The Pros and Cons Of To Municipal Energy Aggregation Programs

by City power on January 23, 2012

Municipal energy or  City power aggregation programs are processes whereby municipalities and cities arrange to sell energy solutions and products to pools of people. The main aim of such programs is to induce people to purchase these energy solutions at affordable people. They are especially worthwhile to low-end energy consumers.

The Pros

These programs come with proven advantages to users. Some of these merits are discussed below;

  • Provides bargaining power – this is a big deal, especially for low-end consumers whose resources come at a premium. By coming together people are able to command fair prices that can compete with those offered by industrial users. Bargaining power can come in the form of rebates, discounts and other price reduction mechanisms. The beauty of it all is that you will purchase at wholesale rates instead of retail rates.
  • They stimulate competitionmunicipal energy aggregation programs mean that consumers will gain an upper hand over the suppliers. The ripple effect is that different energy product suppliers will be forced to cut deals with the pool of customers, a situation that leads to fair prices and great customer care.
  • Customization – another benefit of these programs is that municipalities will be able to get customized products that fit their specifications. This is achieved since they will get market power as well as market efficiency.
  • Expert advice – Municipalities are also able to bargain for expert educational programs for their residents. This is another benefit that will further ensure efficient energy use.
  • Certainty – aggregation programs eliminate market uncertainty and unpredictability that would have been prevalent if consumers were buying individually. The fact that it makes things more transparent is another tick in the box.

The Cons

Even with the above stated merits of municipal energy aggregation programs, there are some drawbacks that cut back on the positives. Some of these putdowns are discussed below;

  • They eliminate individual preferences – there are complained –and they are merited – that these programs ‘force’ people into using products that may not suit their tastes, but they are compelled to use them since the deal has already been sealed. People may also purchase items that they may not necessarily need from peer pressure or the need to conform.  In a free market people should be able to select the energy provider of their choice and not be forced into something they do not want or need.
  • You have to sign in – aggregation programs are a form of clubs whereby you have to join in order to enjoy the benefit. Some people find the idea of joining a program in order to buy a product to be funny. It is one thing to join forces to get energy insulating solutions, while it is quite another to join up to purchase a mere water heater.
  • Open to manipulation – while municipal energy aggregation programs have been drummed up to be transparent and certain, there are situations whereby the process is infiltrated with fraud, corruption and dealings in order to get tenders.
  • Cumbersome – Due to the scale of operation involved, these programs can be tedious when it comes to issues like processing refunds as well as offering personal customer service.

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