A Busy Summer at the DPU: Part 1 – Municipal Aggregation
By Jeremy Koo, Assistant Director of Clean Energy
The Department of Public Utilities issued several orders this summer that will have significant impacts on municipalities and their residents. MAPC will summarize some of the key impacts in a series of blog posts. To start, Part 1 summarizes the DPU’s actions to enhance the municipal aggregation process under docket 23-67 and provides an update on the landscape of municipal aggregation programs in the MAPC region.
November 20, 2024 – Municipal aggregation programs have been a major success story for advancing the use of renewable electricity and delivering electricity supply cost savings to residents across the Commonwealth. Municipalities with greenhouse gas (GHG) emission reduction goals across our region have found aggregation programs to be one of their most effective tools for reducing emissions: municipalities can procure electricity for their default supply option with a higher percentage of renewable electricity (through the purchase of Class I Renewable Energy Certificates [RECs]) than mandated by the state’s Renewable Portfolio and Clean Energy Standards, keeping their community electricity supply ahead of the decarbonization curve.
A majority of non-municipal light plant communities across MAPC’s region (and the Commonwealth) have municipal aggregation programs, and most of those programs exceed the state’s requirements for renewable electricity by at least five percentage points in their default enrollment options.
However, the process of initiating and modifying municipal aggregation programs has historically proven challenging. Municipalities across the Commonwealth have expressed frustration with the long timelines for DPU review and approval of their aggregation plans. At the start of December 2023, 11 municipalities in our region (and another 11 outside of our region) were awaiting approval from DPU. Over half of these communities had been waiting for at least two years.
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These delays and the process for making modifications to existing plans also impacted municipalities with already operational plans: municipalities who launched their programs years prior expressed interest in adding new renewable electricity products. However, concerns about needing to file an amended plan with DPU for approval stopped these communities from moving forward.
A new streamlined process from DPU
In August 2023, DPU launched an investigation with the goal of establishing new, streamlined guidelines for municipal aggregation (D.P.U. 23-67). After extensive public comment, including from dozens of municipal representatives, DPU scheduled a technical session and presented a straw proposal in December 2023. Following this session, the three municipal aggregation consultants and the Cape Light Compact proposed further revisions to the guidelines to reflect stakeholder feedback and engaged in an iterative process with DPU and stakeholders to revise the guidelines throughout the first half of 2024. The final guidelines were submitted to DPU for review in June and DPU issued an order approving the revised guidelines in July 2024. These guidelines include the following provisions:
- Application requirements: The guidelines clearly articulate the required information municipal applicants will need to provide to submit a complete application to DPU. DPU provided numerous template tables that include required information.
- Improved transparency: Municipalities must take additional steps for public transparency, including: (1) prominently placing a link to the aggregation plan on a public website, (2) clearly listing components of rates charged to customers (including supply and renewable energy content, consultant and municipality services, and other service fees); (3) providing the public with access to ongoing information about the program in annual reports (including rates, renewable energy provided, equitable treatment of customers, and more); and (4) providing notice to the electric utility serving the community at key points throughout the aggregation approval and startup process.
- 120-day deadline for approval: DPU must issue a written order within 120 days of the filing of a complete application.
- Modifying existing aggregation plan: Municipalities may now modify their plans after a 30-day public review period and only need to submit their revised plan to DPU for informational purposes. Municipalities may consult with DPU to confirm whether the proposed revision is consistent with the revised guidelines.
DOER also released an updated Municipal Aggregation Best Practices Manual following the DPU order. New aggregation applicants must review their proposed plan with DOER and consult these best practices prior to submitting the plan for review.
DPU has not yet resolved all questions related to how municipal aggregators may be able to offer Low-Income Community Shared Solar (LICSS). DPU expanded its investigation under 23-67 to identify the issues that need to be resolved with the goal of developing guidelines for municipal aggregation LICSS and launched a working group this fall to examine the issue.
The state of municipal aggregation in winter 2024-2025
While over half of municipalities without MLPs already had municipal aggregation programs prior to DPU’s order, DPU’s actions to streamline the application and review process have already enabled many more municipalities to begin launching programs.
- Since the investigation launched, 39 municipalities across the state (11 in MAPC’s region) filed applications to launch aggregation programs.
- The 29 applications that were in the queue when the July order was issued were required to file updated plans, most of which were filed in mid-August.
- Since August, 20 of these 29 plans have been approved, putting DPU well ahead of their 120-day deadline.
Aggregation programs on average continue to deliver both economic and climate mitigation benefits to municipalities throughout the region. Some highlights from our analysis of aggregation programs in the MAPC region are summarized below:
- 70% of eligible MAPC communities have an approved aggregation program (with more to come): As of November 20, 2024, of the 80 communities in MAPC’s region that are not served by MLPs, 52 have active aggregation programs. 11 submitted applications in 2024, with seven approved to-date and four still awaiting approval.
- Default options are increasingly renewable: Starting December 2024, 8 of the 52 active aggregation programs’ default options will exceed Class I REC requirements by over 25 percentage points. 13 programs will exceed Class I REC requirements by 11 to 25 percentage points, and 18 will exceed requirements by up to 10 percentage points.
- Aggregation continues to deliver savings even with more renewables: On average, aggregation program default options continue to deliver bill savings compared to basic service offered by the utilities. While additional renewables do come at a premium, most aggregation programs are more affordable than basic service.
85% of active programs in our region have default options that offer savings compared to basic service. Most of the programs that have higher rates than basic service offer at least 25 percentage points of additional renewable electricity—and residents can opt down to the basic service-equivalent option and save compared to utility basic service in five of these eight communities.
- Price stability offers benefits to residents: Slightly more than half of the 52 active aggregation programs have supply rates locked in for terms of approximately two years, while the remainder have terms of three years. The price stability offered by aggregation programs continues to provide more consistency to customers compared to the six-month fixed rates offered through basic service, as we saw acutely during the unprecedented price spike in winter 2022-23.
- Timing matters for negotiating favorable rates: On average, contracts negotiated in 2024 were 0.75 cents cheaper per kWh compared to contracts negotiated in 2023; all but one of the 15 highest priced default options had terms that began from November 2023 to January 2024. Energy prices are volatile, and while price stability is often a benefit to residents, having to go out to bid for new supply contracts at the wrong time can lead to higher rates in the future if basic service prices fall.