Look out, your town may switch you to a ‘greener’ energy plan
It was one of those pieces of mail that you might cast aside without much thought, but when Terry Ann Knopf dug into the fine print, she learned some surprising news: Brookline officials would be switching her electricity supplier.
The city, she later learned, was using a provision in the state’s electricity laws that allows a municipality to buy power on behalf of its residents, even if it means switching to a more expensive supplier. People can opt out, but they would have to proactively reach out to the company to do so.
“I may have a master’s degree from Harvard, but I didn’t know what they were talking about, frankly,” Knopf said. “At the very least, it is quite confusing for someone who is not well informed about electricity rates and kilowatts.”
Residents in many towns in Greater Boston have been getting similar notices lately, as community leaders seek to buy more environmentally friendly power than what’s offered by the utilities Eversource and National Grid.
Other municipalities that have recently decided — through town meeting or city council votes — to buy power in bulk include Arlington, Cambridge, Lexington, Somerville, Sudbury, and Winchester. Several swapped on July 1. In all, nearly 100 cities and towns have made the switch, most of them doing so in the past two years, according to the Metropolitan Area Planning Council.
In Knopf’s case, her electric rates would go up by a few dollars a month. In return, the portion of her electricity from renewable sources would increase to 37 percent, from the current level of 12 percent. She ultimately went along with the new plan, because she wanted to do her part to help the environment. But she still felt put off by the process.
“I wish the town could have been more precise and forthcoming in letting us as consumers know how our electricity rates would be affected,” Knopf said.
For most communities, the supply costs in the new environmentally friendly plans are about the same as with current plans. In Winchester, the rates are also higher, though customers there won’t see quite as much of an increase as in Brookline. Communities with supply rates that are somewhat cheaper include Somerville and Cambridge.
The state Department of Public Utilities has approved all of the changes.
But ConsumerWorld.org’s founder, Edgar Dworsky, argues that this approach is decidedly anti-consumer, particularly because the vast majority of people won’t bother to make the effort to opt out of their new plans.
The notices resemble sales pitches or junk mail, Dworsky said, and many people will simply throw them away or at least not fully read or understand them.
“What upsets me about the whole thing is the manner in which cities and towns are implementing it,” Dworsky said. “They’re automatically enrolling people in these plans and switching them away from Eversource unless they complain. . . . If a consumer doesn’t understand it, throws it out, or does nothing, they get switched anyway.”
The dollars can add up, at least according to Eversource. The company estimates that residential customers who joined municipal aggregation programs, as they’re known, have since 2005 collectively paid more than $50 million more than they would have if they had stuck with Eversource’s basic service option.
(Eversource and National Grid continue to deliver power to the homes in towns that have switched, but they no longer handle the supply.)
There could be a financial downside for residents of these towns who don’t elect to change plans, too. James Daly, vice president of energy supply at Eversource, estimates the company will pay 0.5 cents per kilowatt hour more for electricity supplies for its Eastern Massachusetts customers, starting July 1. That’s because Eversource’s suppliers are accounting for a big anticipated loss in electricity customers in the utility’s buying pool as towns switch over.
That extra cost translates to about $3 more a month for an average residential customer.
Daly said it’s tough for towns to consistently beat utilities’ prices if they go with another supplier. But the emergence of environmentally friendly plans gave these municipalities a new reason to switch.
“They’re not for the most part advocating that they will save customers money,” Daly said. “It’s that they can get a greener product.”
Many towns made the switch after being approached by consultants such as Good Energy and Peregrine Energy, who act as intermediaries, and energy suppliers, such as power plant operators.
State law requires utilities to buy an increasing amount of renewable energy every year. These purchasing plans allow towns to do more for the environment in a cost-effective manner, Mass Energy Consumers Alliance executive director Larry Chretien said, while helping to support local clean-tech jobs.
“Our viewpoint is it’s not anticonsumer, it’s pro-consumer,” said Chretien, whose group is working with Good Energy to line up deals with towns. “It moves us forward on renewable energy in a very effective way. . . . We’re able to demonstrate that a community can go 5 percentage points ahead of state law at a cost that’s competitive to Eversource’s service.”
Big industrial companies have been able to shop around for the best rates since the state’s electricity deregulation law was passed in 1997. But it’s been much harder for consumers to do so, particularly if they are looking for good deals on price.
Over the past two years, however, the added incentive of helping the environment, has seen these municipal plans take off in the Boston area.
“This is a classic example of communities taking control of their own climate-change destiny,” said Philip Carr, Good Energy’s regional director.
In Brookline, Selectwoman Nancy Heller said a Town Meeting member picked up on the idea to make the town more environmentally friendly after hearing about a similar effort in Melrose.
Working with Good Energy, Brookline officials picked Dynegy, a Houston company that owns several power plants in New England, as the town’s energy supplier. Dynegy has also recently signed deals with Acton, Arlington, Somerville, Sudbury, and Winchester.
Heller said the town deliberately offered an alternative for people who didn’t want to pay extra for more renewable power.
“We realize that there are some people in Brookline who struggle, whose budgets don’t allow” for the extra cost of $2 to $3 a month, Heller said.
Charlie Harak, an energy attorney with the National Consumer Law Center in Boston, said consumers should read the fine print in these deals, but usually aren’t going to pay substantially more for them than they would if they stuck with their utility.
“It’s not like people are getting clobbered,” Harak said. “[But] it’s very hard to beat the default supplier’s price.”