Energy aggregation for Montclair explained: Stay in or opt out by March 7
BY JAIMIE JULIA WINTERS
After rejecting bids in September, Montclair and its regional partners have a new clean energy supplier.
In early February, residents began receiving notification of their right to opt out of the Sustainable Essex Alliance — a partnership with several neighboring communities to seek clean energy at lower rates — by March 7. Residents who opted out of an earlier round would need to do so again to avoid being enrolled.
Those residents who stay in the program will automatically be signed on with SEA’s new provider, Energy Harbor, in April. Those who opt out will continue receiving energy from PSE&G, as they have been since the SEA’s contract with its last supplier expired in December.
Households currently with other third-party energy providers will not be enrolled automatically. They can wait for their contracts to end and then enroll in the community aggregation, or break their current contracts, which could result in fees. Households using solar energy will not be enrolled either.
The new contract will offer 4% savings from PSE&G rates, down from the 10% with the last supplier, at a price of about 12 cents per kilowatt hour. The new supplier will offer 40% sustainable energy.
Montclair joined Glen Ridge, Maplewood, South Orange and Verona to form the SEA in April 2019. They contracted with a third-party power supplier, Direct Energy Services, beginning in July 2019, with a contract running for 17 months at a rate of 11 cents per kilowatt hour.
The purpose of the SEA is to “buy greener energy in bulk, hopefully getting a little savings,” Mayor Sean Spiller told residents in his weekly online talk to residents. He pointed to the fact Montclair’s 70 government energy accounts are already part of an aggregation through the Essex-Hudson Regional Cooperative Purchasing System. It consists of 40 towns that have lowered energy costs by about 13%, with 25% renewable energy.
Before the formation of the SEA, Montclair households could pick their own energy suppliers, but usually at higher rates. So residents wanting to lower their carbon footprints by choosing wind, solar, hydro or landfill gas usually needed the financial means to do so. In the SEA, the local governments act collectively on behalf of participating residents and approach selected energy providers to get bids.
The SEA’s energy consultant, Gabel Associates, estimated that in the first 12 months of the program the aggregate savings for participating residents in the five towns was nearly $1.9 million. Of the 10,000 Montclair ratepayers choosing the plan, they saved a combined $684,000. On average Montclair households saved $100 a year.
Almost half of Montclair households chose to opt out of the SEA in the last round.
During the summer, the SEA began the process of soliciting new bids for round two of the cooperative energy program. The SEA also added Glen Rock and Livingston to its membership, bringing the number of towns to seven and increasing the number of households by about 10,000.
The goal of the SEA has been to obtain 40% sustainable energy and at least a 5% savings compared to PSE&G rates, Montclair’s sustainability officer, Gray Russell, said.
But because the energy market is complex and volatile, finding a supplier for the 100,000 accounts at a cheaper rate can change from day to day.
But on Sept. 15 the SEA received price proposals for the next 12 to 24 months from four energy firms that did not meet the alliance’s pricing criteria, relative to the PSE&G rates. Only one came back that would result in any savings, and only at 1%. Residents enrolled in round one had been saving 10% compared to PSE&G rates, Russell said.
On Nov. 4, after observing market improvements and changing the start date for the contract to improve the chances for favorable pricing, the SEA accepted new bids that were significantly improved. The SEA awarded Energy Harbor, the low bidder, an 18-month contract that will begin in March.
The former supplier, Direct Energy, did not bid in this round, said Russell.
Energy Harbor will provide participating residents with a power supply that has nearly double the renewable energy content required of PSE&G, at a price of 12 cents per kilowatt hour.
In addition, participating residents will have the ability to voluntarily “opt up” to a 100% renewable energy product, at 13 cents per kilowatt hour. Montclair households would be expected to pay an additional $5 per month.
Residents not opting out will receive a notice from PSE&G in mid-March stating that Energy Harbor has enrolled their account for service.
Rates can not be raised throughout the contract, which runs through August 2022.
When the New Jersey Energy Choice program was enacted in 1999 residents were required to opt in. But after several years, officials said the opt-in approach put such a burden on programs that none got off the ground, and New Jersey law was changed to instead have residential customers “opt out” if they chose not to participate.
In Montclair, PSE&G will still provide services, and residents will still receive their bills through that company. In case of a power outage, PSE&G will still be the utility to notify and will respond to repair lines and service. Any resident enrolled in equal payment plans can continue to do so.
Montclair will hold a virtual public information session on Tuesday, Feb. 23, from 7:30 to 8:30 p.m. Access instructions are included in the announcement mailer, and also on the township’s FAQ page for the new round.
Township officials warned that residents may receive solicitation phone calls and letters directly from third-party suppliers not associated with the Sustainable Essex Alliance offering green energy and different electricity rates.
Another plus, said Russell, is that residents are getting sustainable energy from their region and are therefore investing in the future of clean energy.