Amid rising energy costs, R.I. cities and towns look to buy their own electricity

SIX RHODE ISLAND cities and towns are set to launch the first-ever community electricity aggregation program in May, which is expected to offer lower prices and more energy from renewable sources for residents and small businesses. / AP FILE PHOTO/JOHN ANTCZAK

PROVIDENCE – In the face of staggering winter electric rates, a group of Rhode Island municipalities are entering the power procurement business in search of a better deal.

The state’s first-ever ratepayer Community Electricity Aggregation programs are set to launch next May, automatically giving residents and small businesses in the six participating cities an alternative electricity supplier at a lower cost and with more power from renewable sources. The Sept. 22 announcement came amid protest over soaring winter electric rates from the state’s dominant utility operator, Rhode Island Energy. 

But the plans to put local governments in control of their electricity and leverage bulk buying power began long before the recent rate hikes, according to Jamie Rhodes, sales manager for Good Energy LP. The New York-based electricity services provider has been working with cities and towns in Rhode Island over the last four years to develop a strategy for community aggregation, and find a supplier through a competitive bidding process, Rhodes said in an interview on Tuesday. 

Providence and Central Falls led the way, with leaders in each city quick to take Good Energy up on its initial pitch, Rhodes said. The program expanded to include Barrington, Newport, Portsmouth and South Kingstown.

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For Providence, it was an obvious choice to help meet the city’s ambitious environmental goals, and specifically laid out as a requirement in the city’s 2019 Climate Justice plan, according to Emily Koo, the city’s sustainability coordinator. By taking control of the terms of its electricity procurement, Providence – and other participating cities – can set how much power comes from renewable sources.

Indeed, the contract awarded to supplier NextEra Energy Services LLC – one of two companies to respond to a competitive bidding process – sets the default supply and pricing provided to participating customers to include 10% more renewable energy than the state minimum. Ratepayers can opt to increase or decrease the percentage of renewable energy in their individual supply, which will impact prices, Rhodes said.

They can also choose to opt out of the program entirely and return to Rhode Island Energy.

The prices participating customers will pay are not determined, although the terms of the contract state it must be below market prices, according to Koo. Final pricing will be announced in March, about two months ahead of the May rollout, according to a statement from Good Energy.

Although volatile market conditions have driven up energy costs nationwide, municipal aggregation programs often enjoy lower rates than what is charged to third-party operators like Rhode Island Energy, Rhodes said.

“The key difference is there is less risk for suppliers in serving communities directly,” Rhodes said. “It is more known what the electricity needs are going to be, so fewer risk premiums is where you can see the greatest savings.”

In neighboring Massachusetts, where municipal community aggregation has been growing in popularity, participating customers saved 7% to 8% on their electricity bills over the last four years, according to analysis by National Grid referenced by Rhodes. 

The savings in Massachusetts was enough to convince Aaron Ley, a member of the Bristol Town Council, to at least consider something similar for his town. Bristol decided to hold off on participating in the initial Rhode Island community aggregation program but recently awarded a contract to Good Energy to analyze how it might work for the town, according to Town Administrator Steven Contente.

Contente was skeptical about the prospect of community aggregation, explaining that he didn’t think governments should get involved in buying energy. But Ley thought it was worth exploring, especially amid rising electric rates from Rhode Island Energy.

“The feeling on the council is that we need to do our due diligence to see what the best rate is that we can get for our constituents,” Ley said. 

And the six cities and towns embarking on this new way of buying electricity offer a perfect test case. Rhodes expected more municipalities to sign on after seeing how the initial program works.

“Success breeds success,” he said. 

Meanwhile, Rhode Island Energy has not taken a stand for or against the program in filings to state regulators, who had to approve each municipality’s decision to participate. While Rhode Island Energy stands to lose about 100,000 residential and small-business customers if all the ratepayers in the participating municipalities stick with the supplier from the community aggregation program, it does not impact the company profits or the prices for remaining customers, according to Rhodes.

Already, any customer can choose to find an alternative supplier to what Rhode Island Energy provides under its “last resort service” rates. Less than 10% of the company’s 780,000 customers opt out of these rates now, according to Ted Kresse, a spokesperson for Rhode Island Energy.

NextEra Energy was not available to comment for this story.

Nancy Lavin is a PBN staff writer. You may reach her at 

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