who are, you know, really, they struggle, and it is, yes, I'm sure you do, and it really is important to have that stability piece, which, you know, we can't control how much they use. They can control that, but in terms of the rate and knowing how much you'd pay per unit, you know, adds a lot of stability. and I guess when my last question is in terms of reliability and demand on the grid and this is what can we do as consumers and in the meantime are there things that we can do at home to you know say we do our use our dryers or do our laundry off hours or the things like that that we can do to put less stress

▶ 57:03 Speaker 7: on the grid our grid right now is less time time sensitive in that way for most residents that kind of the bigger accounts and our have time of use rates we don't have that birth for the residential I think that the the overall message is using less energy the fuel you don't use is the cheapest fuel there

▶ 57:32 Speaker 7: is right so fewer laundry loads always have I always do full loads of everything instead of a lot of small ones I do a lot of loads and you know the LED LED light bulbs sure and you know that the nice thing about this is that I've reached a different population of people to talk about energy efficiency and talk about mass-save home energy assessments because these aren't folks that I'm necessarily interacting with at events and things, but every chance. It's a great segue to a conversation. Have you had a mass-save home energy assessment? Did you do that installation? Do you have the light bulbs, which make a huge difference, and that kind of thing.

▶ 58:22 Monica C. Medeiros: That's great. I guess one last one last time it didn't we weren't able to bring any City of Melrose accounts into this is this something we anticipate we might be able to do or that might be beneficial at some point yeah we're still in a long

▶ 58:35 Speaker 7: contract along so it's we still have a couple years left on that so when that comes up I think that's something to look into thank you very much thank you

▶ 58:49 Speaker 7: Alderman Forbes. Thank you. Being last day most of my questions have probably been

▶ 58:52 Scott M. Forbes: asked already but I got a couple of questions this is a couple of points. Obviously you know this is a great program anytime you can give residents a utility a utility option where you can have a cost benefit with the option of actually opting out of no cost to the resident it's a winning situation because you're presenting them with viable options am i correct in saying that the reason why we entered this program to begin with was the ability for us to purchase energy in real time at a real cost as opposed to larger carriers that buy in bulk at like maybe like months or maybe even like you know well beforehand so we may be able to go in and see something and purchase in real time that actually is a cost-benefit I think that by doing this this approach unlike the utilities who are mandated to go out to bid on certain particular days of the year with very little flexibility right they can't shop around so the flexibility that we have is that yeah we can time the market and time our purchase and time well depending waiting until DPU approves our thing but once that happens and if we don't like the prices that we that we the bids that we get right we hang tight for for a month or two and try again until until and and the utilities don't have that flexibility and then there's just the benefit of all of us doing it together as opposed to individual households talking to an individual supplier and taking whatever rate that supplier is offering yeah i thank you flexibility was the word i was looking for i didn't find it you found it i appreciate it um and then also i mean outreach solves everything when it comes to solicitations and the phone calls and i think the city does a great job when you have people that are actually contacting your office finding out when they can go into the program i think we definitely turned a page so again i just i appreciate you being here thank you very much thank you alderman mcmaster

▶ 1:00:58 Shawn M. MacMaster: thank you madam chair thank you miss grover thank you mr carr for being here for those who opted out initially in 2015 prior to there being any rate changes um is there any qualitative data to help

▶ 1:01:15 Speaker 7: us understand what the reason was for that no we don't really collect that my sense from talking to a lot of them who ended up switching into the program is that they just didn't understand it and they they were suspicious they wanted to see how it was going to go they wanted to hear talk to their neighbors and then or yeah and then they um so based on that i guess anecdotal information

▶ 1:01:33 Shawn M. MacMaster: right you know that's pretty much all we had in your travels is there anything instructive that would be helpful prospectively in trying to engage members of the public and raise awareness about

▶ 1:01:50 Speaker 7: the benefits yeah i i feel like we did a pretty thorough job i mean i'm i would love to if you know of constituents or anyone you know that you've talked to who didn't understand it or we didn't reach and for whatever reason I'd like to hear about

▶ 1:02:09 Speaker 7: that and figure out what what we what we missed but I did hear from a few people who were surprised but at the end of the day if they're not opening their mail they're not reading local papers they're not following the blog they're not attending the public information sessions I don't know how to reach you know reach some people we do our best and I'm always here if you have any constituents please send them my way I'm happy to talk to them thank you one

▶ 1:02:37 Shawn M. MacMaster: additional question with respect to the senior citizens and other vulnerable populations who were targeted by suppliers last time was that anticipated

▶ 1:02:50 Speaker 7: I it was more than it was it was worse than I thought it was gonna be in the calls that I got from some people who who said that it's just unbelievable to me what some of these people do on the phone and what they say it's just implying that they're from this from the city implying so somehow they knew that we had that we were in an aggregation or implying that they're the utility and

▶ 1:03:18 Speaker 5: and the utility will never ever call you they won't even call you back most of the time right

▶ 1:03:25 Speaker 7: so they're not going to pick up the phone to call you to try to sell you a better deal they don't they're not offering any better deals so it's definitely not it's not us it's not utility it

▶ 1:03:35 Shawn M. MacMaster: sounds like there might be some takeaways to be able to use in your outreach efforts going forward based on what you heard and what others may have heard in terms of the suppliers who were targeting vulnerable populations because I think beyond the elderly we have to be cautious about our immigrant residents in the community there might be opportunities to you know work with the Human Rights Commission to identify ways to try to raise awareness with our foreign-born residents in the The City of Melrose.

▶ 1:04:06 Speaker 4: I agree. Thank you.

▶ 1:04:11 Peter D. Mortimer: Alderman Mortimer. Thank you very much, Chairman Lehmann. Mr. Kyle, you are the attorney for Good Energy LP.

▶ 1:04:19 Speaker 2: Sorry, I should have said I'm a managing director of Good Energy, and I run the New England region. All right. I'm not an attorney.

▶ 1:04:29 Peter D. Mortimer: All right, and who is your attorney? Who was the attorney on this contract?

▶ 1:04:33 Speaker 2: Scott Mueller.

▶ 1:04:34 Peter D. Mortimer: Still, he was the attorney on the last contract as well? sir I see and we signed that on November 25th of 2014 and it was presented to us in the spring of 2014 just as it is now and then it came to fruition for signing in November I see that the outreach and mr. Mueller's offices of in Chestnut

▶ 1:05:01 Speaker 2: Hill yes I think he's recently moved that's correct yes sir he has moved okay

▶ 1:05:04 Peter D. Mortimer: and then on the last contract when it was ultimately signed it was signed by a different company called good offices technology partners and now this good energy is a limited partnership it's an LP yes sir and who are the partners the

▶ 1:05:28 Speaker 2: partners I believe I'm not a partner I think there's four partners as a Charles

▶ 1:05:36 Speaker 2: the Castagere who runs Aggregation nationally, the head of the company, Maximilian Hoover,

▶ 1:05:43 Speaker 2: and I need to check on exactly who the other partners are. I'm not sure. I'm not involved at the partnership level.

▶ 1:05:50 Peter D. Mortimer: Are there corporate partners or are there individual partners?

▶ 1:05:53 Speaker 2: Individuals. We're a privately owned company with no external.

▶ 1:05:59 Peter D. Mortimer: And the four partners, they're venture capitalists?

▶ 1:06:01 Speaker 6: No, no, no, no.

▶ 1:06:02 Speaker 2: It wasn't that kind of company. I mean, I'm probably speaking out of school here, but my understanding is the company was very much grown organically with seed money from families and friends, like 19 years ago. As far as I'm aware, I don't know anything about it. But all I can tell you is it's a private-owned company. We're not affiliated to any other major energy corporation I'm aware of. We're independent. One of our advantages is that we have no affiliation to any of the suppliers that we work with. All right.

▶ 1:06:34 Peter D. Mortimer: your side of the table I see and good offices technology was one who actually signed the contract with us and as you stated it was Max Hoover right who signed it and that's a limited liability corporation it could be I mean yeah I

▶ 1:06:46 Speaker 2: might be the wrong person answer most these questions but I'm happy to tell you what I know I mean you know he is the CEO and president of of good of good offices and good offices is the the good energy is part of good offices good so

▶ 1:07:03 Peter D. Mortimer: good energy works for good offices or good offices works for good energy good

▶ 1:07:08 Speaker 2: energy is part of good offices and there's also a lighting division called good Mart so since there's two kind of divisions one does sort of aggregation and energy consulting services for commercial industrial council is more of a lighting department which comes under the umbrella of good offices and one is

▶ 1:07:23 Peter D. Mortimer: a limited partnership and the others a limited liability corporation i'll be honest i'm i'm

▶ 1:07:27 Speaker 2: recently stage where i'd have to i mean i'm not qualified to because i i'm not a partner or senior

▶ 1:07:36 Speaker 2: member of the company so i just i i'm not really entitled to speak about the details all i can tell

▶ 1:07:42 Peter D. Mortimer: is we're private company all right i see and um in this contract as in the last the payment is one one thousandth of a cent over the going rate and it's the energy supplier who pays that

▶ 1:07:55 Speaker 2: to you uh a dollar per megawatt hour a tenth of a penny per kilowatt hour

▶ 1:08:01 Peter D. Mortimer: um if that's a thousand yeah it says one one thousandth of a penny per kilowatt hour

▶ 1:08:04 Speaker 2: someone said the arithmetic on that the decimal points are important yeah i think one mil one

▶ 1:08:12 Peter D. Mortimer: tenth of a second one all right so one mil of a kilowatt hour which would come out to one one

▶ 1:08:18 Speaker 2: thousandth uh of a thousand over uh it's a dollar per megawatt hour all right so what so it's not

▶ 1:08:21 Peter D. Mortimer: a kilo a dollar per mega would be a thousandth of for that so that's your rent that's what you get out of it that's that's why i mean i understand that you're here to help people yeah but we are we're all here to you know of course you you have to make some money to pay your salary and the gentleman in the gallery his salary as well so that's your cut and it's the um energy supplier

▶ 1:08:50 Speaker 2: who pays that for you uh the winning supplier passenger money is um resident pays the bill utility keeps the money for transmission distribution money for generation goes on to the winning supplier the winning supplier pays us all right so that sounds good now that's what

▶ 1:09:02 Peter D. Mortimer: once this gets approved by dpu and i think we can anticipate that it will it's obviously well prepared and it was accepted before and as miss grover appropriately stated we were one of the fledgling municipalities who started this but now it seems common there's a list of about 12 or 14 municipalities that including boston that do this so this is uh no longer salad days we're uh we're into the meat and potato so this is this is an ongoing enterprise so after DPU approves it and miss Grover may be able to miss Grover may be able to address this more accurately the mayor has to accept the bid the bids we get she has to accept it now on who is advising her of what bids yeah so both of you will be advising the mayor because if not it says and you alluded to it moments ago you wait and try again and you're doing a little bit of market timing now i do market timing for a living in uh in stocks mostly and so you're waiting you're waiting for the right time to enter now in the last contract we got out because the basic rate if i may call it that came back and it was competitive uh with any aggregation contract we had so the contractor that we entered in 2014 no longer became beneficial and by terms of the contract here we can leave whenever we want the city can exit the contract whenever we choose to is that correct

▶ 1:10:53 Speaker 7: yes you know no we we would um go to the end of the contract term so what what happened in 2014

▶ 1:10:56 Peter D. Mortimer: it was worth our money uh it was worth our while when when when we were nearing the contract term

▶ 1:11:02 Speaker 7: ending point of the contract with constellation right that's when we started to go out to bid again and that's when we started to get the indicative pricing and realize that would have been great to keep the price that we had at the time but what the bids we were getting were another two three cents more than what we were paying at the time and um and we knew already what national grid summer rate was going to be and it just didn't make sense um

▶ 1:11:41 Peter D. Mortimer: i say to stay in and the rate is the best option for residents thank you um and the rate is based on kilowatt hours i see or some you know measurement based on kilowatt hours um and it said volumetrically in parentheses now what does that mean volumetrically on the kilowatt hours Volumetrically, in parentheses, it's in the terms of the contract after the rate. What is volumetrically opposed to? What other categories would there be or what specifically does volumetrically mean?

▶ 1:12:11 Speaker 2: That's a good question. I need to consult my thesaurus here. I think it's ... For example, if we're saying we're getting paid volumetrically, it's the idea I think getting paid on flow, that may be a bad explanation, but that's the way I visualize it. So because I often use the example we get paid volumetrically, I don't think about what that means, but what I think I'm meaning is we're getting paid on the amount of a commodity as it flows through the system. So that's what I consider volumetrically to mean approximately.

▶ 1:12:44 Peter D. Mortimer: Thank you. I see that the price of oil at one point in the recent past was as low as $28 a barrel, and now it's back in the 60s. How is the price of electricity linked to the price of oil, if at all? Can you expound on that a little bit, please?

▶ 1:13:03 Speaker 2: Yeah, absolutely. It's a good question. So a few years ago, this is linked, so the price of oil and the price of natural gas used to be more correlated. And because the marginal cost of electricity generally comes from the simplicity, from the price of natural gas in our industry we track the cost of natural gas to see roughly where the price of electricity lies so 10 years ago until the time the great

▶ 1:13:33 Speaker 2: recession it was it was much more correlated um as uh particularly as as the the us has

▶ 1:13:42 Speaker 2: discovered enormous resources of natural gas um it uh they started going on separate routes

▶ 1:13:56 Speaker 2: and they de-linked. So today, there's not a zero correlation at all. For example, during the two or three peak days of the year, particularly in the wintertime, and your question in a

▶ 1:14:13 Speaker 2: way goes to heart of it, one of the challenges facing the state, the residential heat load gets first call on natural gas, right? So in the middle of polar vortex,

▶ 1:14:24 Speaker 2: the residential accounts for heating for natural gas go first, which means the utilities can't get all the natural gas they need when they want it. And then they start burning fuel oil. So actually, the crazy high rates you saw the following winter were directly linked to the price of oil at the, on those specific days, right? Because it's a pass-through cost for utilities. They spend a certain amount of money to, you know, and they're just passing that through to you. So on a macro scale, they're essentially de-linked, but because of the, and it goes to your question earlier, because of the complexities of the market and the very sort of polemic issue as to whether we have enough natural gas generation here, whether we need to build more, whether a pipeline should be coming in.

▶ 1:15:24 Speaker 2: The hard reality is, and I see New England with the first admit it, that for reliability issues, oil comes into play during those peak days. So actually it does affect your rate at a micro level here in Massachusetts quite significantly if there is an event like the Vortex where suddenly there's not enough natural gas going to fuel plants. On a macro scale, D-Linked, micro, yes, it affects you right here.

▶ 1:15:52 Peter D. Mortimer: Right, and it is quite a polemic, as you stated, of what we're going to do to get more supply pipelines, oil pipelines, gas pipelines. And since you've mentioned being a polemicist, if I can take a quick aside, I think it's reprehensible that the oil companies, for a product that's fungible, like oil, it's not dependent on the climate, like the orange crop or the wheat crop, that they can charge $28 for a barrel at one time. And then in the 60s, now this is an aside if you'll excuse me, but I think the oil companies, on a grand scale, somebody has to get them into line. That's enough that they take advantage of the people. But just to get back to the main point here, if I may, so the electricity providers will use natural gas first. They'll go to natural gas to create the energy for the electricity that comes through the cables. And then if natural gas gets too high, then they'll switch to oil?

▶ 1:16:52 Speaker 2: Dual fuel capabilities and what happens, which basically means that if they're not getting the gas they need during a situation, they will start getting whatever they can in and it'll be coal or oil and it's like if we don't get that we're going down and they will they will actually go

▶ 1:17:11 Speaker 2: to coal to go to we have a dual fuel is coal situation they'll take coal but what you're seeing is pretty unprecedented amounts of oil used on the peak days and we even saw it in this past winter we had a we had a very cold day I think around March the 7th or something and and I just out of interest just checked I'm kind of fascinated to see and it's amazing how much oil is used on those peak days during those last week of December first

▶ 1:17:38 Speaker 7: week of January this region used more oil in those two weeks and we used in all of 2016 because um of the the huge temperature and duration of it and the lack of access to

▶ 1:17:59 Peter D. Mortimer: sufficient natural gas thank you that's all the questions i have madam chair thank you

▶ 1:18:06 Peter D. Mortimer: we have the order before us motion to recommend for passage

▶ 1:18:08 Jennifer L. Lemmerman: the motion to recommend passage by alderman mortimer seconded by alderman forbes