New rates, energy efficiency spark success for Cape Light Compact

Cape Light Compact (CLC) recently announced new electricity supply prices for residential, small commercial and large industrial customers that are the lowest for the compact since 2005.

In addition to negotiating lower-cost electricity competitive prices for about 200,000 consumers, the compact operates an energy efficiency program that has become a model for other regions across the country.

CLC buys its electricity from supplier ConEdison Solutions, based in White Plains, N.Y. Through a competitive pricing process, the compact also awarded a three-year contract to ConEdison Solutions for municipal customers that will be in effect from July 2011 through July 2014 meter-read dates.

“Cape Light Compact is working hard to make your electric bills lower, especially in these challenging economic times,” CLC chairman Bob Mahoney said in a press release. “That’s why we’re thrilled to offer our Cape and Vineyard customers the best basic electricity prices currently available and great long-term options starting in 2011.”

How the kilowatt hours add up

The new basic service rate of electricity for residential customers is 7.71 cents per kilowatt hour (kWh), a 3.5 percent decrease from 7.99 cents per kWh in the previous six months. The reduced price, in effect from January 2011 through July meter-read dates, is a savings of more than 12 percent over basic electricity prices from the same time period a year ago.

CLC also now offers a one-year rate of 8.60 cents per kWh and a two-year rate of 8.70 cents per kWh for residential and small business customers who want a fixed rate for electricity over a longer period of time.

Municipal customers will pay a new lower price of 7.57 cents per kWh, a 2.1-cent reduction from the current price of 9.67 cents per kWh.

“We are very pleased that this premium agreement with our electricity supplier, ConEdison Solutions, will translate into significant savings for Cape Cod and Martha’s Vineyard taxpayers over the next three years,” Mr. Mahoney said.

The reduced rate will save towns and taxpayers $1.8 million a year and $5.4 million over the three-year contract period, according to a CLC press release.

CLC negotiated comprehensive contracts with ConEdison Solutions to ensure a fixed price regardless of fluctuating market conditions. Accounts for current CLC customers will be adjusted automatically to the new rates.

The compact also offers Cape Light Compact Green prices to customers who agree to pay more for a percentage of their electricity that is generated from renewable energy sources. For example, residential customers who opt for 50 percent green will pay 8.61 cents per kWh and 9.31 cents per kWh for 100 percent green from January 2011 through July meter-read dates.

CLC’s path to plug-in

CLC is a public regional energy services organization created in 1997 to work with the combined buying power of the region’s electric consumers. CLC is authorized by the 21 towns of Barnstable and Dukes County to choose the electric supplier for the residents and businesses of Martha’s Vineyard and Cape Cod.

CLC’s success has since translated to programs in other states, according to Scott Ridley, a policy analyst and energy consultant involved in its creation in Barnstable County with former state senator Robert O’Leary, and Matt Patrick, former Third Barnstable District state representative.

Mr. Ridley broached the CLC concept in the late 1990′s to Mr. O’Leary, then chairman of the Barnstable County commissioners, and to Mr. Patrick, director of Cape and Island Self-Reliance. At the time, the three were looking at how to utilize local utility franchises.

Historically, utilities placed poles and wires on streets through a franchise with local governments, Mr. Ridley explained.

“It’s sort of a sleeping power that local governments have, and back in the ’90s when they were looking at restructuring the electric industry and going to a competitive basis, we were trying to figure out what would be the best way to utilize the old franchise powers to give consumers, especially small consumers, some leverage in the whole process,” Mr. Ridley said, “because it was clear that the large industries and big commercial customers would be able to benefit from this.

“But it wasn’t clear that the smaller consumers would be able to benefit, so we were trying to figure out a way to bring the smaller consumers together so they could gain some benefit from the whole system,” he added.

The three men formulated an initial planning group for CLC through Barnstable County, and then went out and spoke to various towns to explain the concept and get them to sign on. Mr. Patrick targeted the upper Cape and Vineyard, while Mr. Ridley covered the mid and lower Cape.

A model for energy efficiency

“Cape Light Compact is a landmark program as far as what’s going on in the country,” Mr. Ridley said. “Also, with the energy efficiency program, it was first time in the country that a program was formulated like that. It wasn’t a municipal utility; these were just towns that were doing this, employing together an energy efficiency program that was being constructed from a consumer perspective rather than from a utility perspective.”

Before Commonwealth Electric underwent a merger and became NSTAR, Mr. Ridley said utility companies collected a charge from all consumers for energy efficiency.

“But what we found was most of the money was not being used on the Cape and Martha’s Vineyard, but was going over the bridge and being used elsewhere,” Mr. Ridley said. “And part of our rationale was to be able to bring what was a total of about $5 million a year back down here and make sure it was being applied in the towns that it was coming from.

“And we felt also we could do it on a nonprofit basis,” he added, “whereas the utility was taking a certain amount of that money as profit for its stockholders, although it had no money at risk.”

Since July 2001, CLC has invested over $50 million in energy efficiency programs for residents and businesses on Cape Cod and Martha’s Vineyard, according to its website. CLC estimates those programs will result in an annual net-benefit reduction of approximately $218 million dollars in electricity costs for customers over the three-year period 2010-2012.

Since the compact’s creation, Mr. Ridley subsequently helped establish a similar program for about 130 cities and towns in the Cleveland area, which was picked up in San Francisco and some towns in Texas.

The state of Vermont used CLC’s concept to create a statewide energy efficiency program run by Efficiency Vermont, a nonprofit organization, Mr. Ridley said, which has been copied by the state of Maine.

Mr. Ridley is coauthor of the book “Power Struggle: The Hundred-Year War over Electricity,” and has written for many publications, including New Republic, The Nation, and Newsday. He continues to write about energy issues, as well as work as a consultant for state and local governments and private clients.

“The energy industry is continually evolving, and is a continual challenge for Cape Light Compact, but I think they’ve done quite well,” Mr. Ridley concluded.