One of the ways in which Energy New England provides value to its members when it comes to power supply portfolio management is that the joint action agency avoids a cookie cutter approach, noted John Tzimorangas, President and CEO of Energy New England, in a recent interview with the American Public Power Association.
Along with his role at Energy New England, Tzimorangas also serves as President of the Board of Directors for the Northeast Public Power Association.
The bulk of ENE’s business is power supply portfolio management, similar to “how your financial advisor does your portfolio, retirement portfolio, or investment portfolio,” Tzimorangas said.
“Each of our customers, and we have 29 municipal systems throughout New England that we do this for, all have a different portfolio,” he noted in a recent episode of the Public Power Now podcast.
“They might have some of the same projects, some of the same arrangements, and some of the same contractual agreements in their portfolio, but not one of them has exactly the same,” Tzimorangas said.
“We try to cater to what their goals are, what their boards might want, what their demographics are in each one of the communities and try to build power supply portfolios around that -- so we do all the contract negotiation, hedging and strategies. We manage their budgets.”
ENE manages the credit and risk management for them under the power supply, he said, noting that power supply tends to be somewhere between 75 and 80% of a municipal utility’s budget.
ENE also participates in ISO New England. “We have a senior vice president of regulatory who sits on a lot of the committees for the ISO that make the decisions on what the rules are going to be, how things are going to play out in the market.”
The approach “here has always been to create something that meets the needs and wants, really, of the municipal utility customer -- whatever they're looking for. And again, we have varying folks that their demographics say we want to be 100% green, or we want to be renewable up to this point. They have their own policies internally, so we build portfolios to that,” Tzimorangas said.
“The other thing is we do a lot of the things I mentioned in that portfolio management and others. We do that based on what customers want and that's how we also go ahead and price the services,” he said.
“We'll build you a custom list of what you want us to provide or how you want us to work with your folks inside your utility and do it that way, so there's no cookie cutter approach.”
Tzimorangas also discussed Energy New England's wholesale risk management energy trading activities.
He said that as individual portfolios are built, ENE wants to make sure “that we balance the risk in them -- We don't want people to be too heavy in one resource or the other.”
“We try to dollar cost average. And the easiest way to tell people is to use that example of your financial planner, when they're kind of building your financial portfolio, is we try to do it the same way because it gives us the best ability,” he noted.
“A lot of times we'll take a certain percentage of people's portfolios and say, you should have, for example, 3% of your portfolio be in this resource, so nobody's over hedged, particularly in one resource or the other,” Tzimorangas said.
“They may have the types of resources, but not necessarily one contractual agreement,” he said, noting that this offers stability.
ENE conducts quarterly updates with every one of its customers. “Each one of our customers has kind of a quote, portfolio manager here in the office and a backup. So, they understand what's in your portfolio. They know where you guys are. Has load increased? Has it not? What should we do with this?”
Every quarter “we sit down with each person -- it could be 5 minutes, it could be an hour and a half. It just depends what's going on within the municipality, because the more we know about what they're doing or what's going on in their service territory, the better we can assist them.”
ENE Expands PPA
In January, FirstLight, a clean power producer, developer, and energy storage company, announced the expansion of the company's landmark municipal utility power purchase agreement with Energy New England.
The original deal was struck during the COVID pandemic in 2020, Tzimorangas noted.
It was the first time 21 public power utilities in New England got together to purchase quite a bit of power from two different generating stations, the FirstLight owned hydro stations, he said. “And it was in the neighborhood of 200 million kilowatt hours a year that they purchased,” he added.
“We did an additional deal with them in 2022 for another 110 million from two other generating stations. So we've done quite a bit of work with FirstLight. They're the largest hydro producer up here.”
Looking at the deal from 2020 that was going to expire in 2029, “we went to the customers and said, geez, we get some real good pricing out of this. It's a good, reliable source. It's a renewable energy source. Hydro's considered renewable up here,” Tzimorangas noted.
“So we said, why don't we extend this deal to 2040? And all 21 people put their hand up and said, okay, let's do that. You know, it's a good time to do it.”
He pointed out that in the New England region “there aren't a lot of renewable type resources that are being built.”
Therefore, executing these kinds of arrangements “with other folks that have these renewable sources where we can extend it out, we try to” do that.
ENE is a Municipal Light Plant Cooperative and the largest wholesale risk management and energy trading organization serving the needs of municipal utilities in New England.
ENE works with numerous businesses, residents, and utilities to help promote the principles of conservation, efficiency, and environmental stewardship, and advances the many benefits available through integrated sustainability planning – including home energy audit programs, electric vehicle programs, wholesale energy procurement and risk management programs, regulatory and lobbying services.
