Michael Strauss Newburyport Energy Advisory Committee
In 1997, the state Legislature restructured the electric utility industry with open market competition to establish consumer electricity rate savings. Since then you may have gotten robo-calls and mailings offering discounted electricity. Are these types of annoying deals worth it? The Massachusetts Attorney General’s Office conclusively says “No.” That office found that Massachusetts consumers who accepted them overpaid in aggregate more than $175 million in the last two years alone, and low-income residents were the hardest hit by these “deals.” Clearly this hasn’t worked as planned.
While sourcing electricity through robo-calls may not be a good solution, there are plans that work for communities and Massachusetts residents. The law allows for Community Choice Aggregation (CCA), which means a city may bundle all the residential users into a single buying group, accept bids to supply power for the group, and choose an electricity supplier other than the utility. Expert energy aggregators are brought in to run the program, unsavory vendors are easily weeded out of the aggregation, and residents may opt out without reason.
Is this a good deal? Utilities, like National Grid, go to the market every six months to contract power. Therefore, a separate aggregation deal that is cheaper than the utility today, may be more expensive in the future. It all depends on the ability to beat the utility consistently over time. If it works, the savings are generally modest: $5 to $10 per month per household. However, there are other reasons to do this. Residents may decide it’s better to have a fixed rate for several years instead of having bi-annual fluctuations, making budgeting easier. Also, residents may want the option to source the electric power from sustainable suppliers such as wind and solar. And, the city of Newburyport is working to become net zero on its carbon emissions by 2050 in line with its 2017 Master Plan. So, there are good reasons to use CCA.
Newburyport is evaluating a variation of CCA that offers our residents a lower price than they would get from the utility while using sustainable power from sources such as solar. It combines three state programs: Community Choice Aggregation, community solar, and net-metering. Community Solar is another program you may have been getting calls about. Under the new solar rules in Massachusetts, developers get an incentive payment for having residential customers. This lets them offer residents a discount from the utility over a long period of time, typically 20 years. Under these deals, whenever the utility changes their pricing, so does the solar company, but always to a rate below the utility. Net-metering is the mechanism allowing a solar farm in one area of the state to sell its power elsewhere.
By combining these different programs all the transactions are done at the wholesale level, reducing the marketing costs. Our group in Newburyport is working on the details that need to be finalized. Normally community solar requires a signed agreement for each participant. We would like only a single agreement with the CCA to cover it. Also, in community solar, the bookkeeping can be awkward as residents will get two separate bills – one from the utility with a credit from the solar company, and another from the solar company that they pay. We are working to get this all on one bill to reduce confusion. It will be a regular bill from the utility with some extra lines and the amount to be paid will be less. And finally, we are working hard with our aggregation partner, Colonial Power Group, to draft a program that will get this to work smoothly for our residents, provide options, streamline billing, and reduce costs. When the program is drafted it will be reviewed by the city and have public hearings before it is implemented.
We will provide more information of the program when the details are hammered out. This is one part of the implementation of the 2017 Newburyport Master Plan to move our energy sources to renewables.
Michael Strauss is a member of the Newburyport Energy Advisory Committee.