Recently, some New Jersey local government officials who were interested in energy aggregation asked us to explain the concept in more detail. This led to our looking at better ways to explain our program to the general public. Here was our first attempt:
As a result of energy deregulation in New Jersey, the major utilities such as PSE&G and JCP&L no longer generate their own energy. The new core business of local energy distribution companies is energy delivery and service – what the industry calls “pipes and wires.” Although they still deliver it to their customers and manage the energy grid, utilities now buy gas and electricity from third-party suppliers (TPS). These suppliers often include their own sister companies, but the utility can buy from any supplier that can meet its requirements for price and reliability.
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Community Clean Energy Aggregation is an opportunity for municipalities to take control of their future in New Jersey’s changing energy environment.
Community Energy Aggregation (also called “Government Energy Aggregation” or “Community Choice Aggregation,” often referred to as “CCA”) is an option provided under law in five states (Ohio, Massachusetts, Rhode Island, California, and New Jersey) for municipalities, counties, and groups of municipalities to take over the provision of energy to their residents and businesses.
The law in New Jersey, passed in 2003 in response to the process of deregulation – which separated generation and distribution, and exempted the production of energy from most regulatory control – allows communities to “aggregate” the demand for their residential customers and some business customers and to purchase, build, or supply both electricity and gas on their behalf, and deliver it via the existing distribution system involving PSE&G, JCP&L, ACUA, and other regulated distributors. For a better understanding of the legal regime, click here for an article by attorney Steve Humphreys of Kelley-Drye. Continue Reading »
Community Energy Aggregation (CEA) is a unique tool that allows counties and municipalities in New Jersey (as well as in California, Ohio, and Massachusetts) to procure and produce their own energy. Residents in such communities automatically become customers of the system, and businesses may opt in if they find it in their interest to do so.
The energy that is “aggregated” by the county or municipality can be electricity or gas or both; it can be whatever combination of renewables, conservation, and traditional sources the community determines; and it is delivered by the regulated utilities to the consumer in a standard way. Unlike investor-owned producers, municipal and county governments have no incentive to promote consumption, since they are nonprofit entities. They can invest in clean technologies, support local economic development, enhance efficiency and conservation, purchase energy from a variety of providers at a scale that makes it cost-effective, and provide energy savings to both business and residential consumers.
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Legislation to implement local government energy aggregation in New Jersey was approved in 2003 (Assembly Bill 2165, now P.L. 2003, C. 24). NJ State Senator Stephen M. Sweeney (D-District 3, Salem, Cumberland and Gloucester) made some initial efforts to interest two counties, but at the time it was not possible to obtain competitive rates from energy producers and the idea was abandoned.
Experience in Ohio, Massachusetts, and California suggests, however, that conditions may now be ripe for energy aggregation in New Jersey.
Cooling America thru Local Leadership, a NJ-based 501(c)(3) nonprofit organization, is spearheading clean energy aggregation in counties and municipalities throughout New Jersey. For more information, please contact us.
Community Clean Energy Aggregation is based on legislation that allows local governments (counties and municipalities) to buy electricity wholesale and sell it to their own businesses and residents. Only 5 states have passed specific legislation that allows community energy aggregation: Ohio, Massachusetts, Rhode Island, New Jersey, and California.