A market-based utility cost solution
Municipal Electricity Aggregation (MEA) allows local governments to negotiate power supply contracts on behalf of their residential and small commercial consumers to achieve lower prices, better consumer protections, and access cleaner energy resources. Established by law in six states – Illinois, California, Rhode Island, Massachusetts, Ohio, and New Jersey – MEA programs require local electric utilities to continue delivering power, maintaining grid reliability, and providing monthly billing and customer services.
A significant benefit for consumers
Through MEA, local governments are delivering substantial benefits to residents:
- Worry-Free Choices. Consumer participation in Illinois’ deregulated electricity market has increased from 0.1% to 70% since 2010 because MEA allows local government to develop and provide clear and safe choices for consumers.
- Uninterrupted Utility Services. Consumers continue to receive all essential services from their local utility including: monthly billing, responding to outages, budget billing, energy efficiency programs, and other regular customer service obligations.
- Lower and Stable Electricity Prices. Consumers receive lower electricity prices through MEA due to bulk buying which allows suppliers to avoid advertising and marketing costs.
- Consumer Protections. Consumers receive better contract terms (i.e. savings guarantees, no cancellation fees, no credit checks, etc.) through MEA programs than they would not be able to negotiate one-on-one with suppliers.
- Access to Cleaner Energy. Consumers can participate in MEA offers that provide elevated levels of renewable energy resources, or lower levels of polluting resources such as coal.
A Flexible Tool for Municipalities
MEA can be structured on an Opt-In or Opt-Out basis. (depending on state statute), but the most common and successful programs use the Opt-Out model.
- Opt-Out Aggregations require a referendum vote and automatically enrolls all eligible consumers into the program that do not Opt-Out of the program. Opt-Out aggregation programs typically have a better than 90% consumer participation rate and tend to deliver better pricing than Opt-In aggregation programs.
- Opt-In Aggregations can be created by simple ordinance and only enrolls consumers that voluntarily join (or Opt-Into) the program. Opt-In aggregation programs typically have a 10-20% consumer participation rate.
MEA can provide services beyond simple fixed-rate power prices, such as:
- Time of Use Supply Rates allow consumers the ability to opt for higher on-peak and lower off-peak power prices. Time of Use supply rates provide a financial incentive for consumers to shift electricity consumption from daytime weekday hours to evenings and weekends.
- Energy Demand Management Services allow consumers the ability to reduce their utility costs by using less energy. MEA in Illinois allows municipalities to apply the group purchasing model to energy-efficiency technologies, as well as energy supply.
- Smart-Grid Services allow consumers to participate the wholesale electricity market through demand-response offerings. Demand response is the means by which consumers can reduce energy consumption when prices are high, and sell that avoided electricity consumption back into the market.
A Cost-Neutral Option
Because MEA is revenue-based—not government financed—MEA programs require no public subsidy to operate, nor do they require a new revenue stream. The revenues that support energy aggregation already exist. That is, the electricity rates that consumers pay to a retail electric supplier or an investor-owned utility are redirected to support the group purchase of electricity through MEA.
Continued Partnership with the Local Utility
In states with deregulated electricity markets (like Illinois), the local utility no longer owns power plants. Instead, local utilities such as ComEd and Ameren Illinois deliver electricity that is purchased from third party suppliers. MEA simply assigns the role of securing electricity supply and pricing to the local government, and then that electricity is delivered through the ComEd and Ameren Illinois distribution system. By statute, ComEd and Ameren must provide the same level of service to consumers and communities taking service through aggregation programs as they provide to all other consumers.
Over 650 communities have secured lower rates through MEA. Cities as large as Chicago and villages as small as Green Valley have all secured better rates than the default utility offer, and have the option of expanding their programs to provide more value to their residents as the state moves into a Smart-Grid environment.
Learn more about the ROAD MAPS to Community Aggregation and get started on the path to saving your community money!