When a New York town joins a Community Choice Aggregation (CCA) program to procure electricity for residents, does General Municipal Law § 360 require a town referendum?
Plain-English summary
The Town of Bedford was joining Sustainable Westchester, Inc., a consortium of Westchester local governments, in a Public Service Commission-approved pilot Community Choice Aggregation (CCA) program. Under CCA, a participating town aggregates the electricity demand of its residents and small businesses and signs a contract with a supplier. The town does not own or operate the wires, the meters, or the generation; it acts as a procurement agent ("energy broker") for its constituents.
The PSC's order instituting the CCA proceeding (Case 14-M-0224, Dec. 15, 2014) suggested that municipalities might find their authority to participate in General Municipal Law Article 14-A, with a referendum required under § 360(5). The town attorney asked the AG whether the referendum was actually required.
The AG said no. Article 14-A was enacted in 1934 to authorize municipalities to establish, own, and operate gas and electric plants. O'Flynn v. Village of E. Rochester, 292 N.Y. 156 (1944). Section 360 covers municipalities that construct, lease, purchase, own, acquire, use, or operate a public utility service. CCA participation involves none of those; the town is just brokering procurement on behalf of its residents. The supplier owns and operates the utility infrastructure; the town signs contracts.
So § 360 doesn't apply. The referendum requirement in § 360(5) is keyed to actions covered by § 360(2). Without coverage under (2), there's no referendum trigger under (5). Towns participating in CCA programs do so under whatever other authority governs their procurement and contracting, without the referendum overhead.
Currency note
This opinion was issued in 2015. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
CCA in New York has expanded significantly since 2015. The PSC has issued additional implementation orders and rules, and the Legislature has added related authorities for municipal energy procurement and renewable-energy aggregation. A municipality launching a CCA program in 2026 should consult current PSC orders, Public Service Law amendments, and any applicable opt-out and consumer-protection rules.
Historical context
What the opinion meant for early CCA pilots
Towns in Sustainable Westchester (and similar consortia elsewhere) could move forward with CCA participation without holding individual town-by-town referendums. That mattered because referendum requirements add cost and timing risk to launching new municipal programs. The AG's reading kept the pilot framework practical.
Why Article 14-A doesn't fit CCA
Article 14-A is built around a 1930s vision of municipal utility ownership: build a power plant, run the wires, sell the power. CCA in 2014-2015 was the opposite model: leave the infrastructure with the existing utility, but use municipal collective procurement to negotiate better rates or different supply (renewable, locally-sourced). The two models live in different conceptual worlds, and the statutory text reflects that.
What the opinion left open
The AG didn't tell the town what authority it was operating under, only that § 360 wasn't it. The town would have to look to PSC tariff authority, general municipal contracting power, and any Public Service Law provisions governing CCA. The opinion is narrow: it removes the referendum hurdle without certifying any particular alternative authority.
Common questions
Q: What is Community Choice Aggregation?
A: A program in which a local government aggregates the energy demand of residents and small businesses and contracts with an energy supplier on their behalf, typically to negotiate better rates or to specify renewable supply. Customers can opt out. The local utility continues to deliver the energy and bill the customer; only the supply portion changes.
Q: Why might a referendum be required for some town energy actions?
A: General Municipal Law § 360(5) requires a town board's resolution to construct, own, or operate a utility to be put to a referendum. The referendum protects against unilateral municipal commitments to ownership and operation of significant infrastructure.
Q: When does § 360 apply?
A: When the municipality is itself constructing, leasing, purchasing, owning, acquiring, using, or operating a public utility service to furnish service to itself or, for compensation, to its inhabitants. § 360(2). The trigger is meaningful municipal control over the utility itself, not just commercial procurement.
Q: Does CCA affect customers' billing relationship with the utility?
A: Generally not in the way a municipal utility takeover would. The local utility continues to own and operate distribution infrastructure and bill the customer; only the supply is procured through the CCA contract. Customers can usually opt out and stay on the standard utility supply.
Q: What was the PSC's role?
A: The PSC authorized the pilot CCA proceeding and described the conditions under which municipalities could participate. The PSC's suggestion that Article 14-A might be the source of authority did not bind the AG, who concluded § 360 didn't apply, and accordingly the PSC's referendum implication didn't apply either.
Background and statutory framework
Article 14-A of the General Municipal Law was enacted in 1934 (L. 1934, ch. 281) to authorize municipalities to establish, own, and operate gas and electric plants. O'Flynn v. Village of E. Rochester, 292 N.Y. 156, 161 (1944), summarizes the legislative purpose.
Section 360 is the operative provision within Article 14-A. Subsection (2) authorizes a municipal corporation to "construct, lease, purchase, own, acquire, use and/or operate any public utility service . . . for the purpose of furnishing to itself or for compensation to its inhabitants, any service similar to that furnished by any [gas or electric corporation]." It also lets the municipality purchase gas or electricity from the state, state agencies, other municipalities, or private/public corporations. Subsections (3) and (5) require a town-board resolution and a public referendum.
The PSC's Case 14-M-0224 Order Instituting Proceeding (Dec. 15, 2014) authorized the Sustainable Westchester pilot. The PSC suggested § 360 might apply and noted the referendum implication, but did not bind the AG's reading; the AG determined § 360 doesn't apply to CCA participation.
The opinion cites the broker-versus-owner distinction as the analytic line. CCA participants act as procurement aggregators; § 360 covers municipalities that take the utility role themselves.
Citations and references
Statutes:
- N.Y. General Municipal Law Article 14-A; § 360, § 360(2), (3), (5)
- L. 1934, ch. 281 (origin of Article 14-A)
Cases and orders:
- O'Flynn v. Village of E. Rochester, 292 N.Y. 156, 161 (1944), Article 14-A's establish/own/operate purpose
- Public Service Commission Case 14-M-0224, Order Instituting Proceeding (Dec. 15, 2014), Sustainable Westchester pilot authorization
Source
- Landing page: https://ag.ny.gov/libraries-documents/opinions/opinions-year
- Original PDF: https://ag.ny.gov/sites/default/files/opinions/2015-1_pw.pdf
Original opinion text
General Municipal Law §§ 360, 360(2), 360(3), 360(5), Art. 14-A
General Municipal Law § 360 does not apply to the Town's proposed participation in a pilot Community Choice Aggregation program and thus section 360's requirement of a referendum likewise does not apply.
June 26, 2015
Eric L. Gordon
Attorney
Town of Bedford
Keane & Beane P.C.
445 Hamilton Avenue
White Plains, New York 10601
Informal Opinion
No. 2015-1
Dear Mr. Gordon:
You have requested an opinion relating to the Town's anticipated participation in a pilot Community Choice Aggregation program as approved by the Public Service Commission. Under the program, the Town would procure electricity from a utility service on behalf of participating residents and small businesses. You have asked whether, if the Town participates in the program under the authority of General Municipal Law § 360, the Town's participation is subject to a referendum. As explained below, we are of the opinion that General Municipal Law § 360 does not apply to the Town's proposed participation and thus that its requirement of a referendum likewise does not apply.
You have explained that the Public Service Commission (PSC) has authorized Sustainable Westchester, Inc., a consortium of local governments in Westchester County, to undertake a pilot Community Choice Aggregation (CCA) program. The Town is a member of Sustainable Westchester. A fundamental component of the pilot program is that a participating local government, in this case the Town, will aggregate the energy and gas supply of its residents and small businesses and enter into a contract with a utility that distributes such services. The Town in essence will be acting as an energy broker for its constituents. Ownership and operation of the utility service will remain with the distributing utility company.
In its order instituting the proceeding to enable CCA programs, the PSC noted that a municipality might find authority to participate in a CCA program in Article 14-A of the General Municipal Law, which permits municipal involvement in the provision of gas and electric service to residents. Public Service Com'n, Case 14-M-0224, Proceeding on Motion of the Commission to Enable Community Choice Aggregation Programs, Order Instituting Proceeding and Soliciting Comments (issued Dec. 15, 2014), at 6. The PSC advised that, if proceeding under Article 14-A, the municipality would need to hold a referendum on its resolution to participate in a CCA program. Id. at 7.
Article 14-A was enacted to authorize municipalities to establish, own, and operate gas and electric plants. L. 1934, ch. 281; 1934 N.Y. Laws 787; see also O'Flynn v. Village of E. Rochester, 292 N.Y. 156, 161 (1944). The specific provision of Article 14-A under consideration here is section 360. Under section 360, a municipal corporation may "construct, lease, purchase, own, acquire, use and/or operate any public utility service . . . for the purpose of furnishing to itself or for compensation to its inhabitants, any service similar to that furnished by any [gas or electric corporation]." General Municipal Law § 360(2). Section 360 further provides that, "[f]or such purpose," the municipal corporation "may purchase gas or electrical energy from the state, or from any state agency, or other municipal corporation, or from any private or public corporation." Id. Before taking such action, the town board would need to adopt a resolution, which must be submitted to a referendum. General Municipal Law § 360(3),(5).
We believe that section 360 does not apply to the Town's proposed participation in the CCA program. With respect to the legislative purpose underlying Article 14-A, the Town would not be establishing, owning, or operating the utility itself. And with respect to the specific language of section 360(2), the Town would not be constructing, leasing, purchasing, owning, acquiring, or operating a public utility service. To the extent the Town could be deemed to be "using" a public utility service, it would not be doing so for the purpose of furnishing energy service to itself or, for compensation, to its inhabitants. Thus, the Town's proposed participation in the pilot CCA program does not come within either the purpose of Article 14-A generally or the specific statutory language of section 360(2). Consequently, we are of the opinion that the referendum requirement of section 360(5) also does not apply to the Town's proposed participation.
The Attorney General issues formal opinions only to officers and departments of state government. Thus, this is an informal opinion rendered to assist you in advising the municipality you represent.
Very truly yours,
KATHRYN SHEINGOLD
Assistant Solicitor General
in Charge of Opinions