In the era of electric deregulation customers in some states now have the ability to
choose their electric supplier. But early indications are that the vast
majority of consumers will choose not to choose. Who, then, should be
their default supplier? In most states the incumbent utility has been
given this huge pot of customers - Massachusetts and Ohio have decided that it should be the town or city who is responsible for
serving these customers.
Community choice, or
aggregation, will create community pools of electricity large enough to
command leverage on the market, and with sufficient legal authority and
financial flexibility to demand contracts from energy suppliers that
satisfy local economic and environmental goals. In short, it places
authority in the hands of those who will feel the impact of their
decisions, making investment in renewable electricity much more likely.
In May 2004, San Francisco adopted an Energy Independence Ordinance
using California's Community Choice Aggregation law (Laws of California
2002 Chapter 838) as a purchasing and ratesetting authority, and will
issue revenue bonds, called H Bonds, to finance a 360 MW public works
project. The energy projects would be equivalent to more than a third
of the city's electrical capacity needs and on average would supply
about 14 percent of the city's electric consumption (MWhs) without a
rate increase.
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Ohio was the second state in the nation to offer community choice. Its
community choice provision is modeled after that in Massachusetts' 1997
electric restructuring law. Ohio has given local governments the right,
after a vote by their city council, to become the default supplier.
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Massachusetts was the first deregulated state to decide that the town
or city should be the default supplier in the event that customers do
not choose a new electric supplier. Individual customers are always
free to opt out and choose their own supplier, but if they do nothing
their community represents them.
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