A small but growing number of cities and towns are negotiating new electric contracts for their residents to boost renewable energy use in Massachusetts, bypassing the basic service offered by utilities such as National Grid and Eversource.
The practice is called municipal aggregation.
“Traditionally, it’s been much more used as a practice to achieve savings and provide much more price stability,” said Cammy Peterson, director of clean energy at the Metropolitan Area Planning Council. “The innovation is that piece where they’re also using it as a tool to advance renewable energy in a supply.”
Melrose was among the first Massachusetts communities to use municipal aggregation as a way to increase the use of renewable energy. Its plan, which went into effect last January, mandates that renewable sources be used to generate at least 17 percent of the electricity coming into the town. Massachusetts regulations require that renewables make up at least 12 percent of the statewide energy portfolio.
Martha Grover, energy efficiency manager for Melrose, said she’s recently fielded calls from several communities considering similar plans.
Dedham launched its own program last year. Eight other communities – Arlington, Brookline, Gloucester, Hamilton, Millis, Somerville, Sudbury and Winchester – are currently working with the MAPC to launch their own green municipal aggregation programs.
“I think with this program, people feel like they have a good alternative, and they have a sense that the city is monitoring it and looking out for them,” Grover said. “We have a consultant and broker helping us to work to get the best price. On top of that is additional 5 percent local renewable energy we’re investing in.”
According to the MAPC, which helped Melrose develop its plan,residents saved an average of $23 per household on their electric bills, or $200,000 citywide in the first year of the program. The amount of additional renewable energy purchased was the equivalent of adding a new, local 1-megawatt wind turbine.
How the process works
Utility providers such as National Grid and Eversource operate the power lines that deliver electricity to homes, but they don’t produce the power. Instead, they negotiate rates for their customers with third-party suppliers, then charge a delivery fee. The process is referred to as “basic service.”
While most residential electric customers opt for basic service, Massachusetts law allows residents the option of signing a contract with any licensed power supplier.
Using the power of bulk purchasing, some cities and towns have decided to negotiate contracts with suppliers on behalf of all their residents in an effort to secure lower, more stable rates.
Municipal aggregation does not come without risks. There is no guarantee that the rates will be lower than the basic service rates offered by National Grid, Eversource and other utilities.
Customers can opt out at any time, either returning to basic service or securing their own contracts.
The state Department of Public Utilities lists more than 90 communities with approved municipal aggregation plans, but only a handful require renewable energy use above the state-mandated level of 12 percent.
Peterson said she expects the number of communities inserting renewable energy clauses into their municipal aggregation contracts to increase in the coming years, potentially launching a new trend.
“It really is just a handful getting off the ground, but it’s scaling up pretty quickly,” she said.
The next wave
Once the additional eight plans are up and running, the MAPC projects the collective impact could result in 17 new, local 1-megawatt wind turbines. Increased demand for local renewable power will lead to more renewable energy infrastructure being built, Peterson said.
Brookline’s green municipal aggregation plan was approved by state regulators in April. The town is preparing to put its electricity contract out for bid in May.
While green municipal aggregation plans enroll residents in a default level of service that delivers additional renewable energy at a rate that’s 5 percent higher than the state baseline, Brookline is taking a much more aggressive approach.
Brookline is increasing its renewable energy use to 25 percent above the state requirement.
“We are trying to beat Eversource’s prices and take advantage of bulk purchasing power to do so,” said Maria Morelli, a senior planner in Brookline’s department of planning and community development. “Still, a foundation of our program has also been listening to residents who want to do more. They want to have more of the electricity they purchase come from renewable sources.
The green aggregation programs automatically enroll residents into a default level of service. Residents can then select from a series of options with varying renewable energy components, ranging from the state minimum level to having 100 percent of their power come from renewable sources. Generally, higher renewable components come with higher rates on customers’ bills.
Arlington is also preparing to put its plan out to bid. Its default service will include an additional 5 percent renewables above the state requirement. Customers will then have the chance to opt down to the state minimum, or up to 100 percent renewable power.
Even with the default level of renewable energy use set at an additional 5 percent above the state mandate, Town Manager Adam Chapdelaine is confident the plan will save residents money.
“We won’t execute the contract if the rate is not lower than what Eversource’s stated rate is,” he said.
Somerville, which has been working on developing a green aggregation plan since 2005, plans to launch its program this summer. Its plan received final approval from state regulators in April.
“The main two goals we have are price stability and, hopefully, lower prices, along with an opportunity to bring in green energy to New England,” said Oliver Sellers-Garcia, director of the Somerville’s Office of Sustainability and Environment.
Like most green aggregation plans, Somerville’s default level of service will have a renewable component set at 5 percent above the state-mandated level. The city will also offer different tiers of service with higher or lower renewable energy use.
“That has a pretty big impact when you put all 80,000 Somerville residents together,” Sellers-Garcia said.
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