Energy Aggregation FAQs
Energy Aggregation Frequently-Asked Questions
Who is eligible for this program?
Anyone that receives Standard Offer Service electricity supply from National Grid is eligible for automatic enrollment in the program’s standard product. This typically includes the vast majority of residents and small businesses in a municipality.
If you have already selected your own electricity supplier other than National Grid, you may join the program but you will not be eligible for automatic enrollment.
Why are we proposing a program that automatically enrolls me and then allows me to “Opt-Out”. Why not use an “Opt-In” program?
When soliciting bids for an energy supplier, having more expected participating residents and businesses in the program will allow bidders to offer a larger discount on their bid rates. Using an “Opt-In” program would result in a much smaller number of participating residents and businesses than an “Opt-Out” program and would likely result in a higher bid price.
Can’t I negotiate with suppliers on my own?
You certainly can and many residents and businesses have negotiated their own supplier agreements. But, aggregating a customer base by the Town provides for a more powerful market that will likely result in a lower price for the program.
What is a Standard Product?
The standard product is the program’s electricity supply in which eligible residents and business would be automatically enrolled, unless you select an optional product in the program or elect to opt-out of the program.
The program’s proposed standard product has twin goals of 1) costing the same or less than National Grid’s Standard Offer Service supply and 2) including additional renewable energy, above the State of RI’s minimum requirements.
For background, the State of RI requires every electricity supply to have a minimum amount of renewable energy. In 2021, that amount will be about 18%. By 2035, that requirement will increase to about 38%. Based on the way the Town plan is currently written, we expect the standard product will have an extra 10% renewable energy. In 2021, this would mean that the standard product would have a total of 28% renewable energy.
What are the Optional Products?
The plan includes three optional products, designed with varying levels of renewable energy.
“Basic” – This includes just the State of RI’s minimum renewable energy
“Local Green 50%” – adds 50% renewable energy
“Local Green 100%” – adds 100% renewable energy
How long would the Town be committed to the program?
Often, the longer the agreement term the better price could be offered. It is expected the Town would receive bids for terms of 1, 2 or 3 years. Longer terms would result in more risk if energy prices fall. The Town, working with its energy consultant, would conduct an analysis of long-term energy forecast to determine the best contract term and price.
What if I have a current agreement for an energy supplier?
You would not be eligible for automatic enrollment in the program, but you could elect to join the program voluntarily. We recommend that you check the specific contract you signed before joining the Town’s program. Different contracts have different termination clauses and you would have to examine your individual contract. One option would be that after the termination of your current contract, you could opt into the Town’s program.
Would this impact any payments or incentives I get for solar panels on my house?
No, incentives for solar panels, like net metering or the Renewable Energy Growth program, will continue unchanged.
When would this CCA happen? What are the steps along the process?
On June 22, 2020, the Town Council directed the Town Administrator to come up with a plan. The plan is available for review at https://www.portsmouthri.com/1619/Energy-Aggregation . A public hearing is set for August 11, 2020 at 7 PM at the Portsmouth Town Council Zoom meeting. Watch www.portsmouthri.com for the meeting agenda and zoom details. If approved, the plan will be sent to RI Public Utilities Commission (PUC). Upon PUC approval (anticipated late fall 2020), the Town would solicit suppler bids, conduct a public education campaign and ultimately sign an energy supply contract. The contract would take effect on the next energy bill (anticipated early 2021).
I Iike National Grid. Does this program change my electric company to someone other that National Grid.
The proposed plan DOES NOT change electric service companies. Under the plan National Grid REMAINS in charge of all the wires and equipment that supplies electricity to your home. The ONLY thing that the plan changes is that it allows the town to bid on the SOURCE of your electrical supply. Right now National Grid PICKS THAT SUPPLIER FOR YOU. You now have the option to shop for your own supplier. In the Plan, the Town, by RI State Law, is allowed to band together as a group of potential customers to gain a much better electric rate than National Grid can get. The August 11 public hearing is ONLY to submit the Town plan to the RI Public Utilities Commission for review. After the PUC approves the Plan, our expert consultant will help us craft a Request for Proposals, to go out to "bid" for electricity supply and then there are additional public hearings to review and approve the final plan. Your Electric Service Company will remain as National Grid under ANY final CCA plan. Even after the final plan is approved, each residence will be provided a post card, web site and phone number to "Opt Out" of the plan and return either to the National Grid designated provider or you can switch to your own chosen power provider.
Was any firm other than Good Energy considered for the Service Agreement?
Providence, Barrington, Central Falls and South Kingstown issued a joint RFP in November 2019. All bid documents, including competitive proposals, were made available to aid in the consideration of a consultant. This included the Professional Services Agreement signed with Providence. There is no direct cost to the Town for these consultant services and no obligation or termination fee if the Town determines not to continue this relationship until the Program signs an agreement with a Competitive Supplier.
If Good Energy is paid $0.001 per kWh, it represents a cost of about $1.45 in peak months or about $.50 in low-use months in terms of my household energy use. What is the overall estimated annual payment to Good Energy if 85% of Portsmouth’s users stay with the CCA? Is their rate subject to change?
All payments to Good Energy are made from the Competitive Supplier consistent with the terms of our agreement with them and subsequent contract for electricity supply services. The Town has agreed to include a $0.001 per kWh fee to be included if the Town chooses a Competitive Supplier. Current National Grid data indicates that Portsmouth customers on Standard Offer service used 70,470,148 kWh in the previous 12 months ending June 2020 . 85% of this load would equate to an annual payment from the Competitive Supplier to Good Energy in the amount of $59,900.
Why is there such a rush to get this implemented and why won’t citizens have more time to provide input?
The Town desires to be pro-active in investigating any program that may benefit the residents. The Town has followed every procedural step required by State law to develop an aggregation plan, as described in Attachment 1 of the Plan. This public hearing, in advance of submitting the plan to the PUC for further review, is the next step in that procedure. The PUC is required to host another public hearing on the plan before determining whether to approve the plan. After that the Town may begin the process of developing and issuing a bid for suppliers. At every step of the process the Town may choose to withdraw from the process without penalty or cost. In order to determine the potential cost savings available to our residents and small businesses, we need to have a plan approved by the PUC.
Can the Town Council modify the plan by increasing the renewable energy minimum in the basic plan (or any plan) without Public Utilities Commission approval?
The PUC has not answered this question. Even before the PUC would take up the question, such a change would be at the sole discretion of the Town Council.
Will this program cause additional staff to be added to the town government? Has there been a study of additional potential costs to taxpayers this program may incur and has it been performed by someone other than Good Energy, which has vested interest in this project going forward?
There is no need to add staff to manage this program. There has been no identified costs from any department or funding requested of the Council for the development and implementation of this program. As part of its response to the RFP issued by Barrington, Central Falls, Providence and South Kingstown, Good Energy attested to having no financial interest in any renewable or conventional electricity generation.
Why is there no mention of risks to consumers/taxpayers in the program descriptions?
The program description includes all provisions required by State law. The PUC will be conducting such a review in open meeting to assure that the plan meets these requirements. In previous Council meetings there has been discussion of potential risks to consumers, including that the program cannot guarantee cost savings compared to Standard Offer Service from National Grid. There has been no identified need for taxpayer funding for the execution of the program.
Have there been studies of any failed CCAs to assess whether it might happen here? (Some in other states have been abandoned.)
Every single one of Good Energy’s 200+ aggregations since 2012 have resulted in their clients saving money on electricity supply costs. The quality of a program is directly related to the quality of the consultant. If a CCA program, designed as envisioned by the Portsmouth draft Aggregation Plan, failed or was abandoned, the result would be that all electricity consumers participating in the plan would be returned to Standard Offer Service with National Grid. The draft Aggregation Plan includes procedures for notifying National Grid about a termination, how the Competitive Supplier and National Grid will cooperate to transition customers, and how customers will be notified. Portsmouth has not conducted a study of failed CCA programs in the United States.
If Portsmouth’s CCA enters an agreement with Providence to achieve economy of scale, how much clout will Portsmouth have and what assurances are there that there will be an equitable agreement?
Portsmouth, at all times, retains the right to bid independently. There is no need to enter any formal agreement with Providence to have a Competitive Supplier bid on the opportunity to meet the supply needs of both municipalities. Decision making for any group procurement like this is made via consensus. Importantly, while we will have the option of choosing the same supplier as Providence, there is no obligation to do so.
What will the auditing arrangement be? Will Portsmouth have to pay yet another external entity to audit the CCA and Good Energy? At what cost?
No Town funds, beyond currently budgeted staff time, are needed to develop and implement this program.
Has Good Energy contributed to any local politicians’ election campaigns?
No. Good Energy is organized as a limited partnership under the laws of Delaware. Such organizations are prohibited by Rhode Island law from contributing to political campaigns.
Who would administer this program? To my knowledge the town has no experts on staff.
Portsmouth staff is experienced at providing oversight and management of Town programs. In the draft plan, the Town Council designates the Town Administrator and his staff to administer the program. The Town has chosen an experienced consultant to assist in developing the plan, securing regulatory approval, procuring electricity supply and performing management activities such as customer service. The consultant will provide the Town staff with data and analysis needed to facilitate decision making by the Town Administrator and Town Council.
What is the cost to the town for the consultant per the current resolution passed by the Town Council?
There is no direct cost to the town. The consultant, Good Energy, will be compensated at a rate of $0.001/kWh, to be paid by the chosen electricity supplier directly to the consultant. The Town may terminate its agreement with the consultant at any time without penalty.
How much will the proposed standard product for using additional renewable energy increase the cost to residents?
The exact differential for the various product option is difficult to estimate at this point. As the town develops its bid strategy, it will research the market an arrive a set of cost goals that will be acceptable for bids.
The draft plan has four products, one of which is the standard product into which eligible accounts would be automatically enrolled. The other three products are optional products in which any customer could voluntarily enroll. The goal of the standard product is to cost the same or less than National Grid Standard Offer Service and to have a small amount of additional (extra) renewable energy, above the current state minimums.
What does the term "EXTRA" Renewable Energy mean? More than what? Please expand on this metric.
Extra renewable energy is in reference to the Rhode Island Renewable Energy Standard (RES), which sets a minimum amount of renewable energy that must be included in all electricity supplies, regardless of whether it is provided by the utility, National Grid, or a competitive supplier. In 2021, the RES will require 17.5% renewable energy. For example, if the standard product includes 10% additional renewable energy, the total renewable energy will be 17.5%+10%=27.5%.
I believe that the statement “provide some savings” is way too vague for my liking. I think a defined goal for savings would provide a benchmark to judge the bids provided if the next phase is pursued. Let me suggest that at least a 10% savings over current and projected National Grid consumer (without CCA) pricing will be needed to make the program attractive and that this may not be possible with extra renewable energy. If we save 1% and have extra administrative costs, I think this a silly exercise unless it is a veiled attempt to move the town to more renewable energy with no savings.
At the time the Town is ready to go out to bid, we expect that the Town will have determined some parameters and minimum goals for bid rates that would result in savings that would be acceptable for the term of the contract and would reject any offers that do not fall within the acceptable parameters that have been approved by the Town Council.
Once the bids are returned, is there an option for citizens to review them BEFORE a decision is made? I suggest that the best deal may not be worth executing the plan but I remain open to have it investigated.
As stated in the answer to the question above, the citizens and Town Council would be involved in discussing and approving a set of bid parameters that would be acceptable before the bid process moves forward. The Town would always retain the option to reject any and all bids and wait for a better market or decide to abandon the program altogether.