Municipal aggregation allows townships to enter into agreements with energy brokers to purchase energy at reduced costs with no out-of-pocket expenses to the township. The state-registered energy agent will be paid by the selected supplier.
According to the township, the West Orange Community Energy Aggregation (WOCEA) is a new program designed to:
- Save residents and businesses money on their monthly power bills
- Encourage energy conservation, and provide residents with tools and information to control their energy usage
- Provide a foundation for future clean energy programs in West Orange
What is Community Energy Aggregation?
Community Energy Aggregation is a program that allows the municipality to conduct a “bulk purchase” of energy supply on behalf of its residents and businesses, at prices lower than the average utility price, with the possibility of added benefits, such as higher renewable energy content and other programs. New Jersey regulations allow municipalities to take this approach to procure savings on your behalf. The Township has hired a consultant to implement a procurement process for a Third Party Supplier to provide power supply to its residents.
How does the program work?
It is important to emphasize that this program covers only the power supply portion of your electric bill. Under New Jersey’s retail choice regulations, you may purchase power supply from the electric utility under its Basic Generation Service (“BGS”) tariff rates, or you may purchase your power supply from a third party supplier. Most residential electric customers in the State have not switched to a third party supplier; therefore the majority of West Orange' residents, like most residents across New Jersey, simply obtain their power supply from the utility “supplier” as they always have.All Township residents are automatically included in the WOCEA program unless they have already chosen a “third party supplier.” The Township has engaged an independent consultant to collect energy usage information, prepare bid specifications, and seek pricing from third party suppliers through a public bid process. The aim is to leverage the bulk purchasing power of all of the Township’s residents to obtain power supply that is less expensive, while also considering including a requirement for a higher renewable energy content than the power supply offered by the electric utility. Although all residential customers in the Township not currently purchasing from a third party supplier are automatically included in the program, a resident may “optout” of the program if they wish to. Importantly, the delivery and distribution of electricity under this program will continue to remain the same, through the regulated utility (PSE&G) that serves your home. The utility will continue to handle your account, addressing any outages and maintaining service. The only thing that will change is the billing and cost of the electricity provided.
What is the legal basis for the program?
The New Jersey Legislature approved the Government Energy Aggregation Act in 2003, to ensure that the benefits of energy deregulation were passed on to consumers, in the form of lower costs and greater choice of suppliers. (“Energy deregulation” refers to legislation passed in 1999 that separates the provision of energy as a competitive arena from its distribution, which remains in the hands of the regulated utilities which have a monopoly on the “pipes and wires” that deliver the energy to your home or business. This means that companies are now free to compete to generate electricity (or supply natural gas), and consumers are free to choose who to buy it from.) The 2003 law gives communities the right to “aggregate” all of the residential and business accounts within their boundaries, and solicit bids from suppliers in order to get the best price and terms for everyone. Why is this happening now? Energy prices were “capped” for several years after deregulation, so this kind of program was unnecessary. Since then, the prices charged by suppliers have frequently fluctuated, but the retail prices have generally continued to go up. 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 and have hidden clauses, consumers have been slow to accept them. State regulations have recently been 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 and small businesses can obtain on their own. In addition, energy market conditions have improved, thereby increasing the opportunity to obtain advantageous pricing from third party suppliers.
For the full FAQ head to the West Orange Township's website.