Rhode Islanders are free to choose electricity from a wide variety of competing companies. Some of these offer lower rates, while others focus on greener energy or long-term price stability as their key selling points. Rhode Island has done an outstanding job of bringing the benefits of aggregation to municipal facility accounts through REAP, a program run by the League of Cities and Towns. However, as of yet no community choice programs for residential and small business customers have been formed.
CCA was enabled in Rhode Island through the Utility Restructuring Act of 1996. The Act was amended in 2002 by House Bill 7786 to give municipalities the ability to set up “opt out” programs. Before 2002, less than 1% of customers had chosen alternative electricity providers.
The Rhode Island Energy Aggregation Program (REAP) is operated by the Rhode Island League of Cities & Towns and serves 36 of Rhode Island’s 39 municipalities and four school districts. It has been able to negotiate rates that are significantly lower than the state’s Standard Offer or Basic Service rate. REAP negotiates a master contract that includes terms and conditions; but each municipality enters into its own contract based on its load profile.
According to REAP’s web site (retrieved Nov. 19, 2016) “The program entered its third phase in January of 2012 when the League initiated a preferred provider arrangement where the selected vendor priced electricity for each city and town based upon the load factors of each municipality. Also, each entity was allowed to contract for periods of one to four years. Cost savings of 20% to 30% effective in January were realized by all cities and towns.”
According to a 2014 interview in the Valley Breeze newspaper with Daniel Beardsley, who was then the Executive Director of the League, REAP works with consultants and experienced energy attorneys to issue requests for proposals to various companies that are authorized by the Public Utilities Commission to sell electricity in Rhode Island. After soliciting and reviewing the bids, the League interviews three or four companies, selecting one that they think will be a good provider of electricity based on price, stability of the company, and its ability to work positively with municipal officials.
CURRENT AND EMERGING ISSUES
In addition to being able to choose from nearly 20 different electricity suppliers, some of which offer significant amounts of renewable energy, National Grid offers greener alternatives to it “Standard Mix.” The standard mix is 11% renewable, 48% fossil fuels, 22% nuclear and 18.5% imported from sources that cannot be explicitly tracked or categorized. National Grid’s three green options are New England GreenStart 50%, New England GreenStart 100%, and New England Wind.
GreenStart 100%, for example, eliminates all combustion-based electricity sources and delivers power from hydro (75%), wind (17%), digester gas (7%) and solar (1%) sources. The New England Wind option offers electricity generated 100% by wind farms in the region.
Although Rhode Island’s CCA statute allows opt-out aggregation for residential and business customers, two statutory provisions have discouraged expansion into those markets.
The first provision is the requirement is that residents be given the opportunity to vote on whether they want their community to set up an aggregation program. Several other states have similar provisions and it has not proven to be a significant barrier in those states as long as the newly formed CCA can promise either noticeably lower or more stable prices or a substantially “greener” product at an equivalent price.
The more onerous of these provisions is the requirement to disclose pricing as part of the ballot question. (See lines 14-20 through 14-30 in Section 39-3-1.2 of H 7786 (2002)) This provision makes it virtually infeasible to set up community aggregation in Rhode Island because pricing is subject to change up to the time a contract is signed.
The text of the law relating to this topic is shown below (emphasis added):
No legislative authority pursuant to an ordinance or resolution under this section that provides for automatic aggregation as described in this section, shall aggregate the electrical load of any electric load center located within its jurisdiction unless it in advance clearly discloses to the person owning, occupying, controlling, or using the load center that the person will be enrolled automatically in the aggregation program and will remain so enrolled unless the person affirmatively elects by a stated procedure not to be so enrolled. The disclosure shall state prominently the rates, charges, and other terms and conditions of enrollment. The stated procedure shall allow any person enrolled in the aggregation program the opportunity to opt-out of the program every two (2) years, without paying a switching fee. Any such person that leaves the aggregation program pursuant to the stated procedure shall default to the last resort service until the person chooses an alternative supplier.
- Rhode Island’s renewable energy standard is 10% in 2016, rising 1.5 percentage points per year until reaching 38.5% in 2035. The authorizing legislation was HB 7413, enacted in June, 2016.
- As of late 2016, REAP had saved its members more than $38 million on electricity purchases.
- The controversial Block Island Wind Farm off the southern coast of Rhode Island is the first commercial offshore wind farm in the US. Construction of five 6 MW wind turbines was completed in August, 2016 and commercial operation began in December, 2016. The 30 MW wind farm’s output is equal to approximately 1% of Rhode Island’s electricity usage.
LEGISLATION (Partial List)
- The Utility Restructuring Act of 1996 (Chapter 316 96-H 8124B) was signed into law Aug. 7, 1996 and authorized CCAs
- Summary of The Utility Restructuring Act of 1996 describes the key provisions of the act
- RI General Law 45-55-13.2 (1999) allowed REAP to begin taking bids from power providers
- Restructuring Act of 2002 (H 7786, 2002 R.I. Public Laws chapter 144) was signed into law June 18, 2002.
- Summary of the Restructuring Act of 2002 describes the key provisions of the act. Note: this summary was written by a Connecticut state employee.)
- Senate bill 2841A (2010) decoupled utility profits from utility sales volume to remove disincentives to energy efficiency and demand reduction measures.