Energy and Technology Committee

JOINT FAVORABLE REPORT

Bill No.:

SB-334

Title:

AN ACT CONCERNING MUNICIPAL AND STATE COMPETITIVE PROCUREMENT OF ELECTRICITY, NATURAL GAS, RENEWABLE ENERGY, TELECOMMUNICATIONS SERVICE AND OTHER ENERGY-RELATED PRODUCTS BY NONPROFIT ENERGY BUYING CONSORTIA.

Vote Date:

3/29/2018

Vote Action:

Joint Favorable Substitute

PH Date:

3/6/2018

File No.:

Disclaimer: The following Joint Favorable Report is prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and does not represent the intent of the General Assembly or either chamber thereof for any purpose.

SPONSORS OF BILL:

Raised by the Energy and Technology Committee.

REASONS FOR BILL:

This bill would permit certain municipalities, the state, and state entities to find providers of electricity, natural gas, renewable energy, and other energy-related products with the help of nonprofit energy buying consortia. It can be difficult and costly for municipalities to go through the bidding process of acquiring an energy provider for town- or state-owned buildings, and this bill would allow them to enlist the help of specialized nonprofit organizations to find a good deal through a reputable energy provider.

RESPONSE FROM ADMINISTRATION/AGENCY:

Melody Currey, CT Department of Administrative Services: The Department of Administrative Services (DAS) offered testimony in opposition to S.B. No. 334, arguing that it allows municipalities and state agencies to bypass existing laws that are designed to safeguard the public energy procurement process. Commissioner Currey believes that the hallmarks of public procurement are openness, fairness, and transparency. By allowing municipalities to bypass the state's competitive bidding process, these key aspects of public energy procurement are undermined. This could lead to the expenditure of hundreds of thousands of dollars on procurement of energy without proper oversight. DAS is against undermining existing statutes and regulations with this bill.

NATURE AND SOURCES OF SUPPORT:

Northeast Clean Energy Council (NECEC): NECEC strongly supports this legislation because it streamlines the procurement process for municipalities and state agencies. NECEC argues that this streamlining will allow municipalities to forgo the costly and time-consuming bidding process that is currently in place, allowing them to focus their time and money on more core missions and goals. They also point out that this legislation does not bar municipalities from conducting their own procurement process if they so desire.

Liam Sullivan, PowerOptions: PowerOptions, a nonprofit energy buying consortium, supports this legislation. They believe the voluntary process outlined by the legislation will streamline the procurement of energy by municipalities and state agencies. They argue that aggregating municipalities will lead to more attractive energy packages for those municipalities and the energy providers selling them. According to PowerOptions, allowing municipalities' voluntary access to expert assistance and consultation in this process without having to expend large amounts of time and money will lead to healthier and more effective marketplace.

NATURE AND SOURCES OF OPPOSITION:

Connecticut Conference of Municipalities (CCM): CCM testified in opposition to this bill because they deem it unnecessary. Municipalities can already participate in buying consortia as there is no prohibition against that course of action. They believe that the real purpose of this bill is to allow for one organization to bypass the bidding process in order to gain an unfairly large market share. CCM points to the example of Massachusetts, which has enacted similar legislation. This legislation has led to a lack of transparency in the public energy procurement process, as energy providers pay fees to energy-buying consortia so that these consortia recommend them to municipal associations, and these fees are not always disclosed to the public. CCM argues that this legislation will undermine the transparency and competitiveness of the public energy procurement process.

Vincent Pace, Eversource: Eversource opposes this legislation because it allows for municipal aggregation purchases of standard electric service and last resort electric service. Using Massachusetts as an example, they argue that this part of the bill will allow municipalities to purchase electricity on behalf of their residents and opt-out of service on relatively short notice. Eversource argues that this will cause difficulties for wholesale energy suppliers to predict demand for electricity at any given moment, since entire municipalities could opt in or out of service relatively unexpectedly. Eversource says that if this becomes the case, wholesale electric providers will be forced to add a risk premium into the prices they charge for electricity, which will cause an increase in energy rates for consumers.

Reported by: Spencer Ward

Date: 4/2/18