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Dispelling Energy Aggregation Myths

by Harry Becker

The new trend across municipalities of energy aggregation has come to Hopewell Township, offering the promise of lower energy costs. However, with this new possibility comes new questions, concerns, and mysteries.

Energy aggregation has been an increasing trend in New Jersey, with multiple municipalities and towns, such as the Hunterdon County Cooperative, Atlantic City, Beach Haven, Pennsauken, Pennington, and Lambertville working with companies like Hopewell Township’s consultant, Concord Energy, to negotiate a better price.

Both Pennington Mayor Joe Lawver and new Hopewell Township Committee member Courtney Peters-Manning want to make sure the public is properly educated about energy aggregation. Pennington Borough passed an ordinance last month to move forward with energy aggregation.  The Hopewell Township Committee is in the midst of meeting with the public to decide whether they will approve an ordinance to move forward.

“Fundamentally, this program is designed to save Township residents money,” said Peters-Manning in an email exchange with MercerMe. “Up to $150-200 per year per household based on our consultant’s experience in other municipalities.”

How does a municipality get a lower price? Through a system of “bulk purchasing,” as Lawver describes it, selling the opportunity to supply energy to multiple households as a package deal to an energy production company.

“The only difference between you now and under energy aggregation, instead of PSE&G being your supplier, is that the Borough is going to choose your supplier,” said Lawver. “We can presumably get better pricing than PSE&G.”

For Pennington, Lawver describes the area as a “sweet spot” where the Borough is small enough to not require a major supplier but large enough that attention is still paid to them. However, Lawver described the “mechanics of the energy cooperative” as “the same for Hopewell Township and Pennington Borough.”

Residents may worry about the actual savings compared to a non-aggregated energy plan with other overhead costs, such as administrative or legal fees, a recurring cost for the Township. However, in Pennington’s case, Lawver says that administrative costs are “all carried by the energy brokers” and that once their lawyers review the deal, there are no more administrative costs. Peters-Manning detailed a similar situation for the Township.

“Our consultant, who runs the auction, will be paid from the energy supplier who wins the auction. Their fee ($0.002/kWh or less) is worked into the bid,” Peters-Manning said. “There are no [additional] costs to the Township or to residents.”

Another concern of local residents is the idea of government-set electric rates, although Peters-Manning helped dissuade those fears.

“One complaint about energy aggregation that I have heard is that people are upset that the government will set your electric rates, which I totally understand,” Peters-Manning said. “But it is already the case that the government sets your electric rates, as the state sets rates once per year.”

Peters-Manning detailed that the New Jersey Board of Public Utilities holds a Basic Generation Services, or BGS, auction every February to determine energy rates. Energy aggregation savings will be demonstrated on each customer’s monthly bill are then demonstrable by comparing the rate set by the BGS auction to the supply charge under the energy aggregation contract. 

Furthermore, both Pennington Borough and Hopewell Township would only move forward with the energy aggregation if it offered an actual savings to residents; the Township would not be tied into a more expensive energy contract. The price that the Township negotiates is set for a year and cannot, by law, exceed the price at the BGS auction.

Aggregation may offer some clean energy solutions for residents as well. Peters-Manning described two options for consumers: a base program that will have 23-29 percent renewable energy, and a second “opt-in” option that will allow residents to get a higher portion of renewable energy, up to 100 percent. However, more definitive numbers for Hopewell Township would be determined if the Township Committee passes the ordinance and goes to auction.

The Township Committee has two information sessions coming up. The first will be at the Watershed on January 22 at 7pm and the second will be at Stony Brook Elementary on January 30 at 7pm. Additionally, according to Peters-Manning, if the Committee moves forward with aggregation, Concord Energy will send additional information to each household including ways to opt out at no expense to residents.

For Hopewell Township residents with questions, please visit the Township’s community participation website, “Have Your Say Hopewell Twp” at https://www.haveyoursayhopewelltwp.org/energy-aggregation-in-2020

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