Professional Documents
Culture Documents
AGGREGATION OPTIONS:
An Introductory Guide for Non-Profits, Local
Governments, and Community Leaders
Caroline Sahley
May 2001
IN COLUMBUS: IN CLEVELAND:
7870 Olentangy River Road 2012 West 25th Street
Suite 209 Suite 917
Columbus, Ohio 43235 Cleveland, Ohio 44113
Voice: 614-985-6131 Voice: 216-861-4491
Fax: 614-888-9716 Fax: 216-861-4492
Toll-free: 1-866-GREENOH
geo@GreenEnergyOhio.org
www.GreenEnergyOhio.org
Acknowledgements
1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . 6
4 AFFINITY AGGREGATION . . . . . . . . . . . . . . . . . 37
4.5 Conclusions . . . . . . . . . . . . . . . . . . . . . . 44
5.1 Introduction . . . . . . . . . . . . . . . . . . . . . 46
7 SUMMARY CONCLUSIONS . . . . . . . . . . . . . . . . . . . 68
8 APPENDICES . . . . . . . . . . . . . . . . . . . . . . . . . . 72
1
CONSUMER CHOICE AND ELECTRICITY
1.1 Introduction
6
1 Consumer Choice and Electricity
The 2001 power shortage in California is due in part to growing demand for
electricity coupled with the slow growth of in-state generation. Transmission
constraints make importing power difficult and low hydro levels in the Pacific
Northwest contributed to power shortages. More significantly, long-term, fixed price
wholesale contracts are not permitted, requiring suppliers to buy electricity on the
Power Exchange. This makes them vulnerable to price fluctuations and spot pricing.
2
California Public Utilities Commission data, December 1999, cited in Nancy Rader and
Scott Hempling, Promoting Competitive Electricity Markets Through Community
Purchasing: The Role of Municipal Aggregation, American Public Power Association,
January 2000.
3
7
Electric Consumer Aggregation Options
8
1 Consumer Choice and Electricity
9
Electric Consumer Aggregation Options
10
1 Consumer Choice and Electricity
Jack Lyne, Power Deregulation: A Bumpy Road Begins the Free-Market Ride, Site
Selection, August/September 1998.
8
11
Electric Consumer Aggregation Options
12
1 Consumer Choice and Electricity
13
Electric Consumer Aggregation Options
2
AGGREGATION MODELS AND STRATEGIES
14
2 Aggregation Models and Strategies
a) Governmental Aggregation
15
Electric Consumer Aggregation Options
b) Affinity Aggregation
10
See Appendix A for complete list of communities voting on community aggregation.
16
2 Aggregation Models and Strategies
c) Internet-based Aggregators
17
Electric Consumer Aggregation Options
18
2 Aggregation Models and Strategies
11
In California and Pennsylvania, the most successful states for green power,
approximately 2% have switched to green power. Blair Sweezey and Lori Bird, Green
Power Marketing in the United States: A Status Report, Fifth Edition; National
Renewable Energy Laboratory, August 2000, pg. 7-8.
19
Electric Consumer Aggregation Options
12
Kay Guinane, Group Buying Power: Meaningful Choices for Energy Consumers,
Environmental Action Foundation, May 1997, pg. 9.
20
2 Aggregation Models and Strategies
13
Kay Guinane, op. cit.
14
Nancy Rader and Scott Hempling, op cit.
21
Electric Consumer Aggregation Options
to the power. The latter option is most often used for its simplicity
and low risk.
22
2 Aggregation Models and Strategies
are load profiles. Aggregation pools may get better rates if they offer
a flat load profile -) one that is fairly consistent both seasonally or
intra-day -) or better yet, if they can demonstrate lower loads at peak
times. A supplier will consider not only the demand for power, but a
flatter load profile and higher load factor (ratio of consumption to
peak demand). A skilled consultant can not only assess the load profile
of a given group, but can help form a buying pool with a more
attractive load profile.
15
Anne Millen Porter, The Power Buy: What You Need to Know Part II, Purchasing
Online: The Magazine of Total Supply Chain Management, June 5 th 1998.
http://www.manufacturing.net/magazine/purchasing
16
23
Electric Consumer Aggregation Options
17
Porter, op. cit.
24
2 Aggregation Models and Strategies
25
Electric Consumer Aggregation Options
3
GOVERNMENTAL AGGREGATION:
COMMUNITY CHOICE
26
3 Governmental Aggregation: Community Choice
18
19
Matthew Patrick, Community Choice, July 31, 1998. unpub.
27
Electric Consumer Aggregation Options
20
21
Nancy Rader and Scott Hempling. op. cit.
28
3 Governmental Aggregation: Community Choice
22
Patrick op. cit.
23
29
Electric Consumer Aggregation Options
The first request for proposals was issued in 1998. The first
bids were received in the fall of 1998, and were found to be
uncompetitive. The standard offer of $.035, which most residential
consumers were eligible to receive from the default provider, was
difficult for suppliers to beat.24 This illustrates the critical importance
of setting the price to compare, or standard offer, at a price high
enough to enable new entries to the market to be competitive.
Although rates in the Commonwealth Electric territory are relatively
high, the low standard offer price set by regulators acts as a barrier to
competition.
24
Cape Light Compact to Try Again. LEAP Letter September-October 1998.
25
Press Release, Cape Light Compact and Select Energy Announce Landmark Contract.
1999.
30
3 Governmental Aggregation: Community Choice
26
For more information on PowerOptions, see section 4.2.
31
Electric Consumer Aggregation Options
27
See Appendix B for a complete list of all NOPEC communities.
32
3 Governmental Aggregation: Community Choice
28
NOPEC has also successfully lobbied the Ohio legislature to amend a law that governs
gas aggregation. The House-passed version would have limited the aggregations to
only 50,000 customers, thus denying NOPEC the right to represent its entire 400,000
customer base.
29
33
Electric Consumer Aggregation Options
30
34
3 Governmental Aggregation: Community Choice
31
For more on green power aggregation, see Chapter Six.
35
Electric Consumer Aggregation Options
36
4
AFFINITY AGGREGATION
37
Electric Consumer Aggregation Options
38
4 Affinity Aggregation
39
Electric Consumer Aggregation Options
in the deal was a fixed price over the life of the contract, short term
(two year) options, uninterruptible power, and discounts for
employees of participating non-profits. More significantly, PECO
reimbursed PowerOptions for a significant proportion of its start up
costs -) which were approaching $1 million.
32
Interview, Angela O’Conner, Power Options Operations Manager, September 2000.
40
4 Affinity Aggregation
33
Jack Lynne, Power Deregulation: A Bumpy Road Begins the Free-Market Ride, Site
Selection Magazine, August-September 1998.
41
Electric Consumer Aggregation Options
34
Strober op. cit. pg 3.
35
Select Energy Newsletter, Eye on Energy, #4, June 12, 1998.
42
4 Affinity Aggregation
The Ohio Farm Bureau has registered with the Public Utilities
Commission of Ohio as a licensed aggregator for farm, residential and
small business members. The first step in early 2001 will be to conduct
a load profile of the potential group. Interested Farm Bureau members
have been asked to release their electricity use records to enable a
load profile to be developed.
36
Quoted in, Electricity Choice Begins Now. Buckeye Farm News, January 2001. Pg. 6.
43
Electric Consumer Aggregation Options
4.5 Conclusions
37
The case of energy purchasing cooperatives is covered in the following chapter.
38
Guinane op. cit.
44
4 Affinity Aggregation
45
Electric Consumer Aggregation Options
5
CONSUMER AGGREGATION: A MODEL FOR
LOW-INCOME POPULATIONS?
5.1 Introduction
46
5 Consumer Aggregation: A Model for Low-Income Consumers?
39
47
Electric Consumer Aggregation Options
Perhaps the greatest problem is that this approach fails to address the
key issues facing low-income customers -) poor load profiles and
payment histories. Colton quotes the National Conference of State
Legislatures as stating “even if customers with similarly unattractive
load profiles combine their accounts, they will simply become one large
41
Pam Marshall and Roger Colton, Aggregating Low-income Customers: Can Market-
Based Solutions Fix Market-Based Problems? Energy CENTS Coalition, June 1998. pg.
54.
48
5 Consumer Aggregation: A Model for Low-Income Consumers?
42
Colton 2000 op cit.
49
Electric Consumer Aggregation Options
50
5 Consumer Aggregation: A Model for Low-Income Consumers?
43
Barry Ingber, An Oil Co-op’s Experience in Marketing Green Electricity, EPRI Green
Power Conference, May 1999.
51
Electric Consumer Aggregation Options
Co-op was able to offer electricity at 5.25 cents per kWh, beating the
standard offer in the Connecticut Light and Power service territory.
Members receive the additional benefit of services from the ICE
program: Innovation, Conservation and Efficiency. In addition, the
Connecticut Energy Cooperative offers fuel oil, propane, natural gas
and telecommunication services. Similar to BOCA, the Cooperative
offers two electricity products, Ecowatt, a certified green product,
and Valuewatt, a low-cost product.44
44
The New Co-ops, Rural Electrification Magazine. No date.
52
5 Consumer Aggregation: A Model for Low-Income Consumers?
53
Electric Consumer Aggregation Options
45
Colton 2000, op cite
46
The Maryland Energy Administration and Office of the Peoples’ Counsel offer a third
solution. The report recommends that a systems benefit charge fund legal,
technical, marketing and other staff to assist with low-income and other residential
aggregation efforts. Maryland Energy Administration and Office of Peoples’ Counsel,
Public Benefits and Electric Market Restructuring in the State of Maryland.,
undated.
54
5 Consumer Aggregation: A Model for Low-Income Consumers?
for bulk purchases of electricity, natural gas and heating oil. Residents
signing up for LIHEAP benefits are eligible to join the purchasing pool.
The pilot program is open to 15,000 residents.
The link with the non-profit agencies will provide the necessary link to
the community, through their outreach and organizing capacities.
www.ncat.org/liheap/.
55
Electric Consumer Aggregation Options
48
Pam Marshall and Roger Colton, op. cite. 1988. pg. 55.
56
5 Consumer Aggregation: A Model for Low-Income Consumers?
5.6 Conclusions
57
Electric Consumer Aggregation Options
58
5 Consumer Aggregation: A Model for Low-Income Consumers?
59
Electric Consumer Aggregation Options
6
AGGREGATION AND GREEN POWER
60
6 Aggregation for Green Power
50
Personal communication, Dean Post, Customer Service and Oil Heat Manager, ECAP.
October, 2000.
61
Electric Consumer Aggregation Options
51
62
6 Aggregation for Green Power
63
Electric Consumer Aggregation Options
64
6 Aggregation for Green Power
52
Green Mountain Energy and Episcopal Power and Light Sign Agreement to Promote
“Green” Electricity Statewide, Press Release, August 8, 2000.
65
Electric Consumer Aggregation Options
Retail markets for green power are growing slowly in the U.S.
In the absence of renewable portfolio standards or other green power
mandates, customer sign-ups for green power remain too low to drive
large-scale investment in the generation of renewable energy.
66
6 Aggregation for Green Power
67
Electric Consumer Aggregation Options
7
SUMMARY CONCLUSIONS
68
7 Summary Conclusions
69
Electric Consumer Aggregation Options
70
71
Electric Consumer Aggregation Options
APPENDIX A
72
Perry
Ashtabula countywide
73
Electric Consumer Aggregation Options
APPENDIX B
74
About Green Energy Ohio:
Caroline Sahley was Executive Director of Green Energy Ohio from 1999-2000. She was
previously research associate at the International NGO Training and Research Centre in Oxford,
England, and holds a Ph.D. from the London School of Economics. She currently works as an
independent consultant in the field of international development. She can be contacted at
sahley@aol.com.