Q: What is energy aggregation?
A: Aggregation is a process by which a local government uses the buying power of many customers in a community to purchase electricity or natural gas on those customers’ behalf.
Q: Will aggregation save consumers money?
A: While savings are not necessarily guaranteed, many communities are able to obtain favorable prices from energy marketers to offer discounted energy rates to their citizens. By purchasing large blocks of energy, aggregators may reduce a supplier’s marketing and administrative costs. In turn, these reduced costs may be passed on to the individual consumers in the buying group in the form of lower prices.
Q: Who can aggregate?
A: Areas that are served by investor-owned electric and/or natural gas utilities providing “choice” programs may offer aggregation programs. Local governments, such as cities, counties, townships and villages, may aggregate the energy used by their residents and arrange for the purchase of electricity and/or natural gas. To do so, they must be certified as aggregators by the Public Utilities Commission of Ohio (PUCO).
In addition, under Ohio law, local governments may band together into an aggregation. In northeast Ohio, for example, communities established a regional buying group called Northeast Ohio Public Energy Council (NOPEC). NOPEC currently represents 162 member communities in negotiating energy contracts.
Q: Are there different types of local government aggregation?
A: Yes. Ohio law gives local governments the option to choose either an “opt-in” or “opt-out” form of aggregation:
• “Opt-in”: Each consumer is required to agree to participate in the program before being included in the buying pool. Voter approval is not required for “opt-in” aggregation.
• “Opt-out”: Each consumer is automatically included in the aggregated pool unless the individual decides not to participate, and indicates this decision to the local government. This can be done online or by telephone, or by returning the postcard that accompanied the original notice. Voter approval is required for “opt-out” aggregation.
Under both “opt-in” and “opt-out” methods, a local government must pass an ordinance or resolution approving the aggregation effort before officials can arrange for electricity or natural gas to be supplied to its residents.
Q: Have any communities aggregated?
A: Yes. As of 2012, more than 274 communities in Ohio have become aggregators since the law allowing for aggregation went into effect in 2001. Of these communities, 148 aggregate exclusively for electricity, 60 for natural gas and 66 for both forms of energy.
Q: Who can provide residential customers, local governments and community organizations with more information about electric or natural gas aggregation?
A: The Office of the Ohio Consumers’ Counsel (OCC), the residential utility consumer advocate, can provide additional information about electric and natural gas aggregation. The OCC also can give presentations to local government officials and community groups.
OCC’s fact sheet, “The Basics of Governmental Energy Aggregation” is available at no cost for download at www.pickocc.org or can be requested by calling OCC at 1-877-PICKOCC (1-877-742-5622). To schedule a speaker, contact the OCC at 614-387-2966.
Law You Can Use is a weekly consumer legal information column provided by the Ohio State Bar Association. This article was prepared by the Office of the Ohio Consumers' Counsel.