Guess Who Supports Opt-Out Municipal Aggregation

"My gosh, what a great way to start getting a market opened up," Pat Wood, former Chair of the Public Utility Commission of Texas, said of opt-out municipal aggregation during a Public Utilities Commission of Ohio hearing on PUCO's retail electric market investigation.

Wood, who now is a board member of Dynegy, noted that Texas elected to not allow opt-out municipal aggregation when it restructured, "but looking at how it's worked here, and with Dynegy's recent acquisition of the Ameren retail business last week in Illinois, we've learned a lot about how muni agg works there; my gosh, what a great way to start getting a market opened up."

The Ameren Energy Resources retail business includes a dedicated brand built around opt-out municipal aggregation -- Homefield Energy.

It "probably" doesn't make a lot of sense to permit opt-out municipal aggregation on the "larger customer side," Wood said.

Wood stressed opt-out aggregation as a way to ease the transfer away from the vertical market power of the integrated utilities to a competitive model.

It was not clear whether Wood supported municipal aggregation for markets already sufficiently "opened up," and what threshold of competitive activity would mean a market still needs to be "opened up."

For example, Pennsylvania stands at 30-45% residential migration, which is low enough that retail suppliers have identified barriers in the market that do not allow the market to reach the workably competitive market envisioned by statute.

Wood also did not discuss specifics regarding municipal aggregation design and whether, as a de facto default service, it should reflect all the protections of default service, notably, the ability for a customer to elect a competitive supplier at any time without termination fee or penalty (a protection almost universally recognized as necessary under the competing form of alternative default service policy -- retail auctions).