Cape Cod & Martha's Vineyard - Green Power Purchasing

Summary

The Cape Light Compact has negotiated with MASS ENERGY for the purchase of 4,000 Renewable Energy Certificates (RECS). The RECS will be generated from a land-based wind project, the HOOSAC WIND Project, located in western Massachusetts. The Cape Light Compact, an aggregation of 21 towns and two counties on Cape Cod and Martha's Vineyard, represents 185,000 metered electric customers in Massachusetts. The compact was formed in 1997 through resolutions passed by town meeting, and the board of selectmen or town council, in each member community. Participation in the compact is voluntary for the towns and for each individual consumer. The compact is the first "Community Choice" model for municipal aggregation in Massachusetts. Community Choice offers consumers the ability to join together to gain an economic advantage in a deregulated market place by jointly choosing power supply through their local governments. In establishing contracts with suppliers, cities can specify or negotiate the amount of green power to be supplied, as well as prices, service, and protections for vulnerable customers, such as the elderly or low-income. In March 2000, the compact contracted with Select Energy to supply electricity for Cape Cod and Martha's Vineyard consumers. The contract, which covers all classes of consumers -- industrial, governmental, commercial and residential -- is one of the first of its kind in the nation. The contract includes options to establish opportunities for consumers to purchase green power from renewable energy sources, and development of distributed energy and energy efficiency-related products and services. Volatility of the market and problems in market rules delayed the start-up of the contract, but in 2001 the compact won state approval to launch a pilot project to assist those hardest hit by high electric prices. In March 2002, the Cape Light Compact announced an agreement with Mirant Corporation that resulted in savings to electricity consumers of nearly $2 million in the first year. Since accepting the contract, it customers have saved an estimated $3 million through the end of 2003, with additional savings of approximately $300,000 anticipated in 2004. The contract, the first of its kind in New England and currently in place until at least the end of 2004, served 45,000 default-service customers in 2002 and 52,000 in 2003. These customers were paying among the highest electric rates on Cape Cod and Martha's Vineyard. In 2003, these customers paid $.04798/kWh; they will pay $.05651/kWh in 2004. It more than doubled the total number of customers now receiving competitive supply in Massachusetts. In addition to cost savings, the agreement offers consumer the option to purchase renewable energy. Customers can purchase 100% of their electricity from renewable-energy resources, including run-of-the-river hydro (75%), landfill gas or wind (24%), and solar (1%) for 8.9¢/kWh, or a premium of 1.768¢/kWh over the compact's standard electricity product. Alternatively, customers may choose a 50% renewable-energy option for 8.3¢/kWh, which represents a premium of 2.336¢/kWh for the green power portion. Initially, 25% of the product will come from "new" renewable resources. Mirant voluntarily complied with the Massachusetts Renewable Energy Portfolio Standards from the outset of the agreement, eight months earlier than the January 2003 deadline, and made payments toward development of renewable energy to the Massachusetts Renewable Energy Trust Fund. The contract with Mirant required the approval of the compact's member towns, as well as state regulators. Individual consumers who do not wish to participate will have the option to "opt-out" and choose the existing supplier, Commonwealth Electric, or choose another competitive supplier if one is available. In August 2000, the Massachusetts Department of Telecommunications and Energy approved the compact's original municipal aggregation plan. The Cape Light Compact's members are the Cape Cod [Barnstable County], Massachusetts towns of Barnstable, Bourne, Brewster, Chatham, Dennis, Eastham, Falmouth, Harwich, Mashpee, Provincetown, Sandwich, Truro, Wellfeet, and Yarmouth; the Barnstable County Commissioners; the Martha's Vineyard [Dukes County] towns of Aquinnah, Chilmark, Edgardown, Oak Bluffs; Tisbury, and West Tisbury; and Dukes County. Other public aggregators and/or groups which are investigating public aggregation in Massachusetts include Franklin County, Hampshire County, Town of Lexington, and South Coast EmPOWERment. SouthCoast emPOWERment is an intergovernmental organization of eight municipalities in Southeastern Massachusetts that have been authorized by their Town Meetings to join with other municipalities to aggregate electrical loads similar to the Cape Light Compact. The member towns are Acushnet, Dartmouth, Fairhaven, Freetown, Marion, Mattapoisett, Rochester and Westport.