N.Y. PSC Commissioners Question Benefits, Risks of Municipal Aggregation at REV Conference

The issue of municipal opt-out aggregation drew several questions from New York PSC Commissioners during a technical conference on the PSC's Reforming the Energy Vision proceeding.

As first noted by EnergyChoiceMatters.com, a REV working group did not identify any statutory barriers to opt-out municipal aggregation in New York, and said that the PSC would only need to modify its own Uniform Business Practices.

PSC Chair Audrey Zibelman asked whether opt-out municipal aggregation would help bring choice to rural areas, through lower transaction costs for ESCOs to reach customers.

Commissioner Gary Brown cited an existing procurement pool for various educational facilities, and that many members were dissatisfied with their rate this winter, because the pool apparently did not opt for a fixed rate due to the premiums associated with it.

Brown asked if instituting municipal aggregation would create a similar (but even louder) controversy, and whether municipal leaders would really understand the trade-offs under hedging, and risk premiums versus the risk of floating with the market.

Brown asked whether municipal leaders will understand that hedging and aggregation is not always a "win-win" versus market short-term pricing, bringing to mind Brown's long-standing comments about utility default service hedging (namely, that the goal of hedging is not to always beat the market, and some premium above current prices must be stomached, during some parts of the market cycle, as a necessary trade-off for shielding customers from volatility during other parts of the cycle).