Special Edition - 2019 Session
Override Vetoes on Net Metering, Municipal Transportation Fee
Welcome to a special edition of NHMA’s Legislative Bulletin. A late-summer Bulletin is a rare thing, but anyone who pays any attention to state and local news is aware that Governor Sununu has vetoed over 50 bills this year, and the legislature is preparing to take votes on overriding those vetoes. The House and Senate will both meet the week of September 16 to consider override votes—the House on Wednesday, September 18, and the Senate on Thursday, September 19.
Municipalities have a strong interest in some of the vetoed bills. NHMA would like to see some of the vetoes sustained and some of them overridden. And, of course, we have no position on the many bills that do not affect municipal government.
On two bills in particular, we believe overriding the governor’s vetoes is both important and achievable. HB 365 increases the capacity limit for net metered energy facilities, and HB 409 increases the maximum transportation improvement fee that a municipality may (by local legislative body vote) charge for automobile registrations. We wrote about these bills several times during the legislative session, but the following articles are intended to refresh memories and provide some additional information.
HB 365 is an NHMA policy bill that would raise to five megawatts (from one megawatt) the capacity limit for a customer-generator to participate in net energy metering. Dozens of municipalities around the state are participating in net metering in one way or another or are pursuing the option, but the existing one-megawatt cap limits their ability to do so.
We know of at least 37 municipalities that are considering net metering projects that are between one megawatt (the current cap) and five megawatts (the proposed cap). HB 365 will enable those municipalities, and many more, to reduce costs and generate income from their own facilities or from leasing land for such facilities to private companies, or to reduce their electric bills—and thus reduce property taxes—by purchasing electricity at discounted rates through a group net metering arrangement. Without HB 365, those projects will be stalled.
Expanded net metering will provide the following benefits to municipalities, businesses, and individuals:
- Ratepayer (and taxpayer) savings on electric bills from locally produced power
- Taxpayer savings from increased local tax revenues
- Reduced regulatory barriers to producing low-cost, home-grown renewable energy
- Greater energy independence and reduced price volatility
- A defense against regional cost-shifting by other states onto New Hampshire ratepayers
- Improved grid diversity and reliability
- Tens of millions of dollars in new investment and good-paying local jobs
Of most importance to municipalities, of course, are the cost savings and increased tax revenue. These important benefits explain why the House passed this bill in March on a strong 254-98 roll call vote, and the Senate passed it in April on a voice vote.
The margins in both chambers were well in excess of the two-thirds majorities needed to override a gubernatorial veto, but we understand that a significant number of House Republicans have reconsidered their position because of a perceived need (reinforced by party leaders) to “support the governor.” As a result, we expect an extremely close vote in the House. (We are confident that the Senate, given the opportunity, will again vote overwhelmingly for the bill.)
We can understand that House Republicans may want to support the governor. We want them to support the governor on some of the vetoes, as discussed below. However, both the governor and the legislature started the 2019 session expressing support for property tax relief. Voting against the override on this bill means voting against the interests of municipalities and taxpayers. Republicans can show their support for the governor on dozens of other bills. Disagreeing on two or three bills out of 50 does not show a lack of support.
The governor’s veto also seems to have been based on incorrect information about the bill. This gets a bit complicated, so in the interest of keeping this article short, we address the governor’s veto message separately at the end of this Bulletin. For anyone who wants to understand why the arguments against the bill are wrong, please see the article on at the end of this Bulletin, “Response to HB 365 Veto Message.”
For purposes of this article, suffice it to say that HB 365 is a win-win-win-win-win. It benefits businesses, municipalities, taxpayers, the state and local economies, and the environment. The only people arguably hurt by it are the shareholders of a few huge, multi-state utility companies.
In case you need it, here is a lot more information on HB 365.
Please insist that your representatives vote to OVERRIDE the veto of HB 365.
Municipal Transportation Improvement Fee
HB 409 is an NHMA policy bill that would increase from $5 to $10 the maximum fee that a municipality may collect under RSA 261:153, VI. That statute allows a municipality, by vote of the legislative body, to establish a transportation improvement fund “to fund, wholly or in part, improvements in the local or regional transportation system, including roads, bridges, bicycle and pedestrian facilities, parking and intermodal facilities and public transportation” with money for the fund coming from an additional fee (currently up to $5) assessed at the time of the annual motor vehicle registration.
This fee provides local dollars used for local projects approved by the local legislative body of each municipality that votes to assess this fee. Assessment of the fee itself must first be approved by the legislative body, as would any increase in the fee as provided in HB 409—a textbook example of local control! This local option fee was first enacted in 1997 to help municipalities raise non-property tax revenue specifically for transportation-related improvements and services. HB 409 amends the cap on the fee to adjust for inflation and restore the purchasing power the fee initially provided when enacted 22 years ago.
In his veto message on HB 409, the governor stated that citizens already feel they pay high motor vehicle registration fees and that government should be focused on “finding efficiency and reducing waste rather than adding to the burden of our citizens.” However, since this fee helps offset the cost of transportation related services and projects that would otherwise result in increased property taxes, shouldn’t local legislative bodies decide for themselves whether to increase this local option fee up to $10? With state and municipal budgets struggling to keep up with the maintenance and improvement costs of our aging infrastructure, passage of HB 409 is the perfect opportunity to help supplement the financing of diverse modes of transportation.
The House passed this bill by a little more than the two-thirds majority needed to override a veto, and the Senate fell one vote short of a two-thirds majority, so we expect an extremely close vote this time around. As mentioned in the article on net metering above, legislators who feel a need to support the governor can do so on dozens of other bills, while supporting their municipalities on this one. Whether your municipality currently assesses this fee, or may plan to do so in the future, please urge your representatives and senators to support local control by overriding the governor’s veto on HB 409. Your representative or senator may be the one vote that makes the difference!
Several other vetoed bills would have impacts on municipalities. We are asking legislators to sustain some of the vetoes and override others. We’ll begin with the overrides.
Purchase of energy from biomass facilities. Among other things, HB 183 requires Eversource to buy energy from six independent biomass power plants. This simply reaffirms what the legislature required in 2018 (over another veto by the governor); that legislation, unfortunately, has been blocked by legal maneuvers at the Federal Energy Regulatory Commission and the New Hampshire Public Utilities Commission. HB 183 would work around those obstacles.
Without HB 183, those six facilities may be forced to close, resulting in the loss of hundreds of jobs and hundreds of millions of dollars in economic activity. More than 40 percent of all the wood harvested in New Hampshire is in the form of wood chips destined for wood energy. Without markets for this timber, the economics of sustainable forestry fall apart, and landowners will consider other options for their land, including development.
Apart from the ripple effects of industry losses—unemployment, losses to local businesses, impacts on local welfare budgets—there will be direct impacts to municipalities if HB 183 fails. Perhaps the most serious would be significantly reduced property valuations—resulting in higher taxes for everyone—in the six towns that host the facilities: Alexandria, Bethlehem, Bridgewater, Springfield, Tamworth, and Whitefield. In addition, the inevitable decline in the timber market would lead to a loss of timber tax revenue for almost all municipalities in the state.
Please ask your representatives and your senator to vote to OVERRIDE the veto of HB 183.
Independent Redistricting Commission. HB 706 is an effort to eliminate political gerrymandering by establishing an independent commission to draw legislative districts after each decennial census. The bill establishes criteria for drawing district lines and specifically prohibits the creation of districts that “have the intent or the effect of unduly favoring or disfavoring any political party, incumbent, or candidate for political office.” NHMA supports the bill because many municipalities develop working relationships with their legislators, and it is disruptive when they are moved from one legislative district to another for no legitimate reason.
In his veto message, the governor stated that “legislators should not abrogate their responsibility to the voters and delegate authority to an unelected and accountable commission selected by political party bosses.” But without HB 706, initial authority is, as a practical matter, already delegated to a small group of legislators selected by the same “party bosses”—i.e., the House and Senate majority and minority leaders. The principal difference is that under HB 706, the commission is required to be evenly balanced. HB 706 does not abrogate the legislature’s responsibility—it expressly requires the commission’s recommendations to be submitted to the legislature for approval.
HB 706 enjoyed very strong bipartisan support, passing the Senate on what appeared to be a unanimous voice vote. In the House, it was approved unanimously by the Election Law Committee. Only on the House floor did it become a partisan issue, for no discernible reason. Please ask your representatives and your senator to vote to OVERRIDE the veto of HB 706.
Labor and employment bills. The governor vetoed several bills affecting labor and employment. Municipalities would be affected by at least three of them, and we support the governor’s vetoes on all three.
SB 100 would prohibit an employer from inquiring about a job applicant’s criminal history on an employment application or conducting a criminal record check before an initial interview. While we acknowledge that having a criminal record should not, in most cases, disqualify an applicant from consideration for employment, we agree with the governor that employers still should have the right to inquire about criminal history at any step in the process. A criminal record is a relevant fact, just as much as education and work experience. Should employers be barred from asking about those matters as well?
SB 148 began as a bill to require notification to employees about their right to join or not join a union. However, it was amended along the way to require a public employer to give union representatives access to members of the bargaining unit that the union represents, including: (1) the right to meet with employees on the work premises to investigate and discuss grievances; (2) the right to conduct worksite meetings during lunch and other breaks and before and after the workday to discuss workplace issues and union matters; and (3) the right to meet with newly hired employees for 60 minutes not later than 10 days after hire. We agree with the governor that these matters should be negotiated through the collective bargaining process, rather than mandated by law.
SB 271 is a state-level version of the federal Davis-Bacon Act; it would require payment of the “prevailing hourly rate of wages and benefits” for work on state-funded public works projects. It is unclear how the bill would apply to municipal projects that receive partial funding from the state. NHMA suggested an amendment in both the Senate and the House to clarify that the law would not apply when a municipality is the contracting entity, but neither body accepted the amendment.
Whether a prevailing wage law is needed at the state level is questionable at best; applying it to municipalities would be disastrous, and the bill fails to clarify whether it does apply. We fully support the governor’s veto of the bill.
Please ask your senator and your representatives to vote to SUSTAIN the vetoes of SB 100, SB 148, and SB 271.
Summary of NHMA Positions
Here is a summary of NHMA’s positions on the vetoed bills that are of most interest to municipalities:
Requires electric distribution companies to purchase baseload renewable generation credits from eligible biomass energy facilities
Increases cap for net metering projects to 5 megawatts. NHMA POLICY.
Increases maximum optional fee for local transportation improvements. NHMA POLICY.
Establishes an independent redistricting commission. NHMA POLICY.
Prohibits employers from asking about criminal history on employment applications.
Requires public employers to allow labor union representatives to meet with employees on the employer’s premises
Requires payment of “minimum prevailing hourly rate of wages and benefits” to workers on public works projects.
Response to HB 365 Veto Message
In his veto message on HB 365, the governor referred to the bill as a “subsidy” that “benefits large-scale solar developers while hurting all ratepayers,” stating that it will cost ratepayers “hundreds of millions of dollars in higher electric bills.” He further stated that “any perceived tax savings from a net-metered solar project are cost-shifted to ratepayers across New Hampshire.”
It is true that the bill will benefit large-scale solar developers. It will also benefit small-scale solar developers, as well as generators of hydro, biomass, and wind energy. Some of these are large and some are small; most are locally owned, and all of them provide local jobs and economic development.
Beyond that, the veto message is incorrect. There is no subsidy, no harm to ratepayers, and no cost-shifting. In fact, HB 365 prevents cost shifting. Here’s why:
Under net metering, the distribution company (e.g., Eversource, Unitil, Liberty) pays or credits the customer-generator at exactly the same rate (the “default service rate”) that it would pay to buy the same power from an energy supplier (e.g., Constellation). There is no “subsidy” to the customer-generator, and no required shifting of costs to other customers.
As for “cost shifting,” this is something that is created by the utility, not by net metering requirements, and HB 365 would eliminate it. The cost shifting results from a practice used by some (not all) of the electric distribution companies under which they choose to buy their entire energy supply requirement (known as “load obligation”) from energy suppliers such as Constellation, before accounting for any purchase of net metered energy. They then treat the net metered energy they are required to buy (at the same price) as excess and sell it at a loss on the wholesale market. The utility recovers the “loss” (which the utility itself created) from all of its customers. It is unclear why these companies buy excess power and sell the excess at a loss, but it is worth noting that those same companies, or their parent companies, own transmission assets and benefit any time more energy flows into the transmission grid.
The utility companies used the “stop us before we cost-shift again” argument last year in opposing SB 446, which was similar, but not identical, to this year’s HB 365. Because SB 446 did not expressly prohibit their cost-shifting practice, they could plausibly claim that the bill resulted in cost shifting. They are making the same claim again this year, but new language in HB 365 renders the claim invalid, as explained below.
As mentioned above, not all New Hampshire utilities follow this practice. Liberty Utilities uses the net metered energy supplied by customer-generators to reduce the amount of energy it must buy from third-party suppliers, thus avoiding the need to offload the “excess” energy and avoiding the cost shifting. By the way, Liberty does not own any transmission assets and therefore does not benefit from selling excess energy back into the grid. Liberty also does not oppose HB 365 and has not claimed that it would lead to any cost shifting to its ratepayers.
HB 365 contains a “load reduction” requirement that prevents cost shifting by requiring utilities to follow the practice that Liberty already follows. It states that any energy supplied by net metering customers “shall be treated as reductions to the [utility’s] wholesale load obligation for energy supply.” The utility will simply replace energy that it would otherwise purchase from a third-party supplier with energy purchased, at the same price, from a customer-generator.
The “subsidy” and “cost shifting” claims appear to have been the entire basis for the governor’s veto. Because they are not true, there is no reason to sustain the veto.