Community Choice Electricity (CCE)
The Current Situation for Most Consumers of Electricity Who Live in Boston
Everyone who purchases electricity in Boston pays a bill to Eversource, an investor-owned electric utility. Eversource is in the business of being the distributor of electricity in the metro Boston area and owns the distributive infrastructure. Eversource, however, does not generate the electricity we use. Instead it buys electricity from other companies—the suppliers—who do the actual generation of the electricity we use. Eversource then bills us for the electricity it needs to purchase from the supplier(s), plus the costs of owning and maintaining the distribution equipment (substations, transformers, meters, cables, wires, etc.), the cost of maintaining a work force and running a business, and the cost of returning profits to its investors.
Under the new Community Choice Electricity Program scheduled to start in February, Eversource will continue its present duties as the distributor of electricity in Boston. It will remain the company we call if we have a service problem and it will still be the company that sends us our monthly bill. In other words, not much will change in our relationship with Eversource except that the City (on our behalf) will be selecting the supplier of our electricity. Eversource will no longer be making that decision, unless we chose to ‘opt out’ of the Community Choice Program. (More on ‘opting out’ shortly.)
Some History on Community Choice Electricity
In 1997, legislation was passed in Massachusetts to deregulate many aspects of electricity in our state. The goal of this legislation was to increase competition among the suppliers of energy and thereby reduce prices and to create consumer choice alternatives. As a result, a market place of private energy suppliers developed to provide electricity both to the utilities distributing electricity to customers, and, also, to companies promoting and selling individual contracts to consumers. These companies could then aggregate those contracts in their dealings with suppliers, and, make a profit in the process. Many of the contracts sold to consumers were filled with false promises of lower costs and, in fact, ended up costing unwitting consumers dearly. Others, however, were perfectly legitimate and have proved beneficial to consumers. The latter category would include the “Green Energy Contracts” sponsored by environmental groups such as Mass Audubon and the Green Energy Consumer’s Alliance which were sold to people interested in buying electricity produced by renewable energy sources rather than electricity produced by the combustion of fossil fuels. Several members of our Green Committee, and likely other members of NABB, purchased such “Green Contracts” and have been pleased with the terms of their purchase. Under the Community Choice Electricity Program, consumers can maintain any already established electric supply contracts if they so wish.
The 1997 legislation also provided that municipalities–after careful review and approval of their plans by the Department of Public Utilities—could become their own buyers and aggregators of electricity on behalf of their residents. This new opportunity for cities and towns in the Commonwealth is known as ‘Municipal Aggregation’ (Community Choice Electricity is the same idea, different name) and was seen by its supporters as an avenue to achieving several new goals:
- This approach would have the potential to achieve price reductions to consumers, in part because municipalities, unlike utility companies, do not need to return profits to investors.
- Municipal Aggregation Plans would allow cities and towns the opportunity to negotiate for a higher mix of renewable energy (solar, wind, hydro, etc.) in the energy the electricity supplier used for generation.
- Placing localities in charge of energy purchasing was seen as a means to encourage and support the development of more local renewables providers.
Each of these three goals was designed to directly help the State meet its own carbon reduction goals. And while the idea of energy aggregation (or CCE) had a gradual start in this State, over 160 cities and towns (out of 351) in Massachusetts currently have adopted the CCE approach.
Do I have to sign-up to enroll for Community Choice Electricity?
No, because of an unusual ‘twist” in the 1997 enabling Legislation.
That law provided that the implementation of any Municipal Aggregation Program (like Boston’s CCE) would be done on an ‘opt-out’ basis. What this means for us in Boston is that all of us—except for electricity customers with an existing privately signed contract with another electricity supplier—will automatically be enrolled in Boston’s CCE in February. If someone doesn’t want to maintain that enrollment, then they will need to opt out, which is easy to do with a phone call to Eversource. Indeed, at any time, a customer in the CEE Program can opt out at no cost or penalty and request that Eversource (or some other electricity supplier) serve as their source of electricity.
As for those Boston residents who already have existing contracts with a private supplier, they will not be automatically enrolled in Boston’s CCE in February precisely because they are under contract elsewhere. While some of those residents may wish to switch suppliers and join the CCE Program before their current private contract has expired, it would be wise for them to inquire about the penalties and costs of terminating their contract before its end-date. The “no penalty policy” of Boston’s CCE Program is not the industry norm!
Does the Community Choice Electricity Program have options within it?
Yes, but here is another small twist:
There are ‘options’, in the CCE Program that customers can chose among. However, when we are automatically enrolled in February, we will be automatically assigned to one of the three options to start. However, we can immediately chose one of the other two plans if we so wish.
The three options (or ‘Products’—the term being used presently by the City) are:
- The Standard Product is informally known as the ‘default’ option’ because it is the plan all customers will get unless they request otherwise. As for the mix of renewables in the Standard Product it will contain the State-mandated 18% for 2021 plus some additional renewable power. The percentage of the added renewables will be announced when the rate is determined which should be by the end of November or early December. It is anticipated that the cost of the Standard Product will be attractive to many of Boston’s customers.
- The Optional Green 100 Product will be slightly more expensive but will offer 100% renewables to those who can afford to make that choice and wish to do so.
- The Optional Basic Product (intended to compete with the Eversource residential rate) will be the least expensive choice and will contain the State-mandated legal minimum percentage of energy to come from renewable sources—18% in 20201.
Can a lower price than Eversource be guaranteed?
Electricity costs regularly fluctuate. Boston’s CCE Program involves a long-term contract with its supplier and that should assure greater cost stability. Eversource, on the other hand, enters the market to buy electricity every six months. Therefore, there may be short periods when Eversource’s costs are lower—or higher. Because Eversource and CCE have different approaches to electricity purchasing, the only valid and exacting cost comparisons between the approaches will need to made on an individual basis by consumers over the life of the city’s CCE contract with its supplier, which will probably be between two or three years.
Do we have any information on CCE rates?
According to a story by Paul Ring in EnergyChoiceMatters.com and posted in late October, 2020:
The City of Boston has selected Constellation NewEnergy, Inc. to serve its opt-out municipal electricity aggregation, with a start date of February 2021
The City has not released pricing for its “standard” (default) aggregation rate, whose renewable content is still to-be determined, but did release pricing for two options products
An optional “basic” product (no green content beyond state mandates) will be priced at $0.10959 per kWh
An optional 100% green product will be priced at $0.14764 per kWh for all customer classes (100% MA Class I RECs achieved by purchasing 82% additional RECs above the state’s then-current requirement for these renewables).
Both optional offers, as well as the TBD default offer, are to be fixed rates for 9 months (February 2021 to November 2021). A sample opt-out form notes that, “Rate may increase as a result of a change in law that results in a direct, material increase in costs during the term of the contract.”
The rates listed above include: Consultant Fee of $0.0007 per kWh to facilitate Boston’s Community Choice Electricity Program and (2) Operational Adder of $0.00008 per kWh to fund personnel costs associated with the City’s Energy Manager position.
While this may be more detail than some people are interested in, it does allow a comparison between Eversource’s current basic kilowatt per hour rate rate (as reported on the monthly bill) and the rate that CCE has fixed with their supplier for the first nine months of the contract. (Eversource rate may, of course, change before February.)
In our conversations with people about CCE, Green Committee members have heard people comparing their electricity costs with one another. Of course, such comparisons between different households is quite difficult because different spaces and different households have different levels of energy demand and needs.
Also, the frequent citing of the ‘average household’ is of limited utility to an individual consumer because ‘average,’ by definition, does not describe most households. For this reason the ‘cost per kWhr’ (cost per kilowatt hour) is the best and most common standard used for exacting price comparisons as we evaluate the price of electricity offered by different suppliers.
That said, an interesting comparative 2018 study exists for CCE costs in Massachusetts using aggregated data and averages. The study was undertaken by the Center for Agriculture, Food and the Environment at UMass Amherst. An excerpt:
“We found that aggregations do not provide lower costs in every municipality and every rate period. However, on average, municipal aggregations do provide price savings to residential and small commercial customers. Municipal aggregations also provide price stability, with price fluctuations only 10-20% those of utilities in many cases, and rate contract periods up to 3 years in duration. Because price savings are moderate (averaging less than $0.008/kWh, or less than $60/year for the typical residential household), municipal aggregation may not be worthwhile for municipalities interested in pursuing aggregation for purely economic reasons. As of May 2018, municipal aggregation programs offering 1%, 5%, 20% and 25% additional Class I RECs above the Massachusetts RPS requirements were all providing rates below the Basic Service Rates. Of the programs [that] offered 50% or 100% Class I REC “green-up” options, approximately half were offering a lower rate than Basic Service.
Aggregation may provide a clearer value to municipalities looking beyond standard electricity programs, which meet Massachusetts RPS for renewable energy content to include “greener” energy options. We found that the modest savings available through aggregation programs were often sufficient to support additional renewable energy content for residential ratepayers while still providing rates lower than Basic Service.”
How will CCE impact low-income families in Boston?
As mentioned earlier, the legislation that authorized private (as well as municipal) energy suppliers, unfortunately gave rise to some unscrupulous for-profit companies, which aggressively targeted Massachusetts’ consumers (and especially lower income families) with deceptive and misleading promises of lower electric bills. As a result, it is estimated that these companies have cost Massachusetts’ consumers an extra $340 million dollars over the past five years—an added $226 for the ‘average’ household in 2016-2017.
Boston’s CCE Program is explicitly intended to be an antidote to these predatory and deceptive practices and the first two listed goals of Boston’s CCE Program are to “strengthen consumer protection” and to “offer affordable and stable electric rates.”
As mentioned, Boston’s CCE Program intends to maintain a basic rate comparable to or better than the basic rate at Eversource, but cannot guarantee it due to the different approaches to electricity purchasing. Should the city’s CCE Program fail to attain this goal, a customer can always opt out of the CEE program and return to having Eversource as their electricity supplier– at any time, for any reason, and at no cost.
We hope this explanation has served to answer many of your questions about CCE. The Green Committee will continue to monitor the progress of the CCE Program and we will pass on information on this site as it becomes known—for example, the information about the kWhr cost of the Standard Product and the percentage of additional renewables it will contain.
Please, in turn, pass along your comments, questions and ideas on how the Green Committee, can be more helpful. Emailed them to the Green Committee Chair, email@example.com. We’ll do our best to respond.
For more information, please check out these resources:
The City of Boston CCE website is excellent and offers opportunities to ‘dive deeper’ by clicking on bolded words or phrases.
Here is a short video on ‘Community Choice Aggregation’ that breaks this slightly confusing idea down clearly in a two-minute presentation.
Here is the link to Newton’s Program called, Newton Power Choice.’ It gives you a chance to see a working CEE website and also includes the information that in the 15 months from March 2019, when the Newton Program began, to May 2020, “Newton residents and business bought renewable electricity that . . . equates to 94.8 million pounds of CO2, which is roughly equal to 106 million fewer miles driven by passenger vehicles such as cars, pick-up trucks, SUV’s and vans.” This is an impressive contribution by Newton residents to the goal of reducing Carbon emissions!
Worcester, the second largest city in New England launched their plan in March of this year. You might want to watch this excellent five-minute video with John Odell, Director of Energy and Asset Management explaining the Worcester Plan. Boston’s plan will likely be very similar in structure.