CMA 2016 #155 · Agenda item attachment · Jun 6 2016

INTEROFFICE MEMORANDUM TO: RICHARD C. ROSSI, CITY MANAGER FROM: IRAM FAROOQ, ASSISTANT CITY MANAGER FOR COMMUNITY DEVELOPMENT SUBJECT: VOTE TO INITIATE ELECTRICITY COMMUNITY CHOICE AGGREGATION DATE: JUNE 1, 2016 Primarily as a strategy to increase the amount of renewable energy consumed in Cambridge and thereby reduce greenhouse gas emissions, the City decided in 2015 to start a planning process to aggregate residential electricity consumers into a buying pool, also known as Community Choice Aggregation. Aggregation is typically handled by a consultant (Aggregation Vendor) and designed as an ‘opt-out’ program, giving consumers the choice of whether to be included in buying pool or not. Low income customers stay on special rate. Community Aggregation requires regulatory approval at the state level. The City has engaged Peregrine Energy Group to assist the city in designing an aggregation program, managing the regulatory process, and overseeing the implementation process if approved. The next step in the process is for the City Council to vote to authorize the process to design and initiate the aggregation. Once the process has been initiated, staff will work with the consultant to develop one or more program design options, for review and approval by the Council. Vote to Authorize the City to Initiate Electricity Aggregation Process The municipal aggregation statute, Mass. General Laws, Chapter 164, § 134, requires a vote of the City Council to authorize the City to initiate the process of electricity Community Choice Aggregation on behalf of City of Cambridge residential electricity customers. The statute provides as follows: A city may initiate a process to authorize aggregation by a majority vote of the city council, with the approval of the mayor, or the city manager in a Plan D or Plan E city. Importantly, the vote simply starts the process; it does not require the city to implement an aggregation. I hereby request that City Council pass an Order to the following: The City Council, with the approval of the City Manager, hereby authorizes the City of Cambridge to initiate the process of aggregating the electric load of consumers within the city pursuant to M.G.L., Chapter 164, Section 134.

2 Background on Municipal Aggregation Community Choice Aggregation is a form of group purchasing in which a city or town selects an electricity supplier on behalf of its residents and businesses. The state’s longest-running aggregation, the Cape Light Compact, has been in place since 2006. Today, over 75 communities have active aggregations, including the cities of Lowell, Salem, New Bedford, and Melrose. Many more communities are in the process of developing aggregation plans. Environmental Benefits Cambridge has targeted municipal aggregation as a tool to reduce the city’s GHG emissions. Other communities that are using aggregation for this purpose are using strategies including: - Purchasing additional renewable energy certificates (RECs). For example, the Salem and Swampscott aggregations include 5% more RECs from new renewable energy projects than is included in utility basic service. This puts those communities five years ahead of the state Renewable Portfolio Standard requirements. - Using funds collected through the aggregation to support the development of local renewable energy projects. For example, the Cape Light Compact has used funds to support the development of 28 megawatts of PV projects on Cape Cod. As Cambridge refines its aggregation plan over the next several months, we will examine these and other approaches and develop a strategy that best meets the City’s objectives. What Does Not Change While aggregation affects customers’ electricity supply, all Cambridge customers will continue to receive electricity delivery service from Eversource. As a result, many things will remain the same, including: - Customers will continue to receive one bill from the Eversource. - Customers will continue to call the Eversource if the electricity goes out. - Customers that are eligible for a low-income delivery rate or fuel assistance will continue to receive those benefits. - For customers with net metering for solar power, the net metering credits will continue to appear on the utility bill and be calculated based on the utility’s Basic Service price. Implementation Steps Implementing a municipal electricity aggregation is a highly regulated process that is overseen by the Massachusetts Department of Public Utilities (DPU). The key steps are as follows: 1. The City Council votes to authorize the City to pursue aggregation. 2. The City submits its aggregation plan to the MA DOER for review and then to the MA DPU for approval. 3. Once the plan receives formal approval by the DPU, the City implements a public procurement process to select and sign a contract with an electricity supplier. 4. The City also conducts a public education and outreach effort about the program. This effort includes a mailing about the program as well as informational events open to the community. At the conclusion of that effort, the program launches.