December 19, 2014
Massachusetts

Auburn committee hears energy aggregation presentations

By Ellie Oleson, CORRESPONDENT | Worcester Telegram & Gazette | December 19, 2014 | www.telegram.com

AUBURN – The Wind Turbine and Alternative Energy Committee has heard from three companies interested in helping local residents and businesses cut energy costs through bulk buying, or aggregation, of electricity.

The committee heard presentations from Good Energy, based in New York City; the Hampshire Council of Governments, based in Northampton; and Colonial Power, based in Marlboro.

In 1997, the state approved the Electric Restructuring Act, which deregulated the electricity market and opened competition among electricity suppliers.

Since then, many communities have used “municipal aggregation,” or bulk buying of electricity to save money.

Robert L. Platukis, committee chairman, said he was impressed with all three companies and believes it is vital that the town move forward with plans to buy bulk as soon as possible.

“Town government and school buildings already have contracts that save money on electricity. I save $100 a month on dog food by bulk buying at BJ’s. National Grid raised rates 37 percent,” said Mr. Platukis. “It’s time we looked into bulk buying of electricity for residents. It’s scary for people on a fixed income. It’s time for residents to get a break.”

At the Oct. 21 fall town meeting, members voted to grant Town Manager Julie A. Jacobson authority to negotiate for the purchase of combined electricity for local businesses and residents, who would retain the right to opt out. The purpose of such “municipal aggregation” would be to increase buying power and reduce cost, Mr. Platukis said.

The Alternative Energy Committee was asked to vet companies interested in signing a contract to supply electricity to local consumers at a cheaper rate than that offered to individual homeowners by National Grid. The committee was then to advise Ms. Jacobson.

Mr. Platukis said, “Even if the town manager signed a contract next week, it would be months before we could get through the hoops of state government to start saving.”

Representatives from all three companies said they could save local consumers money through negotiating cheaper contracts for electricity than National Grid can provide.

All three energy brokers said they would serve as an agent for the town and get the best price possible for electricity.

They also said the main question they get from consumers is whether National Grid would fix the lines as usual in case of an outage for aggregation customers. Lines would be repaired as usual by National Grid, and all its budget plans and programs would remain in place, Mr. Platukis said.

“It would be a seamless transition,” since local residents would still get a single bill from National Grid, “only it would cost less,” he said. National Grid still maintains the lines and keeps the money for electricity delivery.

Philip Carr, business development director for Good Energy, said Massachusetts has passed Alaska to have the second-highest rates, after Hawaii, for electricity. One problem is that although there is plenty of natural gas to produce clean energy, there are not enough pipelines, and there won’t be enough until 2019.

He said National Grid’s hands are tied by state regulations when it comes to purchasing electricity.

“They purchase every six months, in March and September, regardless of conditions and cost. It’s not their fault, but it’s not optimal.”

He said that through aggregation, “we can buy anytime, in bulk, when prices are low. I can guarantee you we will get the lowest rate in the market.”

Good energy would act as an agent for the town for one-tenth of a cent per kilowatt hour provided.

He said Good Energy already buys electricity for 600,000 customers, mainly in Illinois and New Jersey, and recently won a bid to provide electricity to 130,000 households in the Southeast Region of Massachusetts, including New Bedford and Fall River.

Brian E. Murphy, president of Colonial Power, said his company “focuses on helping communities manage aggregation programs. We are licensed by the state to act as brokers. It’s all we do; it’s what we do every day.”

His company has 18 clients in Massachusetts, including Lancaster, Lowell, Lunenburg, Marlboro and Winchendon.

The first step in Auburn would be to develop a local plan, and then to submit that to the Department of Energy Resources, followed by the Department of Public Utilities.

Once state approval is obtained, Colonial would get bids from electricity providers and execute an energy contract at the best price possible.

Mr. Murphy said Colonial’s fee is embedded in the contract as one-tenth of one cent per kilowatt hour provided.

He warned that “bottom feeder retailers are offering deals that look good, but aren’t,” while those residents who do not opt out and remain with the town’s aggregate program will enjoy “control, transparency and stability.”

Bernard R. Kubiak, regional services specialist for the Hampshire Council of Governments, said his nonprofit council serves 39 Massachusetts communities in its municipal aggregation program. Eight towns in Worcester County participate: four Brookfields, Barre, Upton and New Braintree.

He said the council has the largest aggregation program in the commonwealth and “reinvests 100 percent of funds in Massachusetts. We are local, we are trusted, we are a public nonprofit, we work for you. We exist to save you money, not owners or shareholders.”

He said if the town wanted, the council could create a “green” custom program using more renewable energy than is required by the state.

He said the council is both a broker and a supplier of electricity, and would charge one-half of one-tenth of a cent per kilowatt hour if the council is both broker and supplier, and up to two-tenths of a cent per kilowatt hour if the council was broker only.

“The bottom line is getting the best rate for the citizens. We’ll find you the lowest rate,” he said. “The goal is to work with the town to save the residents’ money.”

The committee’s next meeting to discuss possible recommendations to Ms. Jacobson and selectmen is scheduled for 5:30 p.m. Feb. 2 in Town Hall.