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<title>March 2002: Municipal Aggregation Proposed in Rhode Island</title>
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<p align="left"><strong><small><font face="Arial">About The Author:</font></small></strong></p>
<p align="left"><font face="Arial" style="font-size: 9pt">Robert A. Olson is a partner in the law firm of
Brown, Olson & Gould, P.C. which maintains a nationwide practice in energy law,
public utility law and related commercial transactions.</font></p>
<p><small><font face="Arial"><font style="font-size: 9pt">He can be reached at:</font><br>
<br>
<b><font color="#0000FF">Brown, Olson & Gould, PC</font></b><br>
2 Delta Drive<br>
Suite 301<br>
Concord, NH 03301<br>
<a href="mailto:[email protected]">[email protected]</a><br>
(603) 225-9716<br>
<a href="mailto:[email protected]"></a></font></small></p>
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</center><p align="left"><b><u><br>
March 2002</u>
<br>
<font size="6">Municipal Aggregation
Proposed in Rhode Island<br>
</font>
</b><strong>by Robert Olson -- Brown, Olson and Wilson, P.C.<br>
</strong><font face="Arial" size="2">(<em>originally published by PMA OnLine Magazine:
200</em>2/05/16)</font></p>
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<p align="left">Rhode Island enacted its Utility Restructuring Act in 1996.
However, as of February 2001, the "Report of the Rhode Island Public
Utilities Commission on Electric Restructuring" concluded that most
consumers had never exercised their option to purchase electricity from the
competitive market,
and that the actual savings obtained by customers entering the competitive market was
"probably modest." Legislation is now pending before the Rhode Island General Assembly to
amend Rhode Island’s electric restructuring law.
According to the executive summary prepared by
the bill’s sponsors, the legislation builds upon
"several visible successes" in the restructuring
regimes of other states. Among other things, the
proposed legislation provides for municipal aggregation
of retail electric loads.
</p>
<p align="left">As proposed, municipalities would be authorized
to adopt ordinances to aggregate retail electrical
loads located within their borders, and to enter
agreements for the purchase of electricity to meet
the aggregated load. The advantages of municipal
aggregation would presumably include increased bargaining power for the
consumer due to the larger volume of potential sales, and reduced
costs for suppliers due to the ability to
market to a single entity rather than numerous
individuals.
</p>
<p align="left">The aggregation would occur either by aggregating only the
loads of persons specifically consenting
to such aggregation, or by automatically aggregating
the loads of all persons who do not
specifically opt out. In the case of automatic
aggregation, the scheme would not take effect
unless approved by a majority of the voters in an
election, and the municipality would be required
to make certain disclosures, including disclosure
of rates, charges and other terms and conditions of
enrollment. Any person enrolled in an automatic
aggregation program would have an opportunity
to opt out every two years without incurring a
switching fee.
</p>
<p align="left">Following enactment of the ordinance and any
required approval of the electorate, the municipality
must develop a plan for the operation and
governance of the aggregation program to be reviewed
and approved by the Public Utilities Commission.
Plans under which the cost of energy in
the first year would exceed the cost of energy
under the standard offer cannot be approved unless
the municipality demonstrates 1) that the cost
of energy under the plan will be lower than the
standard offer in subsequent years, or 2) that the
excess cost is due to the purchase of renewable
energy.
</p>
<p align="left">The proposed legislation is very similar to the
municipal aggregation provisions of Ohio’s electric
restructuring legislation adopted in 1999.
According to the Ohio Consumer Counsel’s
("OCC") "End-of-Year Report: A Review of
Ohio’s Electric Market in 2001," 15% of all eligible
residential consumers actually switched electric
suppliers in 2001, the "vast majority" of whom
ere residents of the 158 communities that have
adopted municipal aggregation programs. Depending
on usage, the OCC reports that aggregation
customers are expected to save between 1%
and 11% on the cost of electricity.
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<p align="left"><font face="Arial">
<small>Robert A. Olson is a partner in the law firm of Brown, Olson &
Gould P.C.
which maintains a nationwide practice in energy law, public utility law and related
commercial transactions. He can be reached at:</small></font><p align="center">
<font face="Arial"><small><font color="#0000FF"><b>Brown, Olson & Gould, PC</b></font><br>
2 Delta Drive, Suite 301<br>
Concord, NH 03301 <br>
<br>
<a href="mailto:[email protected]">[email protected]</a> | (603) 225-9716<a href="mailto:[email protected]"></a></small></font>
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