Developing a Sustainable NJ Community through Municipal Energy Aggregation

What if you could save all the residents in your town 10% to 25% off their electric bill? What if the electricity could also be renewable energy produced locally for a sustainable community and create local jobs and economic development? The Government Energy Aggregation Act of 2003 serves as the basis for New Jersey legislation which provides a vehicle to do all of it!

Aggregation was on hold from 2003 through May, 2012 while the Board of Public Utilities voted in the act and created the regulatory rules. Since the law’s enactment, only one New Jersey municipality has completed a government energy aggregation program; but aggregation is poised to sweep across the state as it did in Illinois. In one year, Illinois expanded the aggregation program to over 300 communities, saving millions of dollars for their residents.

Municipal Energy Aggregation (a.k.a. Government Choice or Community Choice) allows local government to combine the purchasing power of its residents to achieve savings on electricity costs. Under this legislation, all eligible residents within the boundaries of the Government Energy Aggregation program are automatically enrolled. Residents who don’t want to participate in the savings can choose to opt out of the program.

Large businesses have huge savings because the alternative electric suppliers compete to be able to supply their electricity. Competition should work for residents, too, but a typical consumer only uses 10,000 kWh per year, while a large factory typically uses around 50,000,000 kWh. A single home’s electricity usage is simply too small to attract the attention of the suppliers and consequentially unable to negotiate the best possible savings.

Municipal Energy Aggregation works very much like a wholesale buyers club. By combining the purchasing power of 5,000 households, we can equal the same load as the large factory and experience the same savings off our home electric bill.

The residential and small-business electric load of an entire community is very attractive to suppliers and will drive prices down through competition. Individuals can receive the same competitive savings by banding together.

Savings range from 10% to 25% depending on the electric utility you have–Higher savings in ACE and a bit lower in PSE&G. Those savings help the family budget and keep money flowing in the local economy. For a community of 5000 homes, electric savings could total from $500,000 to $1.5 million. These electric savings remain in the hands of the residents in your community.

Think of it as a virtual utility where your community goes to purchase the energy but it is still delivered by your local utility. Your local utility still handles transmission, distribution, repairs and customer service.

Here are the New Jersey Municipal Energy Aggregation key points:

• Municipal aggregation was enabled by state legislation in 2003 as an opt-in program. BPU regulations in May 2012 further defined the program, allowing the opt-out option for residential.
• PUC oversight for consumer protection.
• Licensing is required for alternative electric suppliers, aggregator agents and consultants.
• Your local government passes the decision to become a government aggregator.
• Aggregation is not taxpayer-funded.
• The local utility is the delivery and billing partner.
• Existing regulations and environmental mandates apply.
• Offers consumers an energy choice that reflects their goals and values with the tax burden of maintaining an aging delivery system.
• No out-of-pocket cost to county/municipality when using an energy agent or consultant.
• Eliminates market unpredictability, making acquiring energy at low cost very transparent.
• Designed to fit with the customer’s specific requirements resulting in improved customer market power, presence, and efficiency.
• It allows communities to choose an electricity supply which includes renewable energy components to support the community’s sustainability goals; which up until now required a significant investment in on-site renewable energy generation systems.
• It allows for local program optimization such as the development of a community owned solar garden and other sustainable goals.
• Energy aggregation can also allow for reinvesting in local communities by establishing a municipal green-revolving fun for installing electric vehicle charging stations, energy efficiency rebates, solar rebates, and supporting local not-for-profit organizations.

Benefits Municipal Energy Aggregation Offers Consumers & Community Members

Working with an experienced, professional energy agent or consultant increases awareness of other energy efficiencies that can be addressed. Municipal Energy Aggregation programs have been successfully implemented in Illinois, Ohio, California and Massachusetts. New Jersey is just getting started! As more states are looking at the consumer benefits and economic development potential of Municipal Energy Aggregation, the bottom line is that it delivers results.

How can you begin forming your own opt-out government aggregation program?

It all begins with the local municipality passing an ordinance to form a government aggregation program. The steps following that resolution depend on the implementation option that the municipality chooses.

• County/Municipality must pass an ordinance establishing a type of MEA program.
• County/Municipality informs all affected Local Distribution Companies (LDCs) and enters into an agreement with each LDC.
• Government aggregator executes the implementation process, which can take 6-8 months or more (from resolution to public notifications, to RFP, to selection of supplier, to participant information processing, and start of the program)

What can you imagine for a sustainable community of the future? Municipal Energy Aggregation can help make that future happen! If you still have questions regarding MEA capabilities in New Jersey, see if some of your questions have already been answered on our FAQ or contact us for more information.