Communities Bypass Utilities to Save Money, Push Green Power

Some New York communities are changing the way their residents buy electricity under an initiative designed to save people money while promoting renewable and locally produced energy.

New York is the seventh state to allow community choice aggregation, which lets cities, towns and villages form energy-buying groups that automatically enroll all residents and small businesses.

Instead of buying electricity individually from a utility, consumers pay a fixed price for energy under a contract negotiated by the local buying group. Contract terms may require all or most of the energy to come from wind, solar, hydroelectric and other renewable sources. A contract may also specify reimbursing consumers for reducing energy use.

Consumers have the power to opt out and switch back to the local utility if they want to.

“We’re getting calls from municipalities and grassroots activists throughout New York,” said Mike Gordon, coordinator of Westchester Smart Power, launched as a pilot project in 2015 as the first community choice energy program in the state. “We are transforming the way we buy, consume and generate energy.”

Democratic Gov. Andrew Cuomo called for the development of community choice programs in 2014 as part of sweeping energy reforms intended to support renewable energy development, energy efficiency and a switch from large-scale centralized power plants to a network of local generators.

Westchester Smart Power, which includes 112,000 homes in 20 communities in Westchester County, solicited bids from energy service companies to supply electricity for two utility territories in the region. ConEdison Solutions, sister company to utility Consolidated Edison, and Constellation Energy won the contracts. Each agreed to rates below last year’s utility price for either 100 percent renewable energy or a mix of fossil fuels, nuclear and some renewables.

Sustainable Westchester, the nonprofit community group that launched the local energy program, said consumers are expected to save $4 million to $5 million a year in a region with some of the highest energy prices in the country. Fourteen of the 20 communities opted for 100 percent renewable energy. About 7,000 customers, or 6.3 percent, opted to switch back to buying energy through the local utility.

All consumers still get their bills from the utilities, which collect a separate charge for maintaining the distribution system. Electricity makes up about half the typical bill.

“As an energy delivery company, we aren’t affected by our customers’ choice of energy supplier,” said Clay Ellis, a spokesman for the utility NYSEG, which serves part of Westchester. “We do buy energy since we’re also the default supplier for many customers, but the energy supply costs we pay are passed directly through to the customer with no markup.”

In 1997, Massachusetts and Rhode Island became the first states to pass community choice aggregation laws as part of electric restructuring legislation. They were followed by Ohio, New Jersey, California and Illinois.

Communities choose to develop the programs for a variety of reasons, including saving money and focusing on renewable energy. Lower rates aren’t always possible. In Illinois, about 100 of 673 aggregation programs that were active in 2014 have now expired because a drop in prevailing utility charges made them less attractive. Others have reduced or eliminated their renewable energy options in response to lower margins of savings.

Ulster County in southeastern New York is developing a community energy program this summer, said county legislator Jen Metzger. She said saving money isn’t the primary goal.

“We see this as the tool for energy democracy,” Metzger said. “We feel there should be local control of energy planning and decisions about where the supply should come from. Some communities want to create local solar projects; some might want to do aggressive education about efficiency. By diversifying your energy supply and relying on local sources, that’s how you get true price stability over time.”