About

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 implemented the Barnstable County Energy Committee and 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 (DPU) 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.

The Intergovernmental Agreement

For the Compact, an Intergovernmental Agreement (IGA) 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 Aggregation Plan

The Compact’s Aggregation Plan, which is the foundational filing to be able to implement a power supply offering, was approved by the DPU in 2000, spurring similar municipal aggregation efforts in other states. The document outlines:

• the organizational structure, operations, and funding;
• rate setting and other costs to participants;
• the method for entering and terminating with other entities;
• the rights and responsibilities of participants;
• and termination of the plan.

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.

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.

Energy Efficiency Programs and Services

The DPU approved a five-year plan prepared for the Energy Efficiency Program and the services previously provided by Commonwealth Electric (now Eversource) were transferred to the Compact beginning 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 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:

• Conducted more than 15,500 no-cost energy assessments for residential, business and government consumers on the Cape and Vineyard;
• Saved an estimated 18 megawatt in peak electric generation, offsetting 1.6 percent of the Cape Cod Canal Plant’s rated capacity;
• Saved more than 103,600 megawatt hours of energy use and associated air pollution;
• Saved consumers more than $20.7 million annually on electric bills.

The Formation of the Cape and Vineyard Electric Cooperative

Following its goals to encourage the development of renewable energy and gain access to the benefits of wholesale electricity 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 representatives make 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. 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 was 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.

Revisions to the Aggregation Plan

In 2013, the DPU requested that the Compact review its aggregation plan. As part of the review, the DPU asked the Compact to consider revising the Aggregation Plan to:

1. Reflect the municipal aggregation program’s current structure and operation;
2. Remove obsolete references;
3. Ensure that Compact was in compliance with the DPU’s order in 12-124, pertaining to the City of Lowell’s Municipal Aggregation.

The Aggregation Plan was initially submitted as restructuring of the electricity market was taking shape – things have changed a lot since then. Revisions to the plan that reflect these changes include:

• Procurement process was revised to reflect current electricity market dynamics;
• Appointment of Chief Procurement Officer with defined responsibilities;
• The “mil adder” was renamed to “operational adder” to better reflect use of funds;
• Voluntarily established limit on unreserved portion of power supply reserve fund;
• Operational adder funds spent through budget appropriation process;
• Annual independent financial statements by auditor of Compact’s expenditures
• Codified that all Compact funds included in fiscal agent’s (Barnstable County) annual audit.
• Energy efficiency Administration:
  • Reference to compliance with the Green Communities Act;
  • Describes the three-year planning process, including review and approval by DPU (which is a separate process).

The Compact deleted obsolete terms and references (e.g., standard offer, Commonwealth Electric Company) and removed names of individuals and replaced with functions and/or titles.

The Compact also complied with the DPU’s order in 12-124, pertaining to the City of Lowell’s Municipal Aggregation.

• Items in the order that pertain to CLC:
  • Reaffirmed authority to collect an operational adder;
  • Reaffirmed that there is no requirement that municipal aggregation rates be below basic service, and that DPU’s role does not include a review rates or operational adders;
  • Ruled that aggregations cannot switch customers between basic service and to aggregation to achieve best rate.
• Aggregation Plan updated to reflect:
  • Annual report on power supply due to DPU (CLC currently reports annually to DOER);
  • Triggers for updating the plan, including deviations from original plan, changes in law, etc.

After a public comment period, the Board voted on the final updated aggregation plan in 2014 and submitted the final plan to the DPU, including:

• Memorandum of Law in support of proposed process and suggested procedures for DPU review.
• Public comments from Compact’s comment period, and responses if appropriate.

Reorganizing as a Joint Powers Entity

In July 2017, the Compact reorganized as a Joint Powers Entity (JPE), under the Act Modernizing Municipal Finance and Government, allowing for it to be its own separate legal entity. The Act allows governmental units to enter into joint powers agreements. A joint powers agreement (“JPA”) is a contract specifying the terms and conditions of the joint exercise of powers and duties within a region. At least two government units are needed to sign a JPA to establish a joint powers entity (“JPE”). This protects the members from liability exposure and enhances financial accountability. The Benefits of a JPE:

• A JPE offers express liability protection for its members.
• A JPE has public employer status.
• There is certainty as to the legal form of the JPE – it is a body politic and corporate, independent of its members.
• A JPE has the power to sue and be sued.
• A JPE can have a longer term of existence than an inter-governmental agreement (“IGA”); there is no term limit for the JPA.
• A JPE can borrow in its own name and purchase or lease land.

The JPE was formed in three phases:

Phase I: The newly formed JPE served as the Compact’s administrative agent.

Phase II: After the initial formation of the JPE, other Compact members joined the JPE.

Phase III: Fully operational JPE as successor to the Compact. At such time, the Intergovernmental Agreement ( IGA) was terminated. Town Counsel from 18 communities across Barnstable and Dukes Counties — Aquinnah, Barnstable, Brewster, Chatham, Chilmark, Dennis, Dukes County, Eastham, Edgartown, Falmouth, Harwich, Mashpee, Oak Bluffs, Provincetown, Sandwich, Tisbury, Wellfleet, and West Tisbury — reviewed the draft Joint Powers Agreement (JPA) before it was finalized. Learn more about the JPA (link is https://www.capelightcompact.org/about/governing-documents/).

• Description of the region which the powers and duties shall be exercised.
• Members not liable for the acts or omissions of other members or the JPE.
• Additional powers (to sue and be sued, make and execute contracts, make, amend and repeal policies and procedures, receive and expend funds, apply for and receive grants, submit annual reports, borrow money, contract for supplies and services, lease land and buildings, act as a public employer).
• No salaries or stipends provided to directors.
• Treasurer and Business Officer requirements.
• Public employer status.
• Annual reports with detailed audited financial statements.

• The JPA contains all of the substantive provisions of the IGA, with the following modifications:
  • Barnstable County and Dukes County may participate as limited members of the JPE, with no voting rights and may appoint a representative to attend Governing Board Meetings but do not count towards a quorum.
  • The Directors on the Governing Board are subject to any limitations or direction established by their appointing authorities.
  • A quorum is a majority of the Directors of the Municipal Members be physically present unless remote participation is authorized by applicable law.
  • The Executive Committee is composed of 5 Directors elected by the Governing Board.
  • The powers of the Board of Directors are delegated to the Executive Committee when a quorum of the full Governing Board is not present for a regularly scheduled meeting.
  • If two members of the Executive Committee object to the affirmative action taken, they may appeal the decision within 48 hours by requesting a special meeting of the full Governing Board.
  • A Municipal Member Director who fails to attend at least half of the Directors’ meetings annually is automatically removed but may petition the Governing Board for reinstatement.
  • The Conflict-of-Interest section confirms that Directors may request formal opinions from town counsel and that Directors, County Representatives, officers and employees of the JPE are prohibited from disclosing materials that are exempt under the Public Records Law.
  • JPE Funds are held in separate accounts with a certified public accountant who makes an annual audit.
  • Proposed amendments will be sent to Members of the JPE at least 30 days before any Governing Board vote.
  • An affirmative approval of at least 50% of Municipal Members is required for amendments to the JPA.
  • Termination of the JPA: all of the Municipal Members agree but an individual Municipal Member may withdraw its membership and terminate the JPA. Upon termination any surplus money or assets of the JPE, after payment of all liabilities and costs of the JPE, will be returned to the then-existing Members in proportion to the contributions made by each.
  • JPE will indemnify Members regarding conduct, activities, operations, actions, and omissions of the JPE under the JPA.
  • No current or former Director, officer or employee will be responsible for any act or omission by another Director, County Representative, officer or employee.
  • The JPA requires the JPE to acquire insurance coverage.
  • The JPA incorporates the Compact’s main funding mechanisms in its Aggregation Plan and filing an annual report with DPU.
  • Disputes: a Member and the JPE must engage in nonbinding mediation before exercising any remedy provided by law.
  • The Governing Board may appoint or engage service providers as administrative, fiscal, or operational agents and a Municipal Member may contract with the JPE to be a service provider (or the JPE may hire its own employees to perform such functions).

There will undoubtedly be many challenges ahead in the energy field as markets and technologies as well as state and federal policies continue to evolve. The Compact member towns and county have an opportunity to advance the energy sustainability of the Cape and Vineyard through energy efficiency, power supply, and renewable energy programs. An increased focus on strategic electrification will help us reduce our reliance on fossil fuels and result in decreased greenhouse gas emissions. As advanced metering infrastructure and smart technology proliferates, we will have a more flexible and responsive grid allowing us the ability to reduce peak demand on the grid. All of this builds upon our twenty plus years of offering customers energy assessments and low or no cost energy efficiency improvements.