Energy Aggregation Companies Present Plans to Point Boro
Savings potential is 10 to 25 percent, representatives say
Three companies that work with entities to aggregate utility costs -- thereby driving down the costs -- have made presentations to the Point Borough Council on what they could offer if Point Pleasant pursues energy aggregation for the Borough and its residents.
The Borough has been looking into the feasibility of a Borough-wide energy aggregation program since March, when Borough Council President Antoinette DePaola proposed the idea.
The concept of energy aggregation is that a larger entity -- in this case, a municipality -- enters into an agreement with an energy supplier to provide energy to the group defined by that entity at a lower cost than if each member of the group was purchasing it on their own.
Municipalities are now allowed to aggregate their residents' home energy needs and seek a townwide energy supplier through competitive bidding, thanks to state legislation that deregulated the state's utilities industries.
For two hours on Tuesday night, council members asked questions of the three presenters -- from Colonial Power Group, a Massachusetts firm; from Gabel Associates of Highland Park, and from All Business Solutions of Mountain Lakes -- that likely will be among those bidding to become the broker between the borough and an energy supplier.
Overall, the presenters estimated that energy aggregation could save the borough's residents between 10 and 25 percent.
Residents would be able to opt out of the program and those who already use an alternate supplier would not automatically be opted in to the program. And the rate that the borough and residents pay will never exceed JCP&L's rate.
Mark Cappadona of Colonial Power Group, which manages municipal aggregations for a dozen towns in Massachusetts, said residents could expect to see as much as a 25 percent savings compared with the rates of JCP&L. But his suggestion that the borough could make money on the agreement was immediately rejected by Councilman Robert Sabosik.
"We don’t want to fund the town’s budget on the backs of our residents; we want to save them money," Sabosik said.
Robert Chilton, executive vice president of Gabel Associates, said he estimates residents would save 10 to 15 percent over their current JCP&L rates. He also said his firm, which has been hired in Plumsted Township to do energy aggregation there, has learned a lot through that process, which has included working with the state Board of Public Utilities and JCP&L.
"I think the process will be much more streamlined going forward," Chilton said.
Borough Attorney Jerry Dasti, whose partner, Gregory McGuckin, is the attorney for the Plumsted Municipal Utilities Authority and is helping to oversee Plumsted's aggregation, asked why Gabel is using an online bidding process for the suppliers in Plumsted.
Chilton replied that it allows them the ability to submit a bid at the last possible moment that best reflects the current market conditions.
Councilman Christopher Goss asked Chilton whether a lower energy rate would have a negative effect of encouraging residents to use more energy, and Chilton said that was unlikely, because the savings of $10 or so a month wouldn't be enough to have that effect.
Steve Voulpepsis, the regional director of All Business Solutions, was the only firm of the three to come with a specific rate to offer.
But councilmembers appeared skeptical when Voulpepsis acknowledged ABS has not handled an energy aggregation.
Voulpepsis responded by saying ABS has 80 clients and has handled aggregations of telecommunications and of information technology services for nine towns.
He also said his company already has an agreement in place with Just Energy, a national multibillion-dollar company which Voulpepsis said has been involved in energy aggregations elsewhere.
And he said he has a relationship with JCP&L in place as well -- a point he backed up by noting a representative of JCP&L was at the meeting with him -- with the whole goal to make a transition as seamless as possible.
Voulpepsis said the rate he was willing to commit to -- 8.65 cents per killowatt hour -- would save both the municipality and residents between 21 and 25 percent between now and May 31.
Each June, the tariff rate -- the base rate for electricity -- changes, and that will affect what JCP&L charges.
That tariff rate was cited by all three firms as a factor in how much residents will save under an energy aggregation.
Councilman Christopher Leitner asked all three firms how they make their money in these aggregations. The response of Cappadona of Colonial Power prompted Leitner to ask the question three times, trying to get a direct answer to the question, with his final response being the company does not have a set fee for its services.
Chilton of Gabel Associates indicated it receives a fee based on the usage, as does All Business Solutions, though Voulpepsis stated their fee, 0.0015 per kilowatt hour, which he said is paid by the supplier, not the municipality.
Other points from the presentations:
-- Residents who are more than 60 days behind in paying their electric bill would not be eligible for the aggregation program until their payments were brought up to date.
-- Budget plans, like the ones many residents use to prevent major swings in their costs, may or may not be available, depending on the supplier.
-- Residents who already have selected alternative suppliers would not be forced to switch, nor would they receive a hard sell asking them to switch, because often agreements with other suppliers include a significant early termination penalty.
-- The number of residents who opt out from these agreements is typically 10 percent.
-- Businesses in the borough would not be automatically opted into the agreement but would be able to choose to opt in.