Lawmakers behind the deregulation law inserted a provision that gives citizens the ability to team with their cities to save money.
Buried deep within the Lone Star State’s massive 1999 electric deregulation law lies an obscure provision relating to something called “residential aggregation.” There, in Sec. 303.002, a bit of dense legalese gives cities or their agents authority to act as “aggregators” to purchase electricity on behalf of their citizens.
The lawmakers behind deregulation suspected their new market would be confusing and by inserting this provision, they hoped to give cities and citizens the ability to team together to cut through the morass. But in the subsequent two decades few city governments have attempted residential electric aggregation and even fewer have been successful.
That long drought may be ending, however. In 2017 the city of Fate began experimenting with residential aggregation in coordination with a company called iChoosr. More municipalities eventually joined in, and now more than a dozen host the programs along with participation at some level from 21,000 individual Texans.
In the United States, iChoosr operates only in Texas, where its program is known as “Texas Power Switch” and where it has reported hundreds of dollars in annual savings for individual customers. But iChoosr also operates in other countries and has reported hundreds of millions of dollars in delivered savings worldwide.
“The process is simple,” said one city official, quoted on the Texas Power Switch website. “iChoosr takes care of everything and there’s no obligation for our residents to take the offer.” Another said the power aggregation program makes “it easy for our residents to … save on their monthly energy bills.”
HOW IT WORKS
Participating cities need only promote Texas Power Switch on their websites, permit iChoosr to send out mailers to their citizens and authorize iChoosr to conduct town hall meetings. It costs no tax dollars for cities to participate, nor does any obligation exist for their citizens to join.
Through the town hall meetings and other outreach efforts, iChoosr then identifies citizens interested in participating in an electricity buying group. iChoosr next sponsors a series of rate auctions with retail electric providers — these auctions can last several rounds — and reports back to the buying group after obtaining the best price. Each individual consumer can then decide to opt into the contracted price, can reject it and buy electricity on their own or can stay with their current provider.
iChoosr does not charge electric customers a fee for participating, nor does it charge money to participating cities. Instead (and like electricity aggregators generally) the company makes money by adding a small amount to each kilowatt hour of power sold under the program.
Journalist David Perdue recently detailed Texas Power Switch in an extensive story that appeared in the Killeen Daily Herald. In it, Purdue noted that anyone in Texas who purchases electricity in the competitive retail market can join a Texas Power Switch buying pool. He also quoted iChoosr’s vice president for North America, J.P. Harper, who stressed the company never collects information that could be compromised in a data breach. “There’s no credit card information we collect or anything that could be hacked,” Harper told the reporter.
Like iChoosr, the Texas Coalition for Affordable Power also aggregates power purchases. TCAP, however, is a non-profit coalition that does not purchase power for residential customers, but rather for the governmental use of its political subdivision members. Some TCAP cities participate in Texas Power Switch on behalf of their citizens, although TCAP as an organization has no financial or contractual relationship with the program or with iChoosr.
Is a policy analyst consultant for TCAP, a coalition of political subdivisions in Texas that purchase electricity in the deregulated market for their own governmental use. Because energy costs are typically a significant budget item to our members, TCAP is consistently looking for ways to save our members money, through cost-saving contracts, energy efficiency or demand response programs.