Posted by Dennis Herrick on June 15, 2009 at 12:43:28:
WONDER IF THERE ARE SAVINGS HERE FOR NH TOWNS AND CITIES. OH, BUT WHAT WILL BECOME OF USOURCE?
GUESS UNITIL'S VP TODD BLACK WON'T HAVE ANYTHING TO DO BUT SIT AT HIS DESK AND SCRATCH HIS BALLS.
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Lunenburg alternative to Unitil
Sentinel & Enterprise
Posted: 06/15/2009 11:00:25 AM EDT
By Dan Magazu
dmagazu@sentinelandenterprise.com
LUNENBURG -- The town of Lunenburg currently has no choice but to let Unitil distribute energy to its residents, but officials are investigating whether it makes sense to purchase the energy in bulk from a different supplier.
"If there is any chance it could help residents save money, we should definitely find out more about it," Selectman Tom Mason said recently.
Municipal Electric Aggregation is a process under the law where, through Town Meeting, a community can solicit bids from third-party electricity providers to supply energy to the entire town, according to Town Manager Kerry Speidel.
The distributor, in this case Unitil, would have no choice but to distribute the third-party's energy rather than its own.
"The intent is to save residents money," Speidel said.
Energy consultant Bob Patterson said electric aggregation can help stabilize energy costs and promote competition among utility providers.
Communities in Massachusetts received the option of aggregating energy from a third-party provider following the 1998 deregulation of the utility industry.
Patterson said the Cape Cod Light Compact is one of only two entities that aggregate energy for residential customers in Massachusetts. The city of Marlboro is the other.
"The compact purchases energy for all of the communities in Cape Cod and Martha's Vineyard,"
Patterson said a community can potentially realize significant savings on energy costs by purchasing in bulk.
"There are definitely savings that Lunenburg could achieve," he said. "But it does require that the community give quite a bit of responsibility to whoever is going to handle the aggregation. If it's not done correctly, you could end up with a rate that is not saving the town money."
Brian Murphy is the president of Colonial Power Group, which coordinates the energy supply purchase for Marlboro.
Murphy said residents and businesses in the city have achieved an overall savings of about $1 million since it began aggregating energy in 2007.
"The city's energy rate has always been lower than the rate of surrounding communities since this began," Murphy said. "The difference has varied over time. It's spread between half a penny cheaper per kilowatt to a tenth of a penny cheaper."
The savings for an individual homeowner is modest -- about $1 per month -- but is significant when added up across the city.
"That's all money that's going back into the community," Murphy said.
Any community that votes to aggregate energy must allow residents to opt out for the standard rate, Murphy said.
"Currently more than 90 percent of Marlboro residents participate in the power-supply program," Murphy said.
Lunenburg has been purchasing energy for its municipal and school buildings from a third-party provider since 2003, according to School Facilities Manager John Londa.
"It's definitely saved us money over the long haul," Londa said.
The town is part of a group of several other communities that purchase energy for school buildings in bulk as one customer.
"The bigger the group, the more powerful you are in the market place," Londa said.
Patterson coordinates the aggregate purchase for the group.
"By doing that, we are able to save about 10 percent of the cost of electricity," Patterson said.
TransCanada currently supplies power to the town's municipal buildings, according to Londa.
The town, which pays about $200,000 annually on electricity costs for school and municipal buildings, is currently locked into a two-year agreement at a rate of $9.785 per kilowatt hour.
"It's a solid rate," Londa said. "We definitely are achieving some savings."
Unitil Spokesman Wes Eberle said the company has no problem with Lunenburg exploring the option of Municipal Electric Aggregation.
"It's really a decision for the town to make," Eberle said. "Unitil is glad to be helpful in any way we can and answer any questions the town may have."
Switching to municipal electric aggregation likely wouldn't cost Unitil too much money because the company does not produce its own energy. Instead, it purchases the energy it supplies.
"In talking with them they encouraged the town to explore this," Speidel said. "I suspect they make most of their profit distributing the energy."
Speidel said residents would have to approve the concept of municipal electric aggregation at Town Meeting.
"If we want to do it, the town as a whole has to adopt it," Speidel said. "I'm not sure if it's feasible to have something ready for this fall, but I think it may be."
Selectman Paula Bertram said the town should talk with other communities that have implemented municipal electric aggregation in order to determine what kind of rates they get.
"It's important to talk to other communities," Bertram said. "Then talk to potential suppliers and look at what those rates are going to be in comparison to Unitil."
Board of Selectmen Chairman Tom Alonzo also said he supports investigating the purchasing strategy.
"I think we should at least explore it enough to determine if we can save money through it," Alonzo said.
A 12-month profile of the town's energy usage would be used to determine how much energy to aggregate, Patterson said.
The coordination between the company supplying energy and the company distributing energy occurs through paper contracts, Patterson said.
"It's a pretty seamless process," he said.