At its meeting Monday, June 22, our sometimes torpid Climate Action Committee started a new, invasive approach that, if carried through, promises to impact every Brookline household, business and institution. The name of the game is “community choice aggregation.” What’s that?
Utility restructuring: During the mid-1990s, ambitious state administrations–mostly run by Republicans–began to promote deregulation, particularly for energy. They were apparently taking cues from the deregulation of airline fares during the Carter administration. The federal Public Utility Regulatory Policies Act of 1978 had proven mostly aspirational. State rather than federal government had most sway over utilities.
The United States has a cultural background of enthusiasms for apparently simple solutions to genuinely complex problems–for example, punitive public-school testing claimed as a solution to gaps in educational achievement, a poster child of the Reagan administration. That outlook has strongly influenced so-called “restructuring” of electric power and other utilities.
California conducted the first major experiment, starting in 1994 and descending into chaos in 2001, a year of blackouts and corruption–the Enron price manipulation crimes. Massachusetts started in 1996, during the troubled Cellucci administration. The following year, before the real Big Dig costs had been divulged to the public, the General Court was maneuvered into passing the Utility Restructuring Act of 1997.
Community choice aggregation: The main act of Massachusetts restructuring was to squeeze big electric companies, Boston Edison and New England Power, into selling their generating plants and focusing on local power distribution. A sleeper in the law was a provision for municipal cooperatives: not the traditional sort that own wires, transformers and meters–instead an offspring that engages in financial manipulation.
A widely advertised feature of the Restructuring Act allowed electricity customers to designate generating companies, from whom they would buy wholesale electricity carried to their locations and billed to them by distributing companies. A lengthy section of the act forbids distributing companies from switching customers’ generating companies. Only a voluntary action initiated by a customer can make a switch.
Another sleeper in the schizophrenic Restructuring Act, authorizing so-called “community choice aggregation,” stood those protections on their heads. For ten years, it remained little known and little used. By 2007, there were only five community choice aggregators–all but one a small town. Under the act, a town meeting can approve a program, and a board of selectmen can then contract with a distributing company.
A board of selectmen can also designate a combination of generating sources. Once that is done, local customers are automatically switched–without voluntary actions and without their permissions. They will get notices. They have a month to “opt out”–returning to generating sources of their own choosing. If they fail to act in a timely way, their suppliers are switched without permissions, in whatever way some board of selectmen chose, supposedly on their behalf.
Motives and side effects: For some communities, the main motive has been trying to lower the price of electricity, by combining purchasing and by bargaining for many customers. Success has been spotty at best. Stung by price reverses, in 2012 Ashland and Marlborough suspended their community choice aggregation (CCA), returning local customers either to “standard rate” plans or to generating companies they chose.
A 2013 report by researchers at Tufts University found that “savings reached through a CCA are modest and unpredictable.” In their conclusion, the researchers observe, “A purpose of [state] deregulation was to lower electricity rates through competition, but rates in deregulated states have increased more significantly than rates in regulated states.”
To long-term observers, that comes as no news. In 2006, David Cay Johnson had reported in the New York Times, “A decade after competition was introduced…the market has produced no [overall price] decline. Instead, more rate increase requests are pending now than ever before…Electric customers…are facing rude surprises….”
– Craig Bolon, Brookline, MA, June 23, 2015
Joshua Laufer, Betsy McDonald, Brenda Pike and Mengmeng Zhou, Community choice aggregation: municipal bulk buying of electricity in Massachusetts, Tufts University, May 6, 2013 (36 MB)
Joe O’Connell, Ashland halts electric power program, MetroWest Daily News (Framingham, MA), December 27, 2012
David Cay Johnson, Competitive era fails to shrink electric bills, New York Times, October 15, 2006
An act relative to restructuring the electric utility industry in the Commonwealth, regulating the provision of electricity and other services, and promoting enhanced consumer protections therein, Massachusetts General Court, Chapter 164 of the Acts of 1997