New York City: Muni Aggregation a "Meritorious" Concept, "Worthy" of Consideration
February 18,2015
The concept of municipal aggregation of retail energy customers, "appears to be meritorious and worthy of further consideration," the City of New York said in comments to the New York PSC concerning community choice aggregation.
The City of New York stressed that it, "has not yet made any decisions whether to sponsor a CCA program."
However, the City cited what it saw as potential benefits of the concept, stating, "Provided the framework for the programs is appropriate and the programs are properly designed and implemented, CCA could provide an additional means to empower consumers."
The City also noted potential pitfalls, as well, however, particularly given the monthly variable default service structure in New York.
"[O]ther states that permit CCA programs do not have utility supply charges that fluctuate on a monthly basis, as they do in New York State. This is a critical difference that may subject CCA customers to higher prices than alternative supply options. Although [PSC] Staff asserts that the supply agreement could allow customers to opt-out at low or no cost, such provision would increase the ESCO’s risk, which likely would be reflected in an increased supply cost. Careful consideration of the program structure and rules is needed to ensure that CCA programs are cost-effective," the City said
"Second, an objective evaluation of potential program costs is needed. Although the [PSC Staff] White Paper claims that CCA programs would have little or no impact on taxpayers, advocates for CCA programs in the REV customer engagement working group last summer acknowledged that CCA programs can impose costs on municipalities and taxpayers. Unfortunately, there was not sufficient time in that process to further explore this issue and understand the potential magnitude of those costs," the City said.
"The White Paper does not contain any data regarding the potential cost of establishing or administering a CCA program, or any analysis of how the cost of supply under a CCA program might compare to the cost of supply from alternative sources. Without any factual basis, the Commission cannot simply assume that the incremental costs and work burdens placed on municipal officials will be inconsequential, or that the CCA cost would be competitive with the price paid by full-service utility customers. Indeed, the CCA experience in Chicago suggests that CCA customers could pay substantially more than full-service utility customers," the City said.