Community Choice Aggregation, Potentially Bringing Electricity Cost Savings, Is on the Horizon
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Aggregate means to form separate units into one group. In its simplest terms, a community choice aggregation program for electricity means a municipality can gather together residents and small businesses and act as one customer purchasing electricity. Southampton Town is looking to do that. On April 26, officials held an information meeting about Community Choice Aggregation (CCA), the second in a series of meetings on the topic. The town believes CCA has the greatest potential to bring renewable energy into the community in a relatively short period of time without the disruptive infrastructure improvements that might otherwise need to take place, Deputy Supervisor Frank Zappone said, opening the gathering. CCA could also provide electric energy cost savings to Southampton Town residents. As the town continues to investigate CCA’s potential, officials want to continue to inform people about it, Zappone said. Lynn Arthur, founder of Peak Power, Long Island, which provides education and outreach about renewable energy to municipalities, facilitated the discussion. She’s a CCA program community organizer for the town, working with consultants from Joule Assets, a provider of energy reduction market analysis, tools and financing retained by the town. “It is no less than remarkable, what the Town Board and town staff has accomplished with the assistance of Joule Community Power and New York State Assemblyman Fred Thiele,” she said. With the last obstacle over billing with LIPA cleared, she said, “It’s taken four years to arrive at a moment where the Town of Southampton is considering issuing a bid through the state’s CCA program.” If the Town Board proceeds, the program will provide residents and businesses with the chance to have an additional choice for a renewable energy supply at competitive prices. In short, CCA is a tool enabling the town to aggregate all residents and small businesses together and negotiate a bulk purchase price for electricity. In 2016, state officials came up with CCA to enable municipalities to get competitive rates on what’s known as a pass-through rate — the rate LIPA/PSEG Long Island charges for such aspects of their service as the cost of fuel and oil used to produce electricity along with the cost of purchasing electricity directly. Long Island is unique in the state, which has 11 zones where electricity is supplied. It’s the only area that has just one supplier, described as its “default” supplier. CCA allows the municipality to pick a supplier who offers the most competitive rates. The town can also request renewable energy supply. For the year ending June 2022, CCAs in the state had served over 257,000 customers in 64 municipalities, saving them an estimated $28.798 million, while generating 1.5 million megawatt hours of renewable energy, Arthur reported. Explaining how the program would work for individuals, Arthur said customers don’t have to sign contracts and there are no exit fees. Southampton officials could go out to bid, using the usage of the entire town. “Think of it as buying in bulk,” Arthur said. If the town changes supplier, the roles of LIPA and PSEG stay the same — customers can still call them to report outages, they still get one bill. Customers are enrolled on an opt-out basis. The state decided to do it like that because when you can aggregate the majority of people, you have a large enough pool of buyers to get better pricing and negotiate terms, Arthur explained. People already contracted with a third party electricity supplier, or those using the Home Energy Assistance Program federal assistance program are not automatically enrolled. After a bid is accepted, a 30-day opt-out period begins before the program launches. This fall, town residents will get a mailer comparing the choices and prices to their regular bill. They can opt out with a phone call or by returning a postcard that comes with the mailer. Even after the CCA program launches, people can still opt out. The new supplier will be identified on the electric bill beginning with the first meter read during the winter of 2024. The town’s CCA administrator is asking suppliers what options are available, such as a fixed price or a quarterly variable price, as well sources for renewable energy. “That last will green the Long Island grid,” Arthur predicted, adding “yay.” The program will also offer rates depending on how much renewable energy a customer wants; he or she could ask to get 100 percent renewable energy or less. The program is governed by the state’s public service commission and, Arthur informed that due to two bills authored by Thiele and signed into law, LIPA must comply with any changes the commission orders to the program. Offering additional facts, Arthur said that CCA doesn’t replace the utility company; it’s still responsible for delivery and maintenance of the grid and billing. “There’s no impact to the reliability of electricity delivery,” she said. The program does not guarantee savings. “Sometimes the rate is higher, sometimes it’s lower, but over the time horizon of the contract, we expect it to be more cost effective,” Arthur explained. Right now, Long Islanders are paying the highest rates in the state. If there were, for example 40,000 households using 1,000 kilowatt hours a month, and officials were able to negotiate a reduction of just a quarter of a cent in that pass-through rate, it would mean a savings of $1.1 million per year, Arthur said. Proponents are conducting a 60-day outreach, expected to end in May. The Town Board will decide then whether to send out a request for proposals, with bids due at the end of July. If the bidder is chosen quickly, contracts could be negotiated by the end of August. The opt-out period of 30 to 60 days for individual residents commences when the informational mailer goes out. CCA could launch by January of next year. Another informational session will be held on May 17. |
In Southampton, New Options for Energy
An ability to negotiate rates while ‘greening’ the grid
In a C.C.A. program, a municipality enters into contracts with energy service companies for power supply purchase options within its jurisdiction that can provide power produced through 100-percent-renewable sources, nonrenewable sources, or a blend.
Town of East Hampton |
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With all hurdles overcome, Southampton Town is poised to become the first municipality on Long Island to implement a community choice aggregation program, a model that replaces the utility as the default sole supplier of electricity or natural gas and gives municipalities the opportunity to seek lower prices from alternative suppliers. Under the plan, Southampton aims to aggregate residents and small businesses to negotiate a bulk purchase agreement for renewable, emission-free electricity. In a C.C.A. program, a municipality enters into contracts with energy service companies, known as ESCOs, for power supply purchase options within its jurisdiction. Options include power produced through 100-percent-renewable sources, power produced through nonrenewable sources, or a blend. Residents and small businesses can opt out of the program at any time. New York State approved a C.C.A. tariff, or set of rules and procedures, in 2016. To date, there are more than 150 C.C.A.-enabled communities. For the calendar year ending June 2022, around 250,000 customers in 64 municipalities saved $28 million, in aggregate, on their electricity bills while “greening” the state’s electrical grid with 1.5 million megawatt hours of renewable energy. Southampton, which has set a goal of achieving all of its energy from renewable sources by 2025, passed C.C.A.-enabling legislation in 2018, followed by municipalities including East Hampton Town, Southampton Village, and Brookhaven and Hempstead Towns. But a C.C.A. program within the Long Island Power Authority’s service territory faced several obstacles. As a self-regulating entity, LIPA is the only electrical utility in the state that is not under State Department of Public Service jurisdiction, and the P.S.C.’s initial order did not fully account for the complexities of LIPA’s service territory and rate structure. Subsequent bills co-sponsored by Assemblyman Fred W. Thiele Jr. and passed into law require LIPA to comply with the state’s C.C.A. order. In January 2022, the utility amended its rules and procedures to allow competition among suppliers, and in January of this year its board approved consolidated billing, allowing ESCOs and C.C.A. programs to utilize the billing system of PSEG-Long Island, which manages the electrical grid on LIPA’s behalf, to bill their customers. Officials of Joule Community Power, which Southampton hired to administer its C.C.A. program, spoke at a town board meeting on March 9. Joule represents 56 municipalities and nearly one million New Yorkers, Glenn Weinberg, its vice president of sales and market development, told the board. “Nearly all of them are interested in the same thing that the Town of Southampton is, which is renewable electricity supply at competitive rates. To date, the contracts that have been entered into by those municipalities have performed quite well.” In 2022, Joule customers saved more than $12 million, he said. “Everywhere in the state, your default energy supplier is also your distribution utility,” Mr. Weinberg said. “C.C.A. says that shouldn’t be a state decision of who the default supplier is. That can be a local decision.” Unlike LIPA, C.C.A. can offer a fixed price as well as “an enhanced renewable product customized at the local level.” Joule, he said, is “committed to accessing clean energy markets at competitive rates for those customer classes that have historically been left out of electricity market participation”: residential and small commercial customers. While C.C.A. allows for more competitive rates, “it also enables municipalities to request renewable supply,” Lynn Arthur of Peak Power Long Island, a not-for-profit that Joule selected to serve as its community organizer in Southampton, said in describing the program in greater detail to the public on April 26 at Southampton Town Hall. “C.C.A. enables expanded options: a choice of 100-percent renewable, or as little as no renewable.” C.C.A. features strong consumer protection, she said, because of its tri-party agreement: between the municipality, its C.C.A. administrator, and the electricity supplier. “Instead of signing their contract, they are signing our contract. We are dictating the terms.” At the March 9 meeting, Mr. Weinberg proposed a timeline that would start with a 60-day outreach and education program. That program will conclude on May 31. The town is then expected to issue a request for proposals to suppliers. “We’ve been prepping the suppliers for months on this,” Mr. Weinberg said, “because we’ve been seeing this coming. . . . They’re going to be ready, so when we issue a bid in June, they’ll be prepared to respond with competitive pricing for renewable supply.” “I hope you can see how C.C.A. programs encourage the building of more renewable energy projects on Long Island,” Ms. Arthur said. “This will create jobs, economic development, and it will green the Long Island grid.” It is expected that a contract will be executed in the summer, after which eligible customers in the town would receive a letter detailing the town’s intentions and comparing the C.C.A. supplier’s rates with LIPA’s. Those wishing to participate would take no action. Those wishing to opt out will be able to do so by returning a prepaid postcard, calling a toll-free number, or filling out a form online. East Hampton Town Councilwoman Cate Rogers, the town board’s liaison to its energy and sustainability advisory committee, said in an email on Monday that East Hampton has been “waiting for the ‘logjam’ with LIPA to be sorted out. I understand it has been sorted and we will take up the prospect of offering a C.C.A. to our community as well.” She discussed the issue with Kim Shaw and Samantha Klein of the town’s Natural Resources Department on Monday, she said, and Krae Van Sickle of the energy and sustainability committee, who spoke at Ms. Arthur’s April 26 presentation, “is working on the full report of new C.C.A. onboarding documents for a presentation to the committee at our next meeting,” on May 15. “I’m happy to see we are able to work on this now.” “Wouldn’t it be brilliant if East Hampton (and even the rest of the five towns) could follow Southampton’s lead and hire the brilliant Joule to negotiate on their behalf as well?” Lena Tabori, who also spoke at the April 26 event and is also on East Hampton’s energy and sustainability committee, wrote in an email on Tuesday. “We would accomplish so much more and so much faster if we didn’t always have to invent our own roadmaps but could work, instead, together. Climate change is in a hurry!” |
Press 2022
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