Energy aggregation benefits Connecticut

For municipalities throughout Connecticut, the need for costsavings wherever possible continues to be a top priority, as so many of them can no longer count on the support levels they once received from the state government. And given newly sworn-in Gov. Ned Lamont’s recent remarks that state budget constraints could mean continued challenges for many cities and towns, finding new, creative ways to stretch limited resources at the local level to meet citizen needs is more important than ever.

One of the biggest concerns for municipalities is the cost of energy, where frequent volatility can lead to pricing spikes throughout the year that become difficult to afford. This is particularly true right now with the price of natural gas so heavily dependent on weather; this presents a clear burden for a cold-weather state like Connecticut at this time of year, as 50 percent of the power in the region is generated by natural gas. So it becomes a double hit for cities and towns, with potential cost increases for both heating and electricity.

But there is some good news, despite the higher costs and limited resources, and it comes in the form of energy aggregation. Throughout New England, in the 20 years since five of our six states here brought competition to the retail electricity market (the exception being Vermont), municipalities have been able to join together to leverage their buying power in the market, which in turn has resulted in better pricing and better contract terms. This is the power of aggregation, and it can work as well in Connecticut as it has worked in neighboring states like Massachusetts and Rhode Island.

What needs to be done to make it happen? In Massachusetts and Rhode Island, state legislatures created statutory exemptions from procurement rules which allow municipalities within such buying groups to avoid having to conduct their own competitive solicitations where such solicitations had already been conducted by the buying group. This has saved the buyers time and money, and allowed the buying group to have even more leverage in the market by virtue of providing the suppliers an assured market for their supply. For taxpayerfocused entities, this opens the door for more resources being devoted to their core responsibilities,

Now is the perfect opportunity for the state to consider such measures that have worked so well with our neighbors.

and similar legislation can be equally effective in Connecticut.

Additionally, the Rhode Island League of Cities and Towns, while already a successful aggregation, recently realized its members could do even better by joining forces with the power of a larger aggregation, and the decision led to better contact terms, pricing and new products and services — including on-bill financing of energy efficiency, electric vehicle chargers and solar power — for its members. Once more, this is an approach that can work in Connecticut, where 169 different cities and towns are all searching for ways this year to save on energy bills.

Right now in Connecticut, there are loose affiliations around different business sectors, where customers have pooled their buying power around agreements to use a single broker or a supplier, but nothing as robust as aggregation efforts in Massachusetts and Rhode Island. The problem with Connecticut’s approach is broker agreements merely save customers from having to find and negotiate a contract for services; they still have to pay the broker and they have no buying power with the suppliers. The lack of a statutory exemption for public entities who participate in a buying group where there has already been a competitive solicitation hinders access to buying groups which, in turn, hinders efforts to save money.

As the Connecticut General Assembly begins its work in the 2019 legislative session, now is the perfect opportunity for the state to consider such measures that have worked so well with our neighbors. This is a critical time in Connecticut’s cities and towns, which also makes it the ideal time for the state to remove the barriers that keep municipalities from obtaining these much-welcomed cost savings.

Cynthia Arcate is president and CEO of PowerOptions, a nonprofit energy-buying consortium that provides cost savings to more than 400 nonprofits and municipalities in Connecticut, Massachusetts and Rhode Island.

File photo Power lines at an electricity station. One of the biggest concerns for municipalities is the cost of energy, where frequent volatility can lead to pricing spikes throughout the year that become difficult to afford.