Texas to Allow "Community Choice" Pilot Project in 1999

Parties to a Texas-New Mexico Power rate proceeding have agreed that Massachusetts-style "Community Choice" municipal aggregation pilot project will take place in 1999. The Request for Proposals will go out early this Summer, offering local governments in Texas the opportunity to contract for electric service on behalf of their residents and businesses.

Key to the success of the pilot is a provision that the chosen city will be allowed to aggregate its community on an "opt-out" rather than an "opt-in" basis, said Jim Boyle, a consultant representing Gatesville, Texas. This means that residents and businesses will automatically be included in the community's electric service contract unless they "opt out" of it to find their own supplier.

The opt-out approach to municipal aggregation is modeled on the Massachusetts "Community Choice" model which enables communities to contract for power as communites, rather than merely "defaulting" consumers to an incumbent utility while forcing communities to sign on each resident and business individually, as was enacted in California.

"This way individual consumers retain the ability to choose any provider they want," said Boyle. "But if they do not choose, they will remain members of their community rather than becoming the property of their distribution monopoly. This means the community's market power gets a major shot in the arm."

Boyle said that many Texas cities and towns are interested in municipal aggregation as a means of protecting franchise fee revenues threatened by electric restructuring.

Because the negotiated pilot project will be limited to 25MW, only one small community will be allowed to participate in the experiment. He said that the town of Gatesville, a city of 12,000 residents whose largest customer is the state government, is aggressively seeking the role.

Copyright (c) 1998 by the American Local Power Project