The CCA energy supply option

Community choice aggregation helps municipalities give consumers a chance to benefit from third-party suppliers

Thoms Carter FreedomWe have all seen them. A suspicious postcard promising a magically low electricity rate. A phone call from someone you think is from the utility somehow “lowering electricity cost.” Since energy markets began deregulating in 1996, the individual consumer has been subject to predatory business practices, failing to achieve benefit from the disruption of industry.

Over 90% of commercial utility accounts find advantage in third-party supply. Yet less than 15% of residential consumers find third-party supply worth navigating. The quantity of kilowatt-hours purchased is clearly a leading factor.

Because households are a low priority, they receive lower-quality contracts fraught with rate pass-throughs and “gotchas.” If the consumer succeeds in dodging those, simply missing the renewal month may cause their supply rate to double or more at the discretion of the supplier.

This alone largely attracts many of the lower-quality suppliers to the market, even spawning multi-level marketing models into the supply industry. All the while the “blue-chip” suppliers cautiously serve only the larger energy consumers. But this unfortunate caste system is evolving.

Enter community choice aggregation, or CCA. Newly minted into law, House Bill 286 authorizes your town or city council to form an energy buying group among the ratepayers. This option unlocks the rates, quality of supplier/contract and the subsequent consumer protections. Previously, these protections were only accessible to the large commercial or industrial buyers. The powerful leverage of bulk purchasing makes this possible.

The process is straightforward. With guidance from energy professionals, the town forms a CCA committee to create a CCA plan for their community. This plan can maximize savings, fund community-wide efficiency upgrades, utilize time-of-use pricing or include a town’s renewable generation project.

Last year’s fate of HB 365 (the potential to increase the net metering cap from 1 to 5 megawatts) disappointed advocates and communities. Those hopes are resurrecting as municipalities comprehend the nuanced capabilities of community aggregation.

CCA has the flexibility to advance diverse bipartisan energy initiatives, all using the same program structure. Typically, CCA programs are entirely self-funded and infinitely customizable to the culture and goals of every city or town.

For instance, Nashua intends to include electricity generation from their downtown hydroelectric dam into the CCA rate they will offer to their community. This is a potential win for the city, the ratepayer and for the environment.

Londonderry is beginning its first foray into CCA with a savings offering and the optionality to include their future solar installation.

“We see this as adding value to the town by attracting businesses and residences with an alternative, more competitive ‘standard offer rate’,” said Londonderry Town Manager Kevin Smith. “This has been proven in other states. Londonderry is proud to lead the way in this manner of local economic development for our community.”

After formation, the CCA plan moves through municipal approval process and then progresses to RFP. Suppliers bid for the bulk load inclusive of mandated specifics such as the local hydro, etc. If the leadership receives a desirable rate and term from the RFP, they may extend that offer to the community. Upon launch, the chosen supplier notifies every utility account by postcard of the upcoming enrollment with an ability to opt out.

Protections remain in place for accounts already served by third-party supply, on utility assistance or with individual solar behind their meter. The utility assists the supplier with enrollment of all other accounts.

Residents may opt in or out at any time. CCAs are free from early termination fees, “hold over” or “out of contract” charges. The consumer is free to enjoy the community aggregation rate, the utility standard-offer or search for an alternative third-party supply of their choice.

Neighboring states, such as Massachusetts, have surpassed 150 communities utilizing CCA. This further confirms that combining the best facets of consumer choice, cooperative partnership and localized management is fast becoming the most compelling supply option in deregulated states.

Finally, this electricity rate postcard is one we actually want to receive.

Thomas T. Carter is director of business development and public relations at Auburn-based Freedom Energy Logistics. He can be reached at thomas.carter@felpower.com.

Categories: Energy and Environment

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