West Orange to a create a town-wide Energy Aggregation Program

I am sure that one point or another you have all received at least one piece of mail or a phone call from a company promising to lower your electric and/or gas bills. I asked myself how is switching possible if I have been a life-long customer of PSE&G. That it must be a marketing gimmick that may result in a long term commitment and higher fees. Most specifically, that it will require a lot of my limited time for research and perhaps an interruption of my services.

I did not give it further thought until the West Orange Town Council deliberated a proposal creating a town-wide energy aggregation program.  The program will allow West Orange residents to save money on the supply of electricity by aggregating and bidding the purchase of energy consumed in the Town.  Under this set up, the Township will contract with a consultant who will create the energy savings program, perform public outreach, and administer a bidding process. Consulting fees would be paid by the winning third party supplier based on a consumption formula. Residents that already have switched to a third party supplier (TPS) or that wish to opt out will not be included in the town wide program.        

In order to understand how the savings will be realized, one needs to go back to 1999, when the New Jersey State Legislature passed the Electric Discount and Energy Competition Act as an effort to inject the powers of the free market into an industry that up to that point had been heavily regulated. Prior to 1999, only four utility companies were allowed to supply utilities in New Jersey and their rates where regulated by the Board of Public Utilities (BPU). To date, there are over 50 companies licensed to do business in New Jersey. The infrastructure carrying the utility still remains under the ownership of the original companies, and charges remain regulated by the BPU or the Federal government.

According to the BPU, only 11% of consumers take advantage of competitive purchasing in New Jersey compared to 42% in Connecticut and 27% in Pennsylvania. In West Orange, we are seeking to change all of our residential consumers over to a competitive process so that we can jointly realize individual savings. Aggregating and publicly auctioning a large portion of the town would also be beneficial in assuring lower rates.  As I stated, residents will be given the opportunity to opt out, or will not be included should they have a current TPS contract.

This past Tuesday, the Council unanimously awarded a consulting contract to Gabel and Associates. The company will now begin the formation process as required by the Government Energy Aggregation Act of 2003, which can be found here: http://nj.gov/bpu/pdf/energy/NJ_Gov_Energy_Aggregation_Summary.pdf  Once the program has been established, the company will perform public outreach. The public outreach would include informational mailings inviting residents to attend town hall meetings, website/social media postings and literature.  They will then draft bid documents and perform the bidding process.

If you chose to independently seek a TPS, please be aware of the following: Length of the agreement, early termination fees, if the quote is inclusive of the state sales tax; and most importantly, is the rate fixed, floating or a combination. A list of New Jersey suppliers is found on the BPU website here: http://www.nj.gov/bpu/pdf/energy/shopping_forms/psegterritory.pdf

It is also important to note that your energy bill is made up of basic generation service, delivery service, and customer charges. Switching to a TPS only affects the basic generation service and not the other charges so savings are only realized on that portion and not the entire bill.

For any comments, feedback, or if you wish to share your experiences with a TPS, I can be reached at Vcirilo@westorange.org. You can also visit my website www.victorcirilo.com. My twitter handle is @CouncilmnCirilo.