News Flash

Borough of Red Bank News

Posted on: April 25, 2019

Borough Begins Money Saving Energy Aggregation Process

Borough of Red Bank, New Jersey

At the regular public meeting of the Mayor & Council on April 24, 2019, the Borough adopted Ordinance 2019-17 to begin the process of establishing a community energy aggregation program to purchase electric generation service pursuant to State statutes and regulations.  By aggregating the electric generation service on behalf of residential users of electricity, the Borough is able to seek bids from licensed and appropriate third party suppliers in a reverse energy auction creating competition for the provision of electric power that will likely result in lower electric rates without causing any interruption in service. 

The Borough has selected Commercial Utility Consultants, Inc. (CUC) and Concord Engineering Group (CEG) to run the program at no cost to the Borough.  The next steps include execution of required agreements, submission for review by the State of New Jersey, a bid process/reverse energy auction, a review of the bids and selection of the winning bidder, and then a comprehensive resident outreach effort consisting of mailings, public meetings, and a customized webpage.

The program was previously discussed at a Workshop Meeting on April 3, 2019 and introduced by Ordinance on April 10, 2019.  Two presentations were made by representatives of Commercial Utility Consultants to explain the program.  Click here to download a copy of the presentation made by CUC/CEG.


BACKGROUND

The Government Energy Aggregation Program (L2003, c. 24, “GEA Act”) authorizes municipalities and/or counties of New Jersey to establish Government Energy Aggregation (GEA) (a.k.a. Community Energy Aggregation (CEA)) programs after passing an ordinance or a resolution. A CEA program allows municipalities, working alone or in a group, to aggregate the energy requirements of residential accounts so that the CEA program can purchase energy supply from non-utility sellers of electricity and gas supply (Third Party Suppliers or TPS) at prices lower than the average utility price, with the possibility of added benefits such as higher renewable energy content.

Community wide energy aggregation is a realistic means for counties and municipalities to provide their residents with a lower-cost utility option, and keep those savings within their local community. Under the current legislation, all eligible residents currently not under contract with an existing Third Party Supplier within the boundaries of the participating municipality are automatically enrolled. Residents who do not wish to participate may cancel participation at any time and there is never a fee or penalty. CEA programs offer municipalities and counties the opportunity to proactively assist and support programs that reduce energy costs for their residents. These programs are much different than standard third party supply contracts and offer consumer benefits a resident may not typically obtain on their own.

It is important to identify the different parts of our electric service which were created by energy deregulation. Energy deregulation is the separation of distribution and supply. New Jersey has been deregulated since 1999. Since then, approximately 18% of residential customers have switched to a third-party supplier of their choice.

Currently, pricing for the utility companies is set through a state-wide auction called the Basic Generation Service Auction (http://www.bgs-auction.com/), or BGS Auction, in which wholesale commodity suppliers participate to offer the utilities in NJ with energy commodity for their residents. This auction is sponsored and conducted by the New Jersey Board of Public Utilities (BPU) each February. Through this process, the winning suppliers are chosen to provide the “default” or “price to compare” utility rate throughout the state.

CEA allows the Borough, through a reverse auction, to obtain competitive commodity pricing on behalf of its community and compete with the utility’s “default” rate offered through the State auction and provided by the local utility company. The reverse auction mimics the state’s BGS Auction process, allowing for the competitive “bulk purchase” of energy supply on behalf of its residents. There is no cost to a participating municipality or the community to implement a program.

Once the Borough adopts the ordinance to participate as well as sign the required paperwork for the energy agents and the utility, the bid specifications and supplier agreement are sent to the NJ Board of Public Utilities (BPU) and the NJ Division of Rate Counsel for review and comment. Once the regulatory review is completed, a bid process is held via an online reverse auction, and pricing received at the time of auction is presented to the municipality for consideration.


WHY PARTICIPATE?

Residents are looking for ways to save money and the Borough wants to help.  In the past few years, a number of third party suppliers and independent brokers have entered the marketplace, mainly to address the needs of large-scale commercial users, but more recently also offering various plans and discounts to residential consumers. Since these competing plans can sometimes be confusing, have hidden clauses, and can be predatory-type contracts, consumers have been slow to accept them. In 2012, state regulations were modified to provide a clearer path for municipalities to offer community energy aggregation, and thereby use bulk purchasing power to obtain better pricing and better terms than residents can obtain on their own. This program is advantageous and offers greater leverage required for increased buying power and securing better pricing, consumer protections in the contract terms, and never a termination fee.

Additionally, there are consumer protections included in CEA programs that are generally not found in individual third party agreements. These protections include no termination or other hidden fees, no confusing terms and conditions, and a locked-in flat price throughout the contract term. While it is the Borough that establishes the CEA program, the choice to participate or not participate belongs solely to each resident. As such, residents can decide to participate or not participate in the CEA program as many times as they like during the contract term, providing the flexibility for residents to consider the best option for their personal households.

It is important to note that a resident’s relationship with their local utility company (JCP&L) does not change under a CEA program: all current services such as delivery, meter readings, billing, payments, emergency services, etc., are serviced through the utility company just as they are today (https://nj.gov/njpowerswitch/rights/). Therefore, billing questions, service outage notifications, etc. is still handled by the utility for the resident, and residents will still receive one bill every month from the utility. In addition, residents currently enrolled in a budget bill plan through the utility will be automatically enrolled in a budget bill plan through the CEA program, and anyone wishing to switch to a budget bill plan will have the opportunity to do so as well. Furthermore, residents who receive low income assistance will continue to receive this assistance if they participate in the CEA program. The CEA program provides the community an additional option outside of the one chosen for them by the utility. Residents have the flexibility to participate or not participate at any time during the contract period with no costs or fees. Providing our residents with the opportunity to participate in the Community Energy Aggregation program allows them to have another choice for their energy needs.


FREQUENTLY ASKED QUESTIONS

1) Does participation in a CEA program change the relationship between the residents and the local utility company (JCP&L) and the Borough?

No. The relationship between the local utility company and the residents does not change under a CEA program. Residents will still reach out to the utility company (JCP&L) to report power outages, tree limbs hanging over power lines, etc. and with any questions related to their monthly bills from the utility. Municipalities are not utility companies and as such cannot be responsible to provide these services or answer questions related to these services.

2) Who do residents call if their electricity goes out?

They will still call the utility company. 

3) Do residents have to be in this program?

No. Residents can opt-out by following the instructions to be announced.

4) Can a resident’s information be sold to advertisers or energy companies?

No. Residents’ information, including their account numbers, is confidential and can only be used to enroll them in the CEA program set up by the Borough.

5) What is a Government Energy Aggregation program?

A municipality has the ability to pool together the usage of all their residents to obtain a lower electric price than what the utility is currently charging. If the municipality is able to secure a lower price, the municipality can then offer it to all of their residents.

6) Is there a fee to be a part of the program?

No, there are no fees or penalties for participation in the program.

7) Will residents be penalized if they do not become a part of the program?

No, there is never a fee or penalty. If a resident does not want to be a part of the CEA program they are free to stay with their utility company or choose their own third party supplier.

8) Is Commercial Utility Consultants or Concord Energy Services an energy supplier?

No. They are independent consultants that works with all the energy suppliers licensed by the BPU to do business in New Jersey to obtain the energy contract and work through the process to put the CEA program in place.

9) Will residents have to pay more than one bill each month if they are a part of this program?

No, residents will continue to receive one bill each month from their local utility company and will pay that bill directly to the utility just as they always have.

10) Who do residents call with service questions or questions about their bill?

Residents will continue to call their local utility company just as they always have.

11) Who will read the meters of residents in the program?

The local utility company will still read residents’ meters just as they always have.

12) Will the Budget Bill or Equal Payment Plan be offered?

Yes, this will be offered for this program. Residents may experience a “true-up” prior to enrollment. A detailed explanation of budget billing is included in the information kits that are mailed to residents.

13) Are the people knocking on residents’ doors asking about their electric bills a part of this program?

No. No one associated with the Borough or this program will be calling residents or knocking on their doors. All official program information is sent via USPS and can be found on a webpage to be designed for the Borough's CEA program. 

14) What information will residents receive about the program?

Aside from public meetings and advertising, residents will receive at least two letters. One is the official information kit which provides program details such as the new rate, term, chosen supplier and the deadline for opting out. The second is a confirmation letter from the local utility company stating the resident has elected to switch electricity suppliers and the date on which their account will be switched over. Note that this is a form letter stating the resident has chosen to switch suppliers even though the program was chosen by the Borough as a benefit to them. Residents may disregard this letter.

15) Is the price a “teaser” price that will go up after a resident is part of the program?

No. The program price will remain at the flat rate determined for the term of the Borough's contract with the supplier.

16) Who supervises the Community Energy Aggregation process?

The NJ Board of Public Utilities (BPU) has enforcement authority over CEA programs in New Jersey. The program must follow strict statutory guidelines implemented by the BPU. Key documents are provided to the BPU and the Division of Rate Counsel for review and comment throughout the process.

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