Twenty-one municipalities in Westchester County have signed on to participate in a pilot program to negotiate electricity prices at a lower rate for groups of residents and small commercial businesses in those localities.
Sustainable Westchester Inc., a nonprofit consortium of about 40 dues-paying municipalities in the county, is heading the program. Its officials are preparing a request for proposals, expected to be released by the end of the month, for one energy-supplying service company to create an electricity contract for the pilot program”™s participants.
This energy-buying strategy, called community choice aggregation, differs from the traditional way of paying for utilities in that groups of consumers will be in the same rate contract rather than having variable rates that are susceptible to change.
The driving force behind starting community choice aggregation is simple, according to Leo Wiegman, executive director of Sustainable Westchester: “We asked for it.”
“We being the municipalities in Westchester,” he explained, “saw this program helping people save money and have smarter, better energy choices in other states.”
This thinking, Wiegman said, is what prompted a bill, introduced in the state Senate in May 2013, that would have started a similar program, but was vetoed by Gov. Andrew Cuomo in December 2014. In his veto letter, Cuomo said he supported the intent of the bill, but said it was duplicating efforts already being made by the state Public Service Commission. Cuomo referred the proposal to the commission, which approved the current program in February.
Six other states ”” Massachusetts, Ohio, New Jersey, Rhode Island, California and Illinois ”” have implemented a version of community choice aggregation. Participants in the Cleveland program, started in 2013, have saved about 21 percent on electric bills, according to the U.S. Dept. of Energy.
The supplier in Westchester will be required to offer two electricity rates from which customers can choose. One is the default rate, which will be lower than the 12-month rolling average in the U.S. The second will be a little higher, but will be up to 100 percent green, renewable energy.
Wiegman said the program will only go forward if the customer has economic savings, meaning the winning energy supply company will have to provide rates in its bid that are low and competitive. He estimated consumers will save about 4 to 5 percent on utility bills.
“Depending on what zone you”™re in for the supply feeds, you”™re currently spending probably 9 and 11 cents per the kilowatt hour for supply and an additional 12 or 13 cents for delivery fees,” Wiegman said. “We”™ve seen competitive bids come in at 6 or 7 cents” per kilowatt hour in other markets, he added.
By banding together, the program will also give the participating municipalities more leverage in rate negotiations.
Municipalities that want to participate in the program must first pass a local law; White Plains, Bedford, Lewisboro, Greenburgh and Mount Kisco are among those to have done so. The 21 participating municipalities represent 52 percent of the county population.
Consumers in the participating municipalities will be automatically enrolled in the program, but can opt out at any time and return to a different utility provider. Residents or small commercial business owners who use third-party energy suppliers are not eligible to participate.
Why would energy supply companies want to bid on a program like this?
The short answer, Wiegman said, is the Public Service Commission is asking them to. In addition, he said, this is an opportunity for an energy company to acquire large blocks of consumers in what could be a market transformation.
Karl R. Rábago, executive director of the Pace Energy and Climate Center, said Westchester”™s community choice aggregation program is a “natural fit” because it can “reduce costs, improve market clout, and accelerate development of clean energy sources.”
Wiegman said Sustainable Westchester hopes to have a bidder chosen before Thanksgiving and have participants switched over in January.
