The aggregation refers to customers in a defined geographic area who choose to form a group for the purpose of purchasing a commodity like energy. The NJ BPU and the Ratepayer Advocate believe by forming energy buying groups, municipalities aid in the process of creating a level playing field for customers, giving small residential and business customers the same type of market power to negotiate lower power prices as the larger industrial customers.
In this new era of electric deregulation, large industrial customers are the first to be able to negotiate cheaper rates, whereas residential and small business consumers may be left with fewer energy options. The reason why large customers will receive lower rates is because of their large energy usage. Small customers may be at a disadvantage because the amount of electricity/gas individual customers use is relatively small; and, consequently energy suppliers are likely to go after the most lucrative consumers first and turn to the smaller customers much later in the process. But if a town aggregates thousands of customers to form a buying block, the power generating companies and the suppliers will bid lower rates to get the lucrative business.
Understand a little more about what government energy aggregation is and how it all works.
With Retail Choice, companies are now able to compete for your energy usage and you are able to choose who to buy it from. With the passing of the Government Energy Aggregation Act of 2003, government entities were given the ability to pool the energy usage of its ratepayers to drive down costs.
With energy deregulation, the “supply” and “distribution” portions of your bill were separated. The distribution portion remains with the same regulated utility that has always delivered your service but allows the supply portion to be in a competitive venue to potentially be able to get the energy at a lower cost than what the Local Distribution Company (ACE., PSE&G, JCP&L) provides it for.
The 2003 law gave municipalities the ability to aggregate all of the residential and non-residential meters within their geographic boundaries in order to get the best price and specify very favorable terms for all the participants.