BARNSTABLE – Following up on a requirement from state regulators prompted in part by its critics, the Cape Light Compact is taking another look at the original blueprint for how it operates.
The so-called aggregation plan was crafted 14 years ago, compact administrator Margaret Downey said during a presentation Wednesday before the group’s board of directors on potential revisions to the document.
“Aggregation plans are static documents,” she said.
The plan was created to win state approval for the compact’s activities, which include buying power in bulk for the majority of electric customers on Cape Cod and Martha’s Vineyard, but the organization’s operations are now guided largely by an intergovernmental agreement among its members, Downey said.
Changes to the aggregation plan, however, will help clarify “what happens and what has happened,” she said.
The original plan, approved in 2000, “may no longer fully and accurately reflect the compact’s current operation of its municipal aggregation plan,” Massachusetts Department of Public Utilities general counsel Rebecca Tepper wrote in an Aug. 27 letter to the compact’s attorneys.
In the letter, Tepper instructed the compact to review its plan and determine whether a revised version should be filed.
“In order to minimize confusion and ensure that the municipal aggregation plan adequately describes the program, the compact, at a minimum, should consider removing references to standard offer service and Commonwealth Electric Company,” she wrote.
The compact was formed in 1997 to aggregate the buying power of electric customers on the Cape and Vineyard, provide energy-efficiency programs for local businesses and residents, and advocate for ratepayers. The DPU approved the compact’s original aggregation plan in 2000.
Since that time, the compact appears to have succeeded in meeting the second and third goals. At different periods, however, the cost of its power has exceeded the rates offered by NStar, which delivers power on the Cape and Vineyard, costing local ratepayers tens of millions of dollars over what they would have paid under the utility’s basic supply rate in the past decade.
In recent years, critics of wind energy projects on the Cape also have argued that the relationship between the compact and the Cape and Vineyard Electric Cooperative, which was formed in 2007 to pursue renewable energy projects, is inappropriate. The compact has financed the cooperative’s activities to date and the two organizations have shared legal representation, staff and directors, an arrangement supporters say makes sense because of the overlapping interests of the two groups.
Members of the Barnstable County Assembly of Delegates, however, have raised concerns about the relationship, and the legislative board is expected to take up a resolution in December asking the state’s inspector general to open an investigation into the two organizations.
Many of the changes to the aggregation plan amount to housekeeping, such as removing references to Commonwealth Electric – now a part of NStar and its parent company Northeast Utilities – and a requirement that the compact’s price be lower than the “standard offer,” which was a power supply rate offered by the utility for a specific period.
“There is no longer a requirement to be lower than what doesn’t exist,” Downey said.
Other changes are more substantial.
The compact’s procurement process, for example, will be revised to reflect the current dynamics of the electricity market and the fact that the organization now has a chief procurement officer, Downey said.
In addition, the “mil adder” – a surcharge based on a small percentage of a cent for each kilowatt hour sold – will be renamed “operational adder” to better reflect that it is used for the cost of operations, she said.
The proposed changes would include thresholds that the balance of unreserved funds the compact holds could not exceed, Downey said.
“You don’t want to sit on millions of dollars in ratepayer funds without a use of those funds,” she said.
Expenses from the operational adder would be made through the compact’s appropriation budget, she said.
The plan also would include references to the state’s Green Communities Act as well as the compact’s three-year energy efficiency plans, Downey said.
The state is reviewing a proposed aggregation plan from the city of Lowell and the compact will need to align its plan with whatever the state decides in that case, Downey said.
For many years, the compact was the only municipal aggregation, but now there are several, said Jeffrey Bernstein, the compact’s attorney, adding that the compact is the only one that administers its own programs rather than using a broker.
“There is nobody else like the compact,” he said.
If the DPU rules on Lowell in time, the compact could vote on the proposed changes at its Dec. 11 meeting, followed by a 30-day public comment period and submission to the DPU, Downey said.
The compact also must consult with the state Department of Energy Resources on the proposed changes, she said.
That department is planning an initial conversation with compact officials about the plan at the beginning of December, agency spokeswoman Mary-Leah Assad said.
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