The long dormant power of local governments to grant utility franchises has already been described as the "sleeping giant" of electric utility restructuring because of the potential it holds for power marketers to aggregate residential and small business customers for bulk sales. Now, the initiative by Barnstable County, could mean the giant is waking.
Believed to be the first large scale example of small consumer aggregation to occur in the United States, the scheme pools the power demand of 162,000 customers, representing $175-$200 million in annual revenues -- half the load of the current utility, Commonwealth Electric. At present, 11 of the 15 towns have voted in favour of the strategy, termed a "loose franchise." Residents, small businesses and some industrial operations will enter the market as one buyer as early as January 1998, unless they specifically opt out of the deal.
Meantime, a number of citizens in the area have voiced support for local wind projects. Organisers behind the Barnstable County effort say that as much as $40,000 has been set aside for feasibility studies for an undisclosed wind farm site.
Barnstable County officials talked about the scheme at a June conference in Washington DC. The event was dominated by discussion of the potential for local governments on the free market. One study argued that the only way small consumers will benefit in the new market is for local governments to become buying agents for consumers. "It's a buyer's market. We are essentially saying that sellers need to agree to get out of the way of our local efforts on DSM and renewables," said Nancy Brockway, utility analyst with National Consumer Law Centre. "This is a terrific marketing programme that offers a lot of value," she adds.
Given Zond's recent purchase of an interest in new wind projects for Maine (Windpower Monthly, May 1997), New England could become the testing ground for new strategies to convert support for renewables into actual sales of wind generated electricity. Currently, 30 states in the US have utilities using existing franchise contracts, according to a report released at the conference, "Community Franchise Study: An Option for Local Governments Facing the Challenge of Electric Utility Industry Restructuring." Another 11 states still grant local governments substantial franchising powers for electricity service, even though contracts are not currently in use. Nine states have removed local franchising powers and granted those rights to state governments.
The one city that has made a large scale commitment to wind through a similar method is Portland, Oregon. Phil Welker of the city's energy office observed that even if local governments continue to be served by investor owned utilities, consumer demand for clean power can be met by city government purchasing and policy decisions. He noted that this thinking had led to a five year agreement with Portland General Electric (PGE) to buy 10 MW of power from wind facilities. Some of the savings generated from this action is planned for reinvestment in new, renewable projects.
Portland's leadership on this issue resulted in a new PGE tariff for renewables, which then prompted the city government to add another 8 MW of wind power to supply electricity for the city's street lights. The wind power for these facilities is expected to come from a 25 MW project originally proposed by Kenetech, later bought by Zond.