Pittsfield Considering Group Purchasing For Electricity
PITTSFIELD, Mass. — The city is looking to lower electric rates through a group bidding process.
The City Council's Committee on Community and Economic Development is recommending the full council start the power aggregation process. The joint purchasing efforts has been used by a dozen or so Berkshire towns to find lower cost power generation.
"Right now the savings could be tremendous in the marketplace," said Mark Cappadona, president of Colonial Power, the company that would head the process.
The program takes all of the city's electric usage — residential, commercial, and municipal — and puts it out to bid for a power producer.
Colonial Power would take those bids back to the city, which could then choose a contract for power. By going out as one large contract, the city hopes to attract more interest and lower rates from generators.
Residents in Clarksburg, Florida, Dalton, Lenox, New Marlborough, North Adams, Sheffield, Tyringham, Williamstown and West Stockbridge have already seen lower electric bills than in other towns by joining together for a large bid. Last year those towns signed a contract that was nearly 25 percent less than National Grid was expected to charge. Lanesborough also runs its own aggregation program for its residents.
"It is no longer just taking whatever Eversource says their rate is," Cappadona said.
If a contract is signed, all residents currently being service by Eversource's basic service will automatically get the new rate for generation on their bill. Currently, Eversource signs contracts with generators and supplies the power at a certain rate. Eversource would now get the power from the generator the city chooses.
"For the end user, there is no change," Cappadona said. "All you are dealing with is the electron running through the wire at a more stable rate."
Residents would still be calling Eversource with issues and Eversource would still be the company issuing and collecting the bills. The company does not generate electricity so has no stake in that contract.
"This is something a number of communities in the Berkshire and throughout the commonwealth have done with success," said Jim McGrath of the city's department of community development.
The city's program would be go to bid with the power used by all of the resident and businesses but would not be tied in with the other towns. However, the city could opt to join the 10 towns which currently go to bid together if it chooses.
"We want to deliver savings to the residents. The savings may not be huge but it will be savings," McGrath said.
Cappadona said once a contract is signed, residents have 30 days to opt out and go with a different generator if they want. But, he said 85 percent of meters are being served with the basic service and typically only 3 percent of those opt out to go with a different company. Those who already go with a different generator would not automatically be in the program but rather have the option to switch.
The city ultimately chooses the provider after Colonial Power manages the bid process. Colonial Power's fee comes from Eversource as part of the generation contract.
"If we join in, you go out and basically shop for us and we get to choose," said Councilor Melissa Mazzeo.
If the city chooses not to sign one of the contracts, Colonial doesn't earn any income.
"There is no financial obligation for any of the work prior to or leading up to when we sign a contract with the supplier," McGrath said. "The only role we play is to simply oversee what Colonial is doing and making sure they are working on our behalf."
But, the program is still a ways away. The first step is for the City Council to declare its intentions to become an aggregator. Then the state Department of Energy Resources reviews the bidding plans; the Department of Public Utilities reviews the plans and issues an order after a public hearing process. That order allows Colonial Power to go to bid and collect the prices.
Colonial Power would then bring the prices and contract options back to the city for choosing. The city does not have to accept any of the contracts Colonial Power finds in the marketplace and can stay with the current service.
"You could get your order and never sign a contract and never switch anybody over," Cappadona said.
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