SALEM — Salem is hoping to cut electricity costs for residents and businesses by combining the purchasing power of the entire city.
The City Council recently approved a request by Mayor Kim Driscoll to pursue “municipal electrical aggregation,” a program that allows a city to buy electric power on behalf of its residents and businesses.
The program could save the average Salem homeowner $66 per year while also reducing the city’s carbon footprint through the use of renewable energy sources, Driscoll said.
“This is a great opportunity to leverage the purchasing power of over 17,000 Salem ratepayers to create a real choice,” she said.
Municipal electrical aggregation was made possible through legislation in 1997 that deregulated the energy market in Massachusetts. Under the law, cities and towns can buy electric power on behalf of their residents and businesses, under the theory that the combined purchasing power will enable the city to negotiate lower rates.
Several smaller communities in Massachusetts have been aggregating their purchasing power for years, including on Cape Cod and in western and central Massachusetts. Salem would be the second largest community to adopt the program, behind Lowell.
Driscoll said the city will work with a consultant, Bay State/Peregrine Energy, to solicit bids from energy suppliers, negotiate a contract and inform the public of its options. Residents and businesses can opt out if they don’t want to participate.
Driscoll said the program will not cost the city any money. The consultants are paid by the eventual supplier if the city ends up signing a contract.
Driscoll also said the program will allow the city, with the input of residents, to decide how much of their electrical supply should come from renewable sources like solar and wind. The city of Lowell is receiving 100 percent renewable energy through the purchase of energy credits and was still able to reduce its bills, she said.
City Council President Robert McCarthy said the program is “worth exploring,” especially in light of National Grid’s 37 percent rate hike this winter.
“It’s not going to be astronomical savings, but even if it’s $30 or $40 or $60 per year, it’s not a bad idea to explore,” McCarthy said.
If Salem selects a new supplier, National Grid would still be responsible for delivery the electricity and maintaining poles and wires, Driscoll said.
Driscoll said the program could take up to a year to implement. The city’s contract with an energy supplier must be approved by the state Department of Energy Resources and Department of Public Utilities.
“If we can have this system in place before next winter,” Driscoll said in a letter to city councilors, “we can hopefully avoid subjecting our constituents to another excessive rate hike by National Grid.”
Staff writer Paul Leighton can be reached at 978-338-2675 or firstname.lastname@example.org.