Massachusetts DPU Ponders Who Can Be Solicited for Municipal Aggregations

by | Aug 19, 2015

Following an open meeting on August 13, the Massachusetts Department of Public Utilities (DPU) formally requested stakeholder comments concerning which utility ratepayers should be included in the customer lists provided to municipal aggregators – and specifically, which names can be provided by National Grid, a utility that serves 3.3 million customers in the Bay State.

Municipal aggregation is the formation of a group of consumers into a single buying pool for the direct purchase of electricity supply. In Massachusetts. the Restructuring Act of 1997 created a process under which a municipality, or a group of municipalities, may aggregate the entire electric load within the boundaries of the participating communities and solicit contracts to serve that load. One successful example is the Cape Light Compact Pilot in Cape Cod.

According to the Department of Energy Resources’ “Guide to Municipal Electric Aggregation in Massachusetts,” published by the administration of Governor Deval L. Patrick, there are several advantages to customers who participate in aggregation initiatives – among them:

  • Lower Transaction Costs. Load aggregation enables individual consumers to choose a competitive supplier at either little or no transaction cost to those individuals. Aggregating individual customers lowers these costs.
  • Competitive Opportunity. Because of the high cost of customer acquisition, relatively few suppliers are willing to compete for low-use individual customers one at a time; municipal aggregation allows utilities to offer better prices and terms to a group that has more buying power.
  • Savings from Load Diversity. Residential, commercial and industrial customers use electricity differently at various times of the day. Generally, supplying an even load profile via aggregation is less expensive than serving an erratic one.

Until now, National Grid has not been able to provide the account information for certain types of customers to municipal aggregators, including customers enrolled with another competitive supplier; customers of the GreenUp program; and customers who already have informed National Grid that they do not want their personal account information shared with other retail providers.

Under the new docket created on August 13 (DPU 15-58), written comments are requested by August 27 regarding whether the customer lists provided to municipal aggregators should include all basic service customers – except customers enrolled in such optional basic service enhancement programs as National Grid’s GreenUp.

In addition, the DPU requests that each electric distribution company provide the department with the total number of customers it has enrolled – disaggregated by municipality and customer class – who have requested that their information not be included on customer lists pursuant to DPU 01-54. (In D.P.U. 01-54, the department directed distribution companies to provide customer lists with usage information to licensed competitive suppliers and brokers in order to expand access to the competitive supply market.)

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