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Cape Light Compact rates fail to remain competitive  

Credit:  By Patrick Cassidy | Cape Cod Times | July 02, 2013 | www.capecodonline.com ~~

When the Cape Light Compact was formed in 1997, the pitch was simple: The organization would buy electricity in bulk at lower prices for customers on Cape Cod and Martha’s Vineyard, provide locally controlled energy-efficiency programs and represent the ratepayers.

More than 15 years later, measuring the compact’s success is decidedly more complex.

Although the organization is frequently praised for its energy-efficiency programs and advocacy efforts, its power-purchase program – a primary reason for its formation – has cost the region tens of millions of dollars over what customers would have paid for the basic power supply offered by NStar.

The compact’s latest residential rate, announced last week, is 8.129 cents per kilowatt-hour from July through January 2014, an increase of about a half-cent above the compact’s rate for the past six months and slightly more than a half-cent over NStar’s basic supply rate of 7.506 cents per kilowatt-hour for the next six months.

Brewster resident and vocal Cape Light Compact critic Christopher Powicki has run the numbers, verified by the Times, that show a conservative estimate of at least $30 million and upwards of $40 million in additional costs to the compact’s customers over the past decade.

“The compact’s power supply program was formed to give local consumers the best electric rates and clearly it’s failed,” Powicki said Monday.

New electric customers on the Cape and Vineyard are automatically signed up for the compact’s power supply program, contracted through ConEdison Solutions, but can opt out in favor of NStar or another alternative.

The compact initially had almost 200,000 customers on the Cape and Vineyard but that number has fallen as customers migrate back to NStar or to other power suppliers. Last year, the compact had about 140,000 customers, according to its senior power supply planner, Joseph Soares.

There have been times when the compact beat NStar’s prices, but those slight differences were wiped out during two periods when the compact’s purchasing strategy failed in comparison to NStar’s: in 2006 after hurricanes Katrina and Rita, and in the wake of the economic collapse of 2008.

During those periods the cost of the compact’s power was higher than NStar’s by 1.7 cents to 3.5 cents per kilowatt-hour – as much as $20 per month more on an average residential bill.

Now, the compact’s newest rates are about a half-cent higher per kilowatt-hour than NStar’s basic supply rate.

The compact’s officials argue the organization does more than just supply electricity and that it has saved ratepayers money through energy efficiency and advocacy.

“I will admit that the Cape Light Compact customers have paid more than they would have if they had been with NStar,” Soares said during an interview earlier this year.

Although he disputed Powicki’s figures, Soares said that the compact’s residential customers paid an average of $0.0036975 per kilowatt-hour more for their power over the life of the compact’s program. When that figure is multiplied by the average customer’s 650 kilowatt-hours per month and the figure of 140,000 Cape Light Compact customers, the total cost is slightly more than $40 million.

Still, the compact saved consumers money by advocating for them during the sale of the power plant at the Cape Cod Canal, intervening in NStar’s pursuit of long-term renewable energy contracts and through energy-efficiency programs, Soares said.

The compact also fought attempts by NStar to spread the cost of renewable energy premiums over its distribution customers, which saved Cape and Vineyard customers $111 million, Soares said.

The decision to lock in prices that appeared extraordinarily low at the time admittedly hurt customers, but the compact’s power-supply program is only one part of its services, Soares said.

Powicki argues that the compact should temporarily shut down its power supply program until it can secure a better price.

“They can continue to operate their energy efficiency without an active supply program,” he said. The state gave the compact that right during a Department of Public Utilities proceeding, he said, although the compact would have to be trying to re-establish its power-supply program.

Other so-called municipal aggregators in the state have suspended their supply programs and restarted them later, Powicki said.

The difference, according to Soares, is that, unlike those entities, the compact provides energy-efficiency services. He argued in an email to the Times that “in order to administer an energy-efficiency program, the aggregation has to have a competitive power-supply program.”

But in a document forwarded to the Times by the compact’s chairwoman, Joyce Flynn, an editing note indicates that even the compact is unsure whether that restriction is absolute: “State law requires that in order to get energy-efficiency programs, entity must be establishing a program – there is an open question if you have to be actually providing power supply which we want to steer clear of,” reads the note.

The compact does its best to secure the best price in the market and to let its customers know they have a choice of suppliers, its administrator, Margaret Downey, said Monday. But despite the push for deregulation, the state’s competitive market is not robust, she said.

“If somebody came to us and said you don’t have to have power supply to run the energy-efficiency program, I would love to see that,” she said.

In an email to the Times, a spokeswoman for the DPU wrote that the department is investigating whether aggregators that provide only power supply may suspend their programs.

“In regards to the compact, the department has found that if an entire town has opted out of the compact’s supply program and … therefore the customers are served by NStar Electric Company’s basic service or an alternative competitive supplier, then the compact cannot administer the energy-efficiency programs for that town,” DPU spokeswoman Mary-Leah Assad wrote.

Source:  By Patrick Cassidy | Cape Cod Times | July 02, 2013 | www.capecodonline.com

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

The copyright of this article resides with the author or publisher indicated. As part of its noncommercial effort to present the environmental, social, scientific, and economic issues of large-scale wind power development to a global audience seeking such information, National Wind Watch endeavors to observe “fair use” as provided for in section 107 of U.S. Copyright Law and similar “fair dealing” provisions of the copyright laws of other nations. Send requests to excerpt, general inquiries, and comments via e-mail.

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