Serving Cape Cod and Martha's Vineyard for Over 20 Years
Cape Light Compact is a nationally recognized award-winning energy services organization operated by the 21 towns on Cape Cod and Martha’s Vineyard and Dukes County. The Compact’s mission is to serve its 200,000 customers through the delivery of proven energy efficiency programs, effective consumer advocacy and renewable competitive electricity supply.
Cape Light Compact was formed in 1997 to advance the interests of consumers in the newly restructured electric industry. The 1997 Massachusetts Restructuring Act enabled towns and cities to establish municipal aggregators like Cape Light Compact that could:
- Purchase power on behalf of all customers in the municipality on an opt-out basis
- Implement energy efficiency programs instead of the local electric utility, ensuring that funds collected from Cape and Vineyard residents and businesses are spent to reduce the energy costs of Cape and Vineyard residents and businesses
The Compact offers a comprehensive approach to energy services,
- Competitive electricity rates with green energy options
- Effective consumer advocacy
- Proven energy efficiency programs
- Energy education
The Compact serves approximately 205,000 consumers from all 21 towns on Cape Cod and Martha’s Vineyard. Each town and Duke's county has a representative on the Compact’s Governing Board to represent each member’s interest. The Compact has been seen as a model for community choice aggregation programs across New England and nationally.
The Compact has a staff of 14 responsible for the oversight and administration of all the Compact's programs.
The National Context
Soaring utility bills in the 1980s sparked national proposals to deregulate the electric industry, by breaking up vertically-integrated electric monopolies to allow for greater competition. These proposals followed a decade-old trend of federal deregulation of banking, airlines, telecommunications and natural gas.
In 1992, the passage of the federal Energy Policies Act mandated broader access for utilities and independent power suppliers to transmission lines and helped increase competition at the wholesale level. This amped up the discussion about competition at the retail level although the form it would take was undetermined. It was clear that large industrial and commercial electric customers might receive benefits from a competitive market, but competitive suppliers were likely going to leave small business and residential consumers behind because of relatively low individual consumption and the cost to service them.
The Local Picture–Pre-Cape Light Compact
On the Cape, high energy costs in the region led to the development of the Barnstable County Energy Management Plan in 1993-94. As part of that plan, Barnstable County began to look into the idea of coordinating the towns to combine their buying power for the purchase of electricity. In May –April 1995, the County obtained US Department of Energy funding for the partnership to study local government options in competitive electric markets. The resulting report found that:
- Consumers needed to aggregate to gain the benefits of competitive electric markets;
- Local governments were natural aggregators, providing non-discriminatory access, and established competitive bidding procedures;
- Local governments had franchise powers;
- Goals of environmental protection and energy efficiency could be advanced through local efforts.
In December 1995, the Massachusetts Department of Public Utilities issued an order on retail competition (D.T.E. 95-30) which included the concept of using local government franchises to aggregate consumers. The following year the DPU conducted another round of hearings and formulated rules and draft legislation for retail electric competition. This resulting order (D.T.E. 96-100) included the option for municipalities to aggregate consumers.
Throughout 1996, the County held educational meetings with Boards of Selectmen, town managers, and local finance committees. In February 1997, the County formed the Cape Light Compact planning committee made up of representatives appointed by Cape towns. In November 1997, the Massachusetts Electric Industry Restructuring Act was passed by the legislature and signed into law. Massachusetts was the seventh state to mandate the establishment of competitive retail markets for electricity. Rushing ahead of the market target dates set by other states, Massachusetts set March 1, 1998, as the opening date for the new market. The full transition to a competitive market required the state’s electric utilities to sell off their generating plants and “restructure” to allow the competitive use of their transmission and distribution networks and provide billing services for competitors. The full transition to a restructured industry was expected to take seven years.
Formation of Cape Light Compact and Programs
For the Compact, an Intergovernmental Agreement was drafted through a process of review and comment by county and town legal counsel. The proposed agreement was taken to Boards of Selectmen and Town Meetings. Twelve Cape towns joined in 1997 and the three remaining towns in 1998. In 1998, the six Vineyard towns also voted to join the Compact. Given obvious cost efficiencies and the central role it had played in developing the concept, Barnstable County was selected to provide a variety of administrative and financial services for the Compact.
The Compact developed detailed plans for its Power Supply Program and Energy Efficiency Program and embarked on consumer protection efforts.
The first successful joint action of the Compact was to intervene in a DPU case concerning disbursement of funds from Commonwealth Electric’s sale of the Canal Electric Plant. Cambridge Electric and Harvard/MIT were looking to gain the value of all the profits. This type of intervention had not been undertaken by Barnstable County or the towns in the past. The DPU’s final decision included $25 million out of a total of $52 million coming back to Cape Cod and Martha’s Vineyard consumers.
The Compact’s Aggregation Plan was approved by the DPU in 2000, spurring similar municipal aggregation efforts in other states. The new competitive market was volatile in pricing and slow to develop for small retail consumers. As expected, most power suppliers were interested in serving large industrial and commercial customers. However, in March 2000, the Compact reached a contract agreement with Select Energy, Inc. on a power supply contract to serve all customers. Continuing volatility in the market delayed startup of service, but having the power supply contract in place satisfied a state pre-condition that allowed the Compact to move ahead with an Energy Efficiency Program.
The DPU approved a five-year plan prepared for the Energy Efficiency Program and services previously provided by Commonwealth Electric (now Eversource) were transferred to the Compact and began operation in July 2001. This was the first time in the nation that a group of municipalities which did not have a municipal electric utility also owning the poles and wires took over an energy efficiency program.
The purpose of the program was to ensure that the $5 million that Cape and Vineyard electric consumers paid into energy efficiency funds on their bills each year under a state-mandated charge would be utilized on the Cape and Martha’s Vineyard. The program would also eliminate shareholder incentive from being deducted from energy efficiency funds. The elimination of shareholder incentives put the money back into energy efficiency program services. To make a smooth transition, the Compact hired many of the same vendors who served standard utility programs, but it also included a number of innovative local features and was soon recognized as an award-winning effort.
For the first nine years of accomplishments, the Compact stated that the program:
1) conducted more than 15,500 free energy assessment for residential, business and government consumers on the Cape and Vineyard; 2) saved an estimated 18 megawatt in peak electric generation, offsetting 1.6 percent of the Canal Plant’s rated capacity; 3) saved more than 103,600 megawatt hours of energy use and associated air pollution; 4) saved consumers more than $20.7 million annually on electric bills.
For Power Supply, in 2002-04 the Compact developed a pilot program and negotiated a contract for 53,000 default service customers paying high prices to NSTAR. It resulted in an estimated savings of more than $4.75 million. While this gave a start to the supply program, the Compact continued to face volatility in power pricing. When a window in the market opened, the Compact shifted its Power Supply contract to ConEdison Solutions which agreed to serve all 200,000 customers starting in 2004.
Following its goals to encourage the development of renewable energy and gain access to the benefits of wholesale markets, in September 2007, the Cape Light Compact helped to establish the Cape and Vineyard Electric Cooperative (CVEC). Nearly all of the towns on the Cape and Vineyard have joined CVEC as members, and their representative makes up the board of directors. The strategy initially pursued was to build local renewable energy supplies to help stabilize and reduce power prices. The passage of the 2008 Green Communities Act and the introduction of virtual net metering altered this strategy.
In 2011, CVEC managed a procurement process for construction of 16 megawatts of solar photovoltaic (PV) capacity in its member towns. In contrast to the wind project, this effort gained broad support. The second round of procurement for additional PV capacity was conducted in 2012. Another 12 megawatts was contracted for development.
The Compact supported CVEC’s start-up with $3.7 million in funding provided over a seven-year period. The return on this investment over a twenty year period is estimated at $60 million. This is the largest amount of solar being developed by a small group of municipalities anywhere in the United States. Massachusetts officials regard the CVEC PV program as a model for communities in the rest of the state.
In July 2017, the Compact reorganized as a Joint Powers Entity, under the Act Modernizing Municipal Finance and Government, allowing for it to be its own separate legal entity. This protects the members from liability exposure and enhances financial accountability.
The Other Side of History–Looking Forward
There will undoubtedly be many challenges ahead in the energy field as markets and technologies and state and federal policies continue to evolve. The Compact member towns and counties have an opportunity to advance the energy sustainability of the Cape and Vineyard through energy efficiency, power supply, and renewable energy programs. The Compact will continue to participate in the development of SmartGrid and microgrid technologies and work to shape the region’s energy future to benefit consumers and the environment.