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Electricity supplier defaults on CCA agreement
About 25,000 households and businesses that had been benefiting from fixed electricity rates as members of a collective purchasing agreement will be sent back to Central Hudson after an energy supply company defaulted on the agreement.
Columbia Utilities was last year awarded a three-year contract to supply clean energy at a fixed rate to members of Hudson Valley Community Power, which includes Beacon, Philipstown, Cold Spring and seven other municipalities, through what is known as community choice aggregation (CCA).
Because it buys in bulk, a CCA can often secure members better rates than individuals would pay. Residents and business owners in participating communities were automatically enrolled but could opt out.
Over the last year, Columbia supplied CCA customers with electricity generated from renewable sources for 6.6 cents per kilowatt-hour for households and 7.1 cents for businesses. The electricity continued to be distributed through Central Hudson, which also handled billing.
The change doesn’t necessarily mean CCA customers will pay more for electricity, only that the monthly charges won’t be consistent. Central Hudson’s current rate of 5.8 cents per kilowatt-hour is lower than the agreement with Columbia. But Central Hudson’s rate in February rose to 21.6 cents.
Joule Community Power, which oversees the CCA, received a letter from Columbia Utilities in February alleging that ongoing technical issues with Central Hudson’s billing system were harming Columbia’s efforts to provide service. Columbia secretly filed notice in April with the state Public Service Commission that it wanted out of the two years remaining on its contract with Joule.
A state judge last month issued a temporary restraining order to give the parties time to negotiate, but during the Beacon City Council meeting on Monday (July 18), City Administrator Chris White said he had been notified that Columbia had already been kicked out of a state energy marketplace.
On Tuesday, Joule CEO Jessica Stromback explained that Columbia had failed to make scheduled payments to the New York Independent System Operator, a nonprofit corporation that operates the bulk electricity grid, and had been removed by the state as a supplier.
As a result, the CCA, which was the second formed in New York State, after Sustainable Westchester, will begin transitioning its 25,000 members from the fixed rate to a variable rate. Joule expects the move to take about a month.
Sustainable Westchester has encountered similar problems. In a letter dated July 1 addressed to members in 24 municipalities, including Peekskill, it said its CCA would be “paused” and customers transitioned back to Con Edison because its supplier, Westchester Power, could not provide a fixed rate for a contract to replace one that expired June 30. The reason given was “extreme volatility in electricity prices.”
Joule and municipal officials will soon begin looking for ways to restart the CCA, Stromback said. She said the program had saved members $8 million over the last year.
“Everybody’s unhappy that Columbia broke their contract but, if anything, I think they’re seeing the value of the CCA,” Stromback said. “It’s much more a question of, ‘This was valuable — How do we maintain it? How do we move it forward?’ ”
White told the City Council on Monday that Beacon would support any legal action Joule takes against Columbia. “The municipalities are not at fault; this is squarely the fault of Columbia Utilities,” he said.
Earlier this month, the Philipstown Town Board voted to join any litigation filed against Columbia, which is based in Brooklyn. A legal agreement accompanying its resolution stated that any money awarded the plaintiffs would go toward Joule’s expenses and then to CCA members.
Councilor Jason Angell noted that Philipstown had “helped push the CCA forward” and that it saved some residents $200 per month over the winter, when Central Hudson rates soared. “So it’s a big deal,” he said. “Getting kicked off is going to hurt people.”