"Governance and Control Failures"
Why we should support the Community Power Coalition of New Hampshire nevertheless
Let’s get one thing straight, right off the bat. As New Hampshire’s Consumer Advocate, tasked with advancing the interests of the state’s residential utility customers, I respect and support the Community Power Coalition of New Hampshire (CPCNH). Collectively, we ratepayers have — since adoption of the Restructuring Act in 1996 — forked over hundreds of millions of dollars in stranded cost charges to utilities in exchange for the right to choose a non-utility supplier of electricity. CPCNH — a coalition of more than 70 towns and cities, a remarkable agglomeration of wholesale buying power, exercised in publicly accountable fashion — remains our best hope for getting real value in exchange for all of those stranded cost payments.
And let me get something else off my chest. Though I think public accountability and transparency make CPCNH the most compelling approach to community power aggregation for New Hampshire, I acknowledge and respect that CPCNH is not the only game in town. Energy brokers like Freedom Energy Logistics and ECM Power have entered into fruitful relationships with individual municipalities and, right now, some of those towns are offering real bargains to retail customers as we all struggle through the current affordability crisis. I want those partnerships to thrive. So there is no need to call the lawyers and have them threaten to sue me for defamation, okay?
Recently I read an op-ed with this headline: “Who does NH’s Consumer Advocate work for?” Written by an elected official in one of CPCNH’s earliest adopting municipalities, the op-ed accused me of failing to ask the “uncomfortable questions” that need to be posed, at a time when CPCNH’s rate is more than three cents per kilowatt-hour higher than what residents can get by switching back to the backstop service available from the local utility.
This was an unfair attack.
About a year ago, I stood up at the annual meeting of CPCNH and emphatically urged the organization’s board to commission an independent investigation of the fiasco that led to CPCNH’s parting company in February 2025 with its founding CEO, Brian Callnan, while blowing through all of the financial reserves the organization had built up since it launched in April 2023. It did not sit well with me that CPCNH had commissioned an extensive analysis of the situation, written by a super-knowledgeable expert whose ongoing contractual relationship with CPCNH nevertheless made him a biased insider, that emphatically and conveniently blamed the whole mess on the recently resigned Callnan.
CPCNH followed my advice — and, to be clear, the organization’s own policies require such outside reviews periodically, so I don’t deserve all the credit for making the review happen. The organization commissioned The Energy Authority (TEA) — an outside firm based in Jacksonville, Florida and Bellevue, Washington — to perform the review. Their reports are available on the CPCNH web site1 and are being presented to this year’s annual meeting, on April 30.
Sure enough, TEA found that there is enough blame to go around.
Here’s the Executive Summary of the TEA Report, in its entirety:
During the 2024–2025 winter period (UAP-4), the Community Power Coalition of New Hampshire (CPCNH) experienced a significant drawdown of financial reserves, estimated between $8.6 million and $12 million, driven primarily by actions that were inconsistent with Board-approved Enterprise Risk Management (ERM) and Energy Portfolio Risk Management (EPRM) Policy requirements. These actions included recommending rates below forecasted costs, delaying required hedging, and unexpected exposure to ISO-NE spot market prices during a period of elevated volatility. While external market conditions (winter cold snaps, price volatility) created pronounced price volatility and contributed to CPCNH’s losses, the bulk of the drawdown was attributable to governance and control failures within the administration of the hedge plan, compounded by limited oversight and ERM plan adherence.
I’ve put the key phrases in boldface italics.
TEA most assuredly finds fault with the former CEO, concluding that he “took on certain decisions . . . that might otherwise have been handled by the Portfolio Manager,” by which TEA means CPCNH’s consultants at Ascend Analytics. CPCNH’s internal investigation likewise blamed Callnan for ignoring Ascend Analytics and sallying forth into what proved to be a volatile and expensive winter without enough hedging as required by explicit CPCNH policy. “Hedging” in this context means firm commitments to buy power at agreed-upon wholesale prices, as opposed to procurement in real time via the open market administered by regional grid operator ISO New England.
“Evidence from compliance assessments and interviews indicates an intentional strategy of deferring hedging with the expectation prices will fall after rate setting,” TEA observed. “This approach is explicitly prohibited as a primary strategy under [CPCNH’s board-aproved] EPRM [i.e., Energy Portfolio Risk Management] Policy, which defines CPCNH as a cost hedger, not a speculative trader. Impact: Outcomes became dependent on favorable market movements rather than controlled risk mitigation, contrary to policy and best practices for public power agencies.”
Yikes. “Hedge plan execution decisions proceeded without effective independent governance,” TEA concluded, in a part of the report whose heading is “Breakdown of Controls.” Double yikes.
But wait; there’s more.
“CPCNH relied on a Power Purchase Agreement (PPA) to hedge supply risk. The PPA was negotiated with a supplier that was potentially not credit-worthy and ultimately was not executed,” according to TEA. Who was this mysterious supplier and why was this agreement — which presumably could have eased the inadequate hedging problem — never finalized? CPCNH should come clean about this or, at least, explain why it cannot do so.
You might wonder why I continue to support CPCNH in the face of such a damning report. Indeed, the author of the op-ed took me to task for publicly referring to Callnan’s successor, and the organization’s director of member services, as my friends.
Well, apart from the fact that people in New Hampshire’s energy and utility sector still maintain a modicum of collegiality even as the world around us sinks into an ooze of vituperation and malice, I think that publicly circulating such a highly critical report is evidence that CPCNH is fully worthy of public trust. There are any number of readily available excuses under the state’s Right-to-Know Law for withholding a report like this from public disclosure. (The likeliest suspect is the disclosure exemption for “confidential, commercial, or financial information,” the one I fear CPCNH will invoke when asked for details about the PPA mentioned above.)
Moreover, TEA made seven specific recommendations for improving CPCNH, six of which have already been implemented. The remaining one is “Develop programmatic price and value trigger structured hedge plan with pre-defined hedge percentages (min and max thresholds) and dates for adherence.” I could use a plain-language explanation of what that is and whether CPCNH’s management agrees with it.
These are hard times for CPCNH. The fiasco described above have forced the organization to charge a price for its basic service that is vastly in excess of what people can get elsewhere, including their local utility. People are justifiably angry given all of the implicit (and, in some misguided communities, explicit) promises from 2022 and 2023 that community power would always beat the local utilities on price. The “refresh” conducted by CPCNH in March, opting in thousands of new customers (i.e., people who signed up for utility service since the program in their municipality launched) at a time when no rational person would make such a choice, did not help.
But these are short-term problems. In the long term, it’s obvious that a big and publicly accountable joint powers authority like CPCNH is the best thing that has happened for the state’s residential utility customers in 30 years. Just like workers are better off by having a union, even an imperfect one, CPCNH embodies the principle that there is strength in numbers and power in solidarity.
Follow this link, look under “Meeting Agendas and Links,” follow the link for the April 30 annual meeting, and download the three documents available under “Results of independent risk audit by TEA.” There are actually three documents — a slide deck plus a report entitled “Winter 2024-2025 Reserve Draw Evaluation” and another captioned “CPCNH Risk Policy and Framework Assessment.” I quote here from the former report not the latter.