INCREASING COMMUNITY CHOICE IN LOCAL ENERGY
How communities can save money, go green, and control their energy futures
by Tim Cronin, Policy Fellow
A growing number of Massachusetts communities are boosting their use of renewable energy and cutting electricity costs for local businesses and households by rethinking traditional utility contracts. Known as municipal aggregation, the practice allows cities and towns to switch everyone in the town over to cleaner energy. The energy is still billed and distributed through the town’s original utility (i.e. National Grid and Eversource).
By doing this, communities can get a better price and ensure that their energy is produced with cleaner sources than the basic service offered by utilities. The state can do more to help encourage green municipal aggregation by expanding educational support for municipalities.
How it Works
Municipal aggregation (sometimes called ‘community choice aggregation’), was established first in Massachusetts to allow for important energy decisions to be made on the local level rather than by investor-owned utilities. Although originally envisioned as a way for residents to switch to cheaper electricity sources, the framework can easily be used to shift resources to cleaner energy sources.
The process of adopting a green municipal aggregation plan usually starts with business leaders and residents engaging with municipal officials. This can be done on a grassroots level through a local community organization, a group formed by the interested residents, or by reaching out to city leaders directly.
Once the idea has gained enough political support, the local council will pass a resolution supporting a green aggregation plan. The city will create and submit a plan to the state for approval. After receiving state approval, the municipality can find and contract with a supplier, and households and small businesses will automatically start receiving electricity from the new supplier.
It’s important to note that electricity is still transported to the consumer via the old utility (Eversource, National Grid, etc.), and is paid for by paying a bill provided by that utility. If a ratepayer doesn’t want to participate in the new aggregated electricity, they may opt-out at any point and instead pay for the utility’s basic supply. This is why many call it community choice aggregation – no one is forced to participate if they don’t want to.
In addition to greater local control, two direct benefits of participating in green aggregation are the potential cost savings for ratepayers, and increased access to clean energy.
Ratepayers, especially local businesses and households, save money with aggregation because aggregated electricity rates are often lower than the basic service rate charged by the utility. This is because cities and towns cans hop around for suppliers who charge lower rates.
An example of this is the town of Melrose, one of the first to adopt a green municipal aggregation plan. In their first year Melrose saw town-wide savings of $200,000, despite wholesale electricity prices being historically low that year. Because these savings come out to about $23 per Melrose resident, the money saved can be recirculated back into the economy in the form of increased local spending. What’s more, community savings will only increase as renewables in the state become more widespread and cost competitive in the future.
[source: Metropolitan Area Planning Council, Factsheet, “Greening Our Grid through Municipal Aggregation”]
The second major benefit of municipal aggregation is that it allows community members easier access to clean energy. Current state law requires that 12% of a utility’s electricity comes from renewable sources, a number that increases by 1% per year. Although a good start, this requirement is too low and increases too slowly to meet the challenge we face with climate change.
By adopting green aggregation, a community has the ability to increase the amount of renewable energy it purchases beyond utilities’ minimum requirement, which does more to reduce carbon emissions. Aggregation also gives business owners and households the ability to be proactive in preventing future climate change in a way that is more accessible than installing solar arrays on their property.
Green aggregation has gained momentum in Massachusetts in recent years, with half a dozen communities across the state participating, and a dozen more beginning to create municipal plans. But there is more that can be done to encourage green aggregation.
The greatest challenge for communities is the availability of guidance and education on green municipal aggregation. Through the MAPC (Metropolitan Area Planning Council), communities near the Boston area have access to resources and advice on how to implement a green aggregation plan and hire a consultant. The challenge is making sure the 250 communities outside the metropolitan area have equal access to guidance on green aggregation. Oftentimes the biggest challenge to green municipal aggregation doesn’t come from local groups, but from confused residents and businesses who don’t fully understand its benefits.
[Source: WBUR News]
Green municipal aggregation is one tool communities can give to local businesses and households to combat climate change, and help their local economy. With the right encouragement and education, the number of towns and cities adopting green aggregation plans can hopefully increase. In this way citizens, business leaders, and municipal governments can take ownership of their energy future.
About the author: Tim is an economics and politics student at Stonehill College. This past year he had the opportunity to study at Oxford University, exploring global governance, human rights law, and int’l economics. As a senior, Tim will serve as student-body president and continue to fight for sustainable initiatives such as fossil fuel divestment and expanding the college’s solar farm. He has interned at the State House and serves on the board of his local civic association. Tim enjoys reading The Economist, listening to podcasts, and exploring state parks in his free time.