Municipal electricity aggregation really works

Newton’s approach changes the game on renewables

ONE DOWN, 350 to go.

That’s how many cities and towns in Massachusetts do not yet have so-called “municipal aggregation” electricity programs with an ambitious amount of renewable power from sources such as solar and wind.  At a time when Washington is back-sliding and worse on climate change, communities in Massachusetts have an easy way to add green electricity and drive down greenhouse gas emissions.

Massachusetts state law authorizes cities and towns to adopt aggregation programs. These programs allow municipalities to choose the electricity supplier for electricity customers within their borders, rather than having the local utility — such as Eversource — buy the electricity on their behalf.  The utility company continues to deliver the electricity; customers continue to contact their utility if the power goes out; and the utility continues to bill them. The difference is that the city or town selects the supplier of the electricity for customers.  Approximately 140 cities and towns in Massachusetts have municipal aggregation programs, mostly intended to try to save electricity customers money.

Newton just changed the game.  Newton’s program, called Newton Power Choice, includes 60 percent local New England renewables, which is 46 percent above the 2019 14 percent state mandate (i.e., the proportion of renewables that state law requires utilities to deliver to all their customers).  Of the 140 cities and town that have aggregation programs, only about 40 provide electricity from renewables above the state mandate.  But of these 40, not even one comes close to the 60 percent of Newton Power Choice.  Brookline comes closest—at 39 percent, including the 14 percent mandate.  Most of the other 40 cities and towns are at 1 percent or 5 percent above the mandate.

Skeptics will say, “That’s Newton. Newton can afford it.”  But here’s the thing.  At the start of the program, Newton customers will be paying less, not more. They will save money.  When this program goes into effect in March 2019, a typical Newton electricity customer (who uses 710 kilowatt hours per month will get a total of 60 percent renewable energy and will pay $165.89 per month.  That’s $16.48 per month less than that same customer would pay on Eversource’s winter basic service rate, which provides only 14 percent renewable power.

Newton’s electricity contract price will remain fixed for 22 months, while Eversource’s Basic Service rate for residential customers changes every six months.  For that reason, it’s not possible to say for sure that the cost savings under Newton Power Choice relative to basic service will last for the entire 22 months. In fact, it’s unlikely that savings in the magnitude of $16.48 per month will continue for the whole contract term. However, if Eversource’s basic service actually becomes less expensive than Newton Power Choice at any point, customers can return to basic service with no fee, making the program a no-lose proposition for Newton customers.

Under Newton Power Choice, customers can even opt for up to 100 percent renewable energy for an additional $2.91 per month, i.e., on top of the $165.89, which is still less than the Eversource basic service price.  Or they can opt down to the 14 percent state renewables requirement and save an extra $3.34 per month, paying $19.82 less than basic service.

How did Newton do it, buying four times the state mandated proportion of renewables for an initial price that is significantly less than basic service?  It’s not the power of the aggregation that does it; after all, Eversource aggregates customers, too.  Municipal aggregation works because it gives cities and towns flexibility in going out to bid for an electricity supplier.  If a city or town receives bids that are higher than it is prepared to accept, it can simply reject them and try again at another time.  Utilities don’t have that flexibility; state law dictates exactly when they must procure electricity for their customers.

Municipal aggregation is far and away the most effective tactic a community can use to encourage the development of renewable power.  It is a much better option for electricity customers than many of the deals offered by the competitive electricity suppliers who are relentlessly marketing their products.  Some of those deals, unlike a city-vetted program, include prices that rise or vary after an introductory period and have significant cancellation fees.

Meet the Author
Meet the Author

Ann Berwick

Former chairman, Massachusetts Department of Public Utilities
Who can argue with a program that puts the power in the hands of communities to do something about climate change, rather than relying on a federal government asleep at the switch, or driving in reverse?

Ruthanne Fuller is the mayor of Newton and Ann Berwick is the co-director of sustainability for Newton and a former chair of the Massachusetts Department of Public Utilities.