Hamilton Township will take a break from its energy aggregation program once its current contract expires in September.
Currently in the second round of the electricity-bundling program, Hamilton Township will not go out to bid for a third phase, Mayor Jeff Martin said. The township’s energy consultant, Gabel and Associates, informed the township in late July that disruptions in the energy market due to the COVID-19 pandemic meant the township likely would not find prices better than the ones offered by utility company PSE&G. The firm recommended Hamilton Township not seek bids at this time, advice that Martin took.
Residents currently participating in the Hamilton Township Community Energy Aggregation Program will receive a notice from PSE&G in August, the township said, and will be transitioned back to electricity provided by PSE&G, effective with their September meter read dates.
Normally, customers of utilities like PSE&G receive electricity at a fixed rate. Energy aggregation allows local governments to bundle electricity accounts—such as the ones belonging to residents—in order to seek bids for cheaper energy rates. Electricity is then sold to this group of accounts together, at a bulk rate lower than one an individual customer could receive. Hamilton Township officials have said residents together have saved millions of dollars since the program started under then-Mayor Kelly Yaede in 2016.
Martin wondered, though, just how in demand the HCEA program is, considering how many residents did not participate in it. The effectiveness of energy aggregation—and total savings received from it— diminishes as residents exercise their right to opt-out of the energy aggregation agreement.
In late 2016, for example, the township entered into an agreement with South Jersey Energy that township officials said would generate more than $8.5 million in savings for residents. The actual savings of the 21-month deal wound up being far less—a total of just more than $1 million—due in part to many residents choosing to not participate.
In November 2018, with the South Jersey Energy deal ending, the township conducted a public bid for new aggregation proposals. The township said the offers it received were higher than the price offered by South Jersey Energy, and officials decided to return to PSE&G instead.
The township tried energy aggregation again in March 2019, accepting a bid from Constellation NewEnergy to provide electricity to Hamiltonians at a bulk-buy price. The second phase began in June 2019 and ends this September.
A statement issued in 2019 by the township said Constellation NewEnergy offered a price about 12 percent lower than PSE&G’s electricity supply price, and more than six percent below the projected PSE&G price during the 15 months of the contract. The township estimated the average resident would save $90 during the 15-month contract, with a township-wide savings of $3 million. Martin did not say what the actual savings of this round of energy aggregation were.
Since the start, the energy aggregation program caused confusion and frustration. With the entire township automatically enrolled, residents who wanted to continue receiving electricity from PSE&G directly had to fill out a postage-paid “opt-out” card and mail it. Those who missed the opt-out deadline found themselves enrolled anyway.
Martin said he knows both experiences, with he and his wife opting out of the program in the second round after joining the first time.
“Personally I just like working with PSE&G, and I felt like we had a better experience with them,” Martin said.
Still, Martin said he won’t rule out a return to energy aggregation, depending on where the energy market goes and what township residents want.
“If Gabel thinks we should pursue Phase Three, they’ll reach out to us,” Martin said. “Then they’ll go before council to present, and the town will reach out to residents to see what they think.”