Top 5 Things to Know About Community Choice Energy

The City of Boston has begun the early stages of setting up community choice energy!  As this critical process gets started, there’s never been a better time to understand what this means for you and other Boston residents.

1. What’s in a name?

Community Choice Energy is a tool that’s been used in hundreds of communities across the country and goes by many names: municipal aggregation, municipal electricity aggregation, community choice aggregation, and a few others. The idea is the same: CCE enables the City of Boston to bulk-purchase electricity for City residents.  Buying in bulk comes with a lot of buying power, which allows us to stabilize rates and get more renewables without paying more.  It also means that we can make important energy decisions instead of for-profit utilities and their competitors.

2. Choice is the key word.

Think of CCE like a ‘public option’.  CCE will be the new default, but you can switch to Eversource or a competitive supplier at any time with no penalties. As always, stay informed about competitive suppliers marketing.

3. CCE is for everyone.
CCE allows everyone to be part of the solution to the global climate crisis. While only some people can afford to install solar panels on their roofs, CCE means everyone is able to increase their clean energy.  It makes it a little bit easier to think globally and act locally.

4. CCE is climate-smart.

In 2018, Massachusetts utilities are required to buy at least 12% of their energy from Class I renewables. While this minimum percentage inches up a little each year, climate change impacts are already here and our current goals for renewables are much too slow. With CCE, we can decrease our reliance on fossil fuels and work towards our climate goals

5. CCE means more green, less stress

Monthly energy bills can be a source of financial stress for many Boston families. When it comes to negotiating electricity prices, no one can perfectly predict what the City will be able to get. That said, researchers at Tufts University looked at eight nearby towns that implemented similar CCE programs with 5% additional local renewable energy. In the first half of 2018, these towns averaged 16% lower supply costs than Eversource basic.

 

Here’s more on how it works!

Consumers Don’t Have to Fear CCE

Jon Chesto, one of the Boston Globe’s business writers, has been covering the news about Boston’s process of deciding to implement a municipal electricity aggregation program, what we call Community Choice Energy or CCE. Chesto’s most recent article, published on Sept. 3, failed to mention the reason that Boston is moving forward with CCE: this is the most cost-effective and equitable way to reduce our residential contribution to global climate change.

Extreme heat is one of the ways that Bostonians are most impacted by climate change. We’ve had 21 days of extreme heat — 90 degrees or greater — this summer, and it’s not over yet. Climate Ready Boston’s 2016 Climate Projections Consensus report notes that that average between 1971 and 2000 was 11 days. The pace of climate change keeps speeding up, such that we may have 90 days of extreme heat by 2070.

The people who suffer most from extreme heat are those who can’t afford air conditioning, those who work or live outside, and those who are medically vulnerable. As a matter of climate justice, we must switch to renewable electricity as soon as possible. Making that switch as a whole city makes the transition to renewable energy affordable. This is why CCE is so important.

Chesto’s article also included a statement of concern by a consumer advocate cautioning, “Boston ratepayers should make sure they read the fine print when they receive mailings regarding the city’s electricity-buying program. If they don’t do anything, they would automatically be enrolled in the new program.”This warning makes it sound as if consumers should be wary about Community Choice Energy, and it ignores the fact that Eversource basic supply is also an opt-out program. When you move into a new apartment and want to have electricity, you automatically receive an Eversource account. You may opt out of basic supply by choosing a competitive supplier, but if you don’t, you will be automatically enrolled as an Eversource customer.

Boston’s program will be equally simple: you may opt out if you want, but if you don’t actively chose a different supplier, then the Boston program will be your default. Also, just as with Eversource basic supply, consumers will be able to leave the Boston program at any time — without any cancellation fee. Switching back to Eversource basic supply will be very simple, unlike canceling a contract with a competitive supplier.

Boston’s electricity supply program will not change how Eversource bills us. We’ll still get our bills from Eversource; only the name of the supplier and the rate will be different. Boston’s size should make it able to negotiate rates that are comparable to Eversource’s. According to researchers at Tufts University, eight other towns in eastern Mass. have already implemented programs like the one Boston plans to implement, with 5% additional regionally sourced renewable energy. In the first half of 2018, these towns averaged 16% lower supply costs than Eversource basic.

No one can predict accurately what electricity rates Boston will be able to negotiate when it gets permission from the Department of Public Utilities to request bids on an electricity supply contract. Likely in some six-month periods Eversource will be able to underbid Boston, and in other periods Boston will underbid Eversource. But over the life of that contract, we are very likely to be able to buy at least 5% more green electricity at a comparable rate to Eversource’s dirtier mix. Other towns have succeeded and so can Boston!

CCE savings chart
Source: Woods, Comings, and Stanton, “Boston Community Choice Energy Aggregation and Electric Costs,” Applied Economics Clinic, March 2018.

Boston Takes Next Step on CCE!

Mayor Walsh announced today that the City of Boston will issue a Request for Qualifications (RFQ) for a consultant to design and set up a Community Choice Energy (CCE) program. With this action, the Walsh administration embarks on the actual implementation of CCE.

Readers who remember BostonCAN’s disappointment when the city issued an RFI (Request for Information), and our insistence on a timely RFP (Request for Proposals), may wonder what an RFQ is. Unlike the RFI, which collected data without promising further action, the RFQ announces the city’s intent to issue a contract and invites companies to apply. An RFQ differs from an RFP in that it does not require a proposal (in this case, a program design) as part of the application. An RFQ is more appropriate for CCE because the intent is for the consultant, once hired, to work with Boston’s Office of Environment, Energy, and Open Space (EEOS) and community representatives to design the program.

The RFQ will be issued on August 27, and the deadline for responses is October 10, 2018. EEOS will also form an advisory group of community stakeholders, and we will share more details about that process when we have them.

BostonCAN couldn’t be more thrilled that Boston has decided to move forward with CCE. Not only will CCE reduce greenhouse gas emissions, but it will do so in a way that is inclusive of all Boston’s residents and small businesses. This is truly a win for the entire city.

Questions about Boston’s New Large Scale Renewable Buying Plan

Boston’s Mayor Marty Walsh announced a new plan on Thursday, June 7, to potentially join forces with other large cities around the country to buy into large-scale renewable energy projects together. The initiative will start with an information-gathering phase, to be conducted by Boston and six other cities. Mayor Walsh claimed that the plan will “help power our cities and create more clean energy jobs.”

BostonCAN is excited to see the administration taking this active new step toward carbon reduction. We’re interested in the details of how this large-scale purchasing plan is going to be set up, and what effects it will have, both on our own city and on the country as a whole. Below are some questions that we hope the city will answer as more information becomes available.

Would this project meet the environmental principle of additionality?

The term “additionality” means the extent to which an investment creates more greenhouse gas reduction than would have occurred without it. In particular, we want to know if Boston’s investment would create additional reduction that would not have occurred anyway.

An example of a project that would not meet the additionality criterion would be a wind farm sited in the Midwest. Wind power is already commercially competitive in states with strong natural wind resources and large rural areas with low real estate costs. In these states, market forces are already yielding many wind power projects, which are profitable without government or environmentalists needing to invest in them. Another decision that would limit the additionality of a project would be to put it in a state with a weak regulatory mandate for renewable energy.

Would the city’s investment yield other public benefits to Boston residents besides low-cost renewable energy?

Would our air be cleaner, or our public health improved? Would local innovative energy businesses be stimulated? Would Boston residents gain employment opportunities? In particular, Boston should not try to cut costs by locating clean energy projects in “Right to Work” states with poor worker protections.

How soon could such a plan be implemented?

Climate change is already damaging our cities, and the more slowly we reduce greenhouse gases, the more problems we will have. The potential effectiveness of a project is a combination of how much it will reduce annual emissions and how soon it will start.

A final note: We hope that this new project will not distract from the effort to implement Community Choice Energy (CCE). Multiple industry experts have said that CCE is relatively straightforward. BostonCAN recommends that EEOS follow through with the directive from City Council to set up an advisory group and issue a Request for Proposals to get the ball really rolling on CCE. By implementing it as soon as possible, the city will score a win on carbon reduction even as it explores other promising proposals.

 

CCE is not Rocket Science!

At a hearing on May 30, Boston City Councilors, energy experts, and community members all pressed Alison Brizius, Boston’s Director of Climate and Environmental Planning, for answers she often could not supply. Asked by Councilor Matt O’Malley to project a timeline for implementation of Community Choice Energy (CCE)—the climate mitigation measure passed unanimously by the City Council and signed by the Mayor seven months ago—Brizius indicated that her department, Environment, Energy, and Open Space (EEOS), was still studying its options.

Significance of CCE to Climate Mitigation

The five City Councilors in attendance: O’Malley, Michelle Wu, Ed Flynn, Josh Zakim, and Michael Flaherty, and the two that sent letters of support: Tim McCarthy and Lydia Edwards, all urged EEOS to move more quickly to implement what they see as a significant step to reducing the City’s collective carbon footprint. Invited panelist Ann Berwick, formerly the Undersecretary for Energy for the Commonwealth of Massachusetts and the Chair of the Department of Public Utilities, described CCE as the most significant GHG reduction tool at a municipality’s disposalWinston Vaughn, Senior Manager for Renewable Energy at Ceres invoked Boston’s commitment to the Paris Accord and asked administrators to make good on that pledge to urgently reduce emissions. Liz Stanton, Director and Principal Economist at Applied Economics Clinic, reported on the significant environmental benefits reported by other municipal aggregations.

may 30 hearing

Historical Pricing

Brizius repeatedly spoke of the department’s need for historical pricing data from other municipal aggregations as a way to project what rates Boston might attain through CCE. The panelists urged Brizius and EEOS to stop trying to gather this historical data. Stanton declared, “Historical energy prices are in no way indicative of future pricing.” Vaughn noted that energy pricing is “extremely dynamic,” and Berwick noted that “Trying to get pricing information now will not be fruitful. No one can tell you what prices will be a year from now.”

Boston’s Size

Brizius also referred to Boston’s relatively large size in comparison to other Massachusetts municipal aggregations as an explanation for why the department has not made more progress.  Stanton offered that Boston’s size would put it at an advantage when negotiating the consultant’s fee, as well as the wholesale price of electricity. Berwick also emphasized that virtually all municipalities simply hire an energy consultant to guide the process of implementation. “This isn’t rocket science. Hire an energy consultant to get the ball rolling.”

2018-5-30 CCE Hearing

Cost of a Consultant

Brizius countered that the payment for the consultant might be exorbitant given Boston’s size. Stanton and Berwick both reassured her that all aggregation consultants work on spec—that no city funds would be paid to the consultant, whose fee is generated instead through a small “adder” to the wholesale price per kilowatt that city residents would purchase, and then only if they successfully delivered a favorable bid. Councilor Wu summed up this practice common to all other aggregations in the state: There is no risk, either to the City budget or to ratepayers, of engaging a consultant.

Moving Forward – An Advisory Committee

Councilor Michelle Wu implored Brizius to understand the importance of appointing the CCE advisory committee called for in the Council’s authorization. This committee of Councilors, EEOS staff, energy experts, and community members would resolve the remaining questions about what Boston would want a consultant to be responsible for and what parts of the implementation Boston would perform through dedicated staff. Then, “in quick order” as Wu put it, a request for proposals (RFP) from experienced aggregation consultants could be finalized.

BostonCAN agrees wholeheartedly with Wu’s priorities: Mayor Walsh needs to appoint a CCE advisory committee with the goal of EEOS choosing an aggregation consultant this summer.

Refuting Common Objections to Community Choice Energy for Boston

In advance of the City Council hearing today at City Hall, BostonCAN has compiled a list of responses to the common objections we hear from the Office of Energy Environment and Open Spaces (EEOS) about why they should delay implementing Community Choice Energy.

Community Choice Energy (CCE) could cost more than basic supply, which would put an unacceptable burden on ratepayers.

The cost of renewable energy is steadily dropping and will continue to drop as economies of scale are achieved. Already many community choice aggregations (CCAs) have been successful in getting better rates. In a study by the Applied Economics Clinic in Nov. 2017, the residential rates procured by local aggregations saved 19% on average below the Eversource rate. By delaying the implementation of CCE, the Office of Environment, Energy, and Open Space (EEOS) is costing ratepayers by not getting residents and businesses a better option.

There will be fluctuations in the market, but if the City finds that all the bids it receives for CCE are higher than Basic Service it can delay entry into the market until a better opportunity arises. Over the course of a contract the price will likely stay below Basic Service since many forces mitigate against significant declines in Basic Service rates. If at the time of contract renewal the bids would be significantly above Basic Service, the city can choose not to renew. In addition, individual ratepayers can always opt out.

But it happened in Chicago. In fact, Chicago’s aggregation had to be stopped when basic service prices became cheaper than their aggregation’s. What if that happens here?

In Illinois, rates for basic service had been kept high by a temporary state regulation for several years. Then that regulation expired, so basic service became much cheaper and was able to underbid aggregation contracts. In Massachusetts, there are no temporary regulations on basic service rates that are set to expire.

What about Melrose, MA? When their first contract was up, none of the new bids was competitive with basic supply.

Melrose had to pause its aggregation due to a spike in capacity charges in National Grid territory. Boston’s default electricity supplier is Eversource, who has not had the problem with capacity charges that National Grid has. Melrose plans to petition DPU to re-start its aggregation once the capacity charge issue has abated.

The Request for Information (RFI) invited vendors to share historical pricing data for municipal aggregations. Since none of the respondents did so, the cost of CCE to Boston ratepayers cannot be estimated.

Vendors were probably the wrong people to ask for historical pricing information. It is understandable that they might consider this information proprietary. Typically, vendors provide prospective pricing information in response to a Request for Proposals (RFP).

CCE will cost too much to administer. Between start-up activities and on-going maintenance, EEOS simply does not have enough staff.

Most municipalities with CCE programs hire a consultant who handles most administrative details of the program. The best way to ascertain administrative cost is to issue an RFP and see what competing consultants would charge.

Additionally, however, the city needs to weigh the cost of providing a CCE program with the cost of not providing one. The slower we reduce greenhouse gas emissions, the more the city will have to spend on adaptation and on responding to emergencies.

Boston is so big it has to move cautiously when considering CCE and can’t follow the same template that smaller towns followed.

Boston has more than 600,000 residents. It can follow the example of the Southeast Regional Planning and Economic Development District (SRPEDD), which also has a population of more than 600,000, and has had a joint municipal aggregation since early 2015. SRPEDD followed the standard aggregation pattern of using a consultant to create an aggregation plan and administer the program.

EEOS needs time to study the trade-offs of making CCE an opt-in vs. an opt-out program.

This is not the way the law works—the path to set up a municipal aggregation is a clear and well- understood process. Setting up an “opt-in,” and entering the market as an individual competitive supplier muddies the waters and is not what the city council authorized the mayor’s office to do.

According to a city report showing GHG emissions through 2015, Boston is on track with its GHG reductions, based on a per capita decrease.

Boston’s commitment to reduce GHG emissions from 2005 levels was never based on per capita emissions, nor are the commitments in the Paris Accord. Global warming depends on CO2 levels in the atmosphere and not on how many people live on the planet. So tying GHG reductions to population doesn’t make sense. Moreover, in 2017 Mayor Walsh pledged to reduce GHG emissions to zero by 2050, changed from the previous goal of an 80% reduction and zero emissions can’t be adjusted per capita. In order to get to the new 2050 goal, the 2020 goal not only has to be met, but exceeded.

CCE – Quantifying The Cost of Delay

Almost half the world’s population lives in cities, which are bearing the brunt of climate change impacts: sea level rise, extreme weather, and declining air quality and public health. Thankfully, a growing global alliance of cities is committing to mitigate these climate change impacts by reducing greenhouse gas (GHG) emissions. Boston is actively involved in these efforts. In fact, Mayor Marty Walsh is hosting an International Climate Summit on June 7, as a prelude to the U.S. Conference of Mayors from June 8 to 11.

For these developments to be truly hopeful, however, city departments must meet the commitments made by city leaders. This is not the case with Community Choice Energy (CCE) in Boston. Although the Boston City Council passed an order authorizing CCE in October, 2017, the Office of Environment, Energy, and Open Space has tabled implementation. Such a delay comes at a cost. CCE would cut Boston’s GHG emissions by 33,000 metric tons annually, as shown by an analysis from the Applied Economics Clinic (AEC) at Tufts University. The city cannot afford to postpone this significant tool to reduce emissions.

Boston’s goals are in line with those of many other cities: a 25% cut in emissions from 2005 levels by 2020, and 100% carbon neutrality by 2050. With regard to reducing emissions from city government operations, Boston has exceeded its 2020 target. What is troubling is that community-wide emissions reduction is falling short of the goal. Boston tracks its GHG emissions rates annually in the GHG Emissions Inventory, a publicly accessible database. The data show that GHG emissions declined from 2005 through 2012, to almost 20% of 2005 levels. However, between 2012 and 2015, emissions have shown a continued upward trend, with the 2015 rate only 12% lower than in 2005. While the GHG Emissions Inventory is only up to date through 2015, the EEOS budget (p.225) mentions that GHG reductions for 2017 were unchanged from 2015. Thus, with only two years left to go, the achievement of Boston’s 2020 goal cannot be taken for granted. This strongly suggests that more urgent measures are needed.

CCE - Cost of Delay Figure 1 v2

The data we’ve presented so far have been community-wide (that is, for Boston as a whole). The GHG Emissions Inventory divides these community-wide GHG emissions into three segments: small residential buildings, commercial/industrial/large residential, and transportation. CCE would mostly affect small residential buildings. Electricity supply to most large organizations is covered by pre-existing contracts and would not become part of the CCE program.

GHG emissions by small residential buildings show the same concerning trend as the community-wide data: they steadily increased from 1.20 million metric tons in 2012 to 1.33 million metric tons in 2015  (No more recent public data are available.) In order to meet the 2020 goal, GHG levels in the small residential buildings segment would need to be cut by 150,000 tons from the 2015 levels. CCE would immediately cut 33,000 tons, or 22% of that goal, and may be able to reverse the upward trend.

cce-cost-of-delay-figure-2-v2.jpg

In order to have a chance to limit the global average temperature increase, it is imperative that cities meet their pledged GHG emissions targets. Therefore, cities simply cannot afford to ignore or slow down any measures available to help meet their climate targets. Boston needs to implement CCE now!