Viewpoint: Aggregation can lower constituents’ utility bills (with related video)
Local governments devote much attention to delivering valued services while trying to hold the line on taxes. Now, remarkably, a growing number of jurisdictions around the country are providing their communities with an exciting, new benefit: they’re lowering their constituents’ utility bills.
Enabled by legislation in states with deregulated energy supply markets, savings arise through a process called “energy aggregation.” It’s presently permitted in California, Illinois, Massachusetts, New Jersey, Ohio and Rhode Island, and is under consideration in several other states.
Under this energy procurement model, local jurisdictions exercise the option to pool — or “aggregate” — the electric load of their residents, businesses, institutions and municipal accounts. They then purchase electricity on their constituents' behalf, using the negotiating power of a large buying group.
As bulk buyers, participating municipalities obtain the supply deal that makes the most sense for their individual community or communities. Residents are always permitted to “opt out” of the group purchase — and continue to buy energy from their current supplier.
Pricing is competitive, and purchasing models can be tailored to suit a community's wishes. Qualified energy service companies (ESCOs) guide municipalities through the entire process to ensure satisfactory results.
For example, Plumsted Township, N.J., launched an aggregation program in January on behalf of its 8,400 residents. As a result, Plumsted has reduced its power supply charge by 14 percent under a one-year initiative that delivers annual savings of approximately $165 per customer. The sponsor of the New Jersey legislation that established the ability to aggregate said communities overall can expect to save “tens of millions of dollars.”
Some communities leverage their bulk purchasing power to achieve sustainability-related objectives. They’re purchasing renewable supply, cutting greenhouse gases, and in some cases tapping locally generated power supplies, which boosts local economic development.
Aggregation delivers across-the-board benefits. If your state permits aggregation, look into it. If not, local communities may want to consider advocating for it with their state representatives.
Richard D. Rathvon is vice president for retail commodity services for Valhalla, N.Y.-based ConEdison Solutions, one of the national energy service companies now assisting municipalities with their aggregation programs. Rathvon has more than 25 years of experience in the energy services industry, with a focus on retail energy businesses.
ConEdison Solutions is an energy services company that provides competitive power supply, renewable energy, sustainability services, and energy solutions for government, commercial, industrial and residential customers.
Learn about standard government energy aggregation programs in this video.