LOWER TOWNSHIP — Township Council has hired an energy consultant, with plans to find cheaper electricity for the township’s 14,500 metered residential customers.
If enough money is saved, the township plans to seek better deals for its businesses as well. It’s a growing trend as changes in state law are allowing towns to seek better deals for bulk energy use.
The plan is not to drop Atlantic City Electric Co. as the distributor of electric services but to find a cheaper supplier of the energy itself. Township Manager Mike Voll said Atlantic City Electric no longer produces energy but buys the energy it distributes to local customers. It still would run the distribution network.
“Atlantic City Electric is the automobile, but they buy the gasoline to run it,” Voll said.
Commercial Utility Consultants, which has offices in Sewell, Gloucester County, and in Pennsylvania, was hired to find a better deal than the 9.7 cents per kilowatt-hour local customers paid in 2012, Councilman Jim Neville said.
The rate fluctuates during the year. Neville noted it ranged from 8.77 cents to 11.01 cents during the May and June period this year.
“We hope to get a rate lower than 8 cents, which is about a 15 percent reduction. If a bill is $2,400 a year, you could save $300 to $400,” Neville said.
Voll said the new rate would be locked in for at least 18 months, so customers would not face the fluctuations some have noticed in their bills.
Council heard a presentation Monday night from John Fish, the business development director for CUC, and voted 5-0 to hire the company. It doesn’t cost the township anything, as the energy provider that is chosen pays CUC at a rate of 0.00275 cents per kilowatt-hour.
“They get a small cut for administration. Residents don’t need to do anything except save money,” Neville said.
Council also introduced an ordinance to set up the energy program. Residents with questions are being urged to attend the public hearing on about the program set for 6 p.m. Aug. 19 at Township Hall, 2600 Bayshore Road. Officials from CUC will be there to answer questions. Voll also said that there would be a town hall meeting at some point and that every resident would get mailings explaining the program. Residents can opt out of the program if they wish.
Voll said some residents were saying they were happy with Atlantic City Electric, but he noted the utility still would take care of power lines, respond to power outages, do the billing and other services residents are used to. He said it also would not affect jobs at Atlantic City Electric.
“All the services remain intact,” Voll said.
This was confirmed by Frank Tedesco, a spokesman for Atlantic City Electric. Tedesco said the utility no longer supplied power but merely distributed it. He said about 22 percent of an Atlantic City Electric bill actually goes to Atlantic City Electric.
“It wouldn’t affect the company’s bottom line,” Tedesco said.
The utility encourages people to find the best energy-supply deals they can, but Tedesco warned they should check the terms and conditions of any agreement. Tedesco said he would feel more comfortable with a deal put together by the local government as opposed to individual customers working out power agreements on their own, which is now possible as well.
Fish said he was seeking at least 30,000 metered customers to auction to the lowest energy bidder. He said Margate, Linwood and West Cape May are in different stages of introducing ordinances and could be part of a package with Lower Township. He said that rates statewide were generally around 10 cents per kilowatt-hour and that he expects to get a price in the 8-cent range.
Fish noted, however, that another group of towns is even further along in the process, including Stone Harbor, Middle Township, Wildwood, Egg Harbor City and Commercial Township. Under the Government Energy Aggregation Program, any group of towns can band together to secure energy on behalf of residents.
“We’re putting the documents together for the auction now,” Fish said. “They will be able to see the rate before they have to commit, and several mailings will be done to residents. Nothing changes for the residents except a lower price for supply.”
Middle Township Business Administrator Connie Mahon said the township had found savings by using the program for public buildings and now was hoping to save money for residents.
“This will save about one energy bill per year. That’s how it should work out,” Mahon said.
The township has details on the program at its website: www.middletownship.com
The Board of Public Utilities oversees Basic Generation Service Electricity Supply Auctions, or BGS auctions, with the next one set for early 2014. This is where the utilities themselves often go to bid on energy supplies.
A move to deregulate the industry led to a 1999 state law that separated energy supply and energy distribution. Energy bills now separate the two charges. It also led a lot of utility companies to get out of the supply business and concentrate on distribution.
The 1999 law was designed to give consumers energy choices and lower costs, but the costs have risen almost 30 percent since then. Part of the reason is that the 1999 law added a number of new charges called “societal benefits charges,” which inflated costs. Electric bills now include charges to subsidize low-income energy users, decommission nuclear power plants, clean defunct gas-manufacturing plants and provide energy-efficiency education and other programs. These charges are somewhat hidden in an energy bill.
The best chance to get some of this money back may be for towns to band together. Neville said that adding Margate, Linwood and West Cape May to Lower Township’s auction package would total more than 40,000 electric meters and that more meters is more power to command lower prices.
Contact Richard Degener: