Aggregation Programs in Nearly Half of Towns
By Meg McIntyre Special to State House News Service
With the launch of Boston’s new Community Choice Electricity program this month, nearly half of all Massachusetts municipalities are now buying electricity on behalf of their residents in an effort to provide cheaper, greener power.
As of January, the state had approved 168 municipal aggregation programs, which allow local governments to procure and provide electricity at competitive rates. Advocates say the initiatives give cities and towns more control over their power sources, and often offer lower rates than utilities for consumers.
Communities that have enacted such programs see them as a way to save money for residents while making progress toward carbon reduction goals – and they expect that the number of aggregation programs in Massachusetts will continue to grow.
Here’s how it works: After developing a municipal aggregation plan and gaining state and local approval, municipalities select a broker to solicit bids from different energy suppliers. Communities then choose a supplier based on cost and the desired amount of electricity from renewable sources. Unless they opt out, consumers are automatically placed on the default plan chosen by the city or town, and they’ll continue to receive their monthly bill from the local utility – but often at a lower price point.
“Bellwether For The State”
Cities and towns in Massachusetts have had the option to pursue municipal aggregation since 1997, although most programs have launched in the last five years or so, said Julie Curti, senior clean energy and climate planner for the Metropolitan Area Planning Council.
“It took a little bit more time and I guess some test cases for municipalities to see how the program could work for it to really start to grow,” Curti said. “So I think once a few communities ran programs successfully, it set a template and a model others have followed.”
Boston’s program is now the largest in the Commonwealth, and officials told the News Service they hope the city can offer an example for other communities. Christopher Cook, Boston’s chief of environment, energy and open space, said the program is part of the city’s commitment to environmental justice and one of its goals is to make renewable energy more accessible to residents who are socially vulnerable and have likely been disproportionately impacted by climate change.
“I do think that we are a strong bellwether for the state just because of the amount of people that we represent and the diversity of the people that we represent,” Cook said. ” … If we’re able to actually achieve our climate goals with renewable energy, that means that others around the Commonwealth, despite their concerns around potential costs, are able to do that as well.”
Under state law, retail electricity providers must source a certain percentage of their power from qualified renewable energy facilities. Through aggregation, communities can offer different tiers of service with varying levels of renewable energy above that standard, giving consumers the ability to choose “greener” options. In Boston, roughly 700 residents have signed up so far for an option to receive 100 percent of their electricity from renewable sources, according to Cook, which is offered at a slightly more expensive rate.
The city’s default plan will source roughly 28 percent of its electricity from renewable facilities during its first nine-month contract with energy supplier Constellation, which is 10 percent above the 2021 state standard of 18 percent.
“With a lot of aggregation programs we’re seeing them go five percentage points, 10 percentage points, much higher beyond that standard to procure more green electricity for their consumers,” Curti, of the MAPC, said. “And that’s, from a local level, probably one of the most if not the most impactful ways to reduce emissions if you’re trying to meet climate goals.”
Towns Band Together
Though many municipalities cite the potential environmental benefits of aggregation, cost-savings are also a big motivating factor. In Plymouth, where a program has been in place since 2017, local residents and businesses have saved roughly $7 million on electricity costs over three years, according to energy officer Patrick Farah.
Local governments can also partner to form aggregation programs, which some smaller communities are eyeing as a way to increase their purchasing power. In August, for example, 12 towns in Franklin County and one in Hampshire County joined together to launch a community power initiative.
“The problem is in western Mass, we have a lot of very small towns. And none of our towns buys enough electricity to be able to get a decent rate when we go out to bid,” Bob Armstrong, a Conway selectman who helped spearhead the effort, told the News Service. “But if we can get 10 or 15 towns together that all went out to bid together – we’re not Boston, but we’re certainly big enough to attract a good rate from just about all the major electrical suppliers.”
Officials noted that the biggest concerns they heard from residents while doing program related to the requirement to opt-out if they want to continue using the local utility as their electricity supplier. Cook said that reluctance may have something to do with “predatory” practices used by competitive electricity suppliers that offer misleading introductory rates that later skyrocket, and often go door-to-door or leave mailers in low-income neighborhoods.
In 2019, Attorney General Maura Healey called for legislation to limit residential solicitation by these suppliers. Her office found that between July 2017 and June 2018, Massachusetts residents who switched to an independent competitive electricity supplier spent $76.2 million more than they would have with their local utility.
In municipal aggregation programs, rates are locked in for the length of the municipality’s contract, and many allow consumers to opt-out or opt-in at any time with no penalty. Local officials should be thorough when selecting a broker to ensure that these protections are in place for residents and business owners, Farah said.