SEA Energy Procurement Initiative

We are pleased to announce that the Township of Montclair, in cooperation with several neighboring Essex County municipalities, recently entered into a contract for the Sustainable Essex Alliance Renewable Government Energy Aggregation program. Under this contract with Direct Energy Services (“Direct Energy”), township residents have the opportunity to save money on their electric bills while receiving power supply that has nearly double the renewable energy content (about 41% in total) of the standard power supply product currently provided by PSE&G. The SEA Renewable Government Energy Aggregation program will begin with your July meter reading.

Eligible residents were sent an information packet in the mail from Direct Energy with program details (download packet). You are not obligated to participate in the program and may opt out if you choose.

Provided below is a program description and answers to frequently asked questions.

What is Community Energy Aggregation?

Community Energy Aggregation (CEA) is a State program that allows a municipality to conduct a “bulk purchase” of energy supply on behalf of its residents, at prices lower than the average utility price. New Jersey regulations allow municipalities to take this approach to procure energy savings on your behalf, and to also obtain energy supply that has a higher renewable energy content than the state-required minimum green energy content (currently a little over 20%).

Gabel Associates was retained as the SEA R-GEA’s Energy Consultant, (at no cost to the Township), to assist with the implementation of the procurement process for a Third-Party Supplier to provide power supply to residents.<

How the Community Energy Aggregation Came to Be

In June 2018 the Township Council passed Ordinance #O-18-026, authorizing a Government Energy Aggregation (“GEA”) program in Montclair. Under New Jersey’s GEA law, municipalities can aggregate their residents’ electric accounts in a single buying pool in an attempt to obtain electric power supply at a lower price than offered by their utility. In addition, a GEA program allows a municipality to seek a power supply with a higher renewable energy content than offered through the utility’s ‘default supply’ service.

To create even greater purchasing power, the Township also joined with Glen Ridge, Verona, Maplewood, and South Orange to form the Sustainable Essex Alliance Energy Procurement Cooperative (“SEAEPC”), to use our joint purchasing for obtaining the best possible price for renewable energy supply, following our mutual sustainability goals and a commitment to reduce the community’s carbon footprint.

A competitive procurement process began in March 2019 for the SEAEPC program. As a result of offers submitted on April 2, 2019, a contract was awarded to the low bidder, Direct Energy Services (“Direct Energy”), which will provide electric supply to Township residents, and residents of the other participating municipalities, for a 17-month term beginning in July 2019, at a price of $.11005 per kilowatt-hour (kWh). This price is more than 10% lower than the average tariff price being paid by those residents currently receiving supply through PSE&G. Although the PSE&G tariff price is expected to drop somewhat later this year, the contract is projected to save the typical Montclair resident about $150 as compared to the average PSE&G tariff “price-to-compare” over the 17-month contract term, with no change to the level of service.

In addition, the power supply being provided by Direct Energy will include approximately 41% renewable energy, which is about double the renewable energy content of default supply service currently provided by PSE&G. As a result, participating residents will be reducing their carbon emissions while saving money at the same time.

All of Montclair’s residential PSE&G customers – unless they already have a third-party supply contract, or use solar panels – were recently sent a mailing which describes and provides the specifics of the SEA R-GEA program. 

If you do nothing, you are automatically enrolled in the program, and will benefit from cleaner electricity and cost savings.
If you do not wish to participate in the program for any reason, you may simply opt out, with no strings or penalties, by simply following the instructions on the Program Summary provided, or by contacting Direct Energy using the contract information provided below.

This energy aggregation program is only for the electricity supply portion of your utility service. The delivery portion will continue to be provided by PSE&G at regulated rates, and PSE&G will continue to provide all emergency and safety services. PSE&G will also continue to provide customer services such as meter readings, billing, and service restoration during outages.

How does the SEA R-GEA Program work?

All eligible residents (all residential customers of PSE&G in the Township except for those that already have their own TPS contract or that have a solar electric generating system on their property that supplies power to their home) are automatically included in the SEA R-GEA program and were sent a notice in the mail at the beginning of May 2019. This notice, known as the Opt-Out Notice, provides all the details of the program as well as the various ways to opt out of the program, including the awarded Direct Energy's toll free telephone number, email address, and a postage-paid opt-out card.

There is a 30-day opt-out period during which customers can review the Opt-Out Notice and decide whether they wish to opt out of the program. The opt-out period concludes on May 30, 2019, when residents who do not opt-out of the program will be enrolled by the supplier – Direct Energy.

Even after an electric account is enrolled, residents remain free to opt out of the program at any time during the contract. Participation in the SEA R-GEA Program is 100% optional. There are no fees or penalties if you decide to opt out.

As noted above customers that have their own, independent TPS contracts are not initially included but are given the option to join the SEA R-GEA program.

Will I receive two bills?

No, you will always receive one bill from your utility – PSE&G. The only thing that changes in the SEA R-GEA program, or any GEA program, is the lower cost of the electricity provided.

Electric bills comprise two main components: power supply and distribution. It is important to emphasize that this program covers only the power supply portion of the electric bill. Under New Jersey’s retail choice regulations, you may purchase power supply from either the electric utility company under its Basic Generation Service (“BGS”) tariff rates, or you may purchase your power supply from a Third-Party Supplier ("TPS"). The SEA R-GEA program seeks to provide savings on the power supply portion of your bill.

Importantly, the delivery and distribution of electricity under this program remains the same, through the regulated utility (i.e. PSE&G) that serves your home. The utility continues to handle your account, addressing any outages and maintaining service. 

Do I have to be part of the program?

No. Residential customers who are initially included in the program have the right to opt out. During the initial, pre-enrollment 30-day ‘opt-out’ period, or at any time after enrollment.

However, it is advantageous for all residents to join and remain in the program, as this gives the community the “strength in numbers” to negotiate the best price for consumers. All residents would receive information about the program and be given the opportunity to opt out.

Would I be able to Opt In to the SEA R-GEA Program?

Yes. Residents who have their own third-party supply contract and who therefore are not included in the initial eligibility pool have the opportunity to join the SEA R-GEA. Residents who move into their home after the start of the program (July 2019) and who therefore were not included in the initial eligibility pool, but would like to join the SEA R-GEA, also have the opportunity to opt in to the program. 

For customers with their own TPS contracts: If you currently have your own third-party supply contract but are considering terminating that contract and joining the SEA R-GEA program, it is very important to first read your existing contract very carefully, as there may be penalties for terminating the contract prematurely. Some third-party suppliers have automatic "roll over" provisions which renew your contract without affirmative consent or action from you. Please be sure to read your current agreement and if, after comparing your current deal to the SEA R-GEA program you decide to join the program, you simply need to alert your third-party supplier that you wish to terminate service at the end of your contract term, and then contact Direct Energy to opt in to the SEA R-GEA program.

Please note that, if you have an existing contract with a supplier not affiliated with the SEA R-GEA program, neither the Energy Consultant nor the Township are responsible for informing your existing supplier or terminating your agreement with them. However, if you have any difficulty with them, please let us know and we will try to help you resolve issues.

Will I still be able to receive budget billing (Equal Payment Plan)?

The Township requires that Direct Energy provide budget billing for their power supply charges to those customers who currently have such arrangements with PSE&G. PSE&G will continue to bill a levelized amount each month for delivery service, and the Direct Energy will also bill a levelized amount each month (through the PSE&G bill) for power supply. Because Direct Energy’s contract price for power supply is lower than the PSE&G price for power supply, your total monthly budget amount (sum of monthly PSE&G delivery service budget amount and Direct Energy’s budget amount for power supply) should be reduced. You may experience a “true-up” on your bill from PSE&G prior to enrollment in order to bring your current budget bill balance with PSE&G to zero, and then again at the end of the program to bring your current budget bill balance with Direct Energy to zero. Direct Energy may also implement a ‘true-up’ of your budget amount during the contract term if it appears that your actual usage levels have been varying significantly from the historical amount of usage used to set up your budget payment, in order to avoid the need for a larger true-up at the end of the contract.

If you do not currently have budget billing with PSE&G but wish to receive an Equal Payment Plan from Direct Energy’s for their power supply charges, you will be able to contact Direct Energy and request that they establish this service for you.

Budget billing with PSE&G’s distribution portion of the bill and Direct Energy’s supply portion of the bill can be complicated. If you are to experience trouble with your budget billing, you may contact PSE&G, Direct Energy, or Gabel Associates for assistance. Contact information for all three companies listed below.

Would I be able to Opt In to the SEA R-GEA Program?

Yes. Residents who have their own third-party supply contract and who therefore are not included in the initial eligibility pool have the opportunity to join the SEA R-GEA. Residents who move into their home after the start of the program (July 2019) and who therefore were not included in the initial eligibility pool, but would like to join the SEA R-GEA, also have the opportunity to opt in to the program. 

For customers with their own TPS contracts: If you currently have your own third-party supply contract but are considering terminating that contract and joining the SEA R-GEA program, it is very important to first read your existing contract very carefully, as there may be penalties for terminating the contract prematurely. Some third-party suppliers have automatic "roll over" provisions which renew your contract without affirmative consent or action from you. Please be sure to read your current agreement and if, after comparing your current deal to the SEA R-GEA program you decide to join the program, you simply need to alert your third-party supplier that you wish to terminate service at the end of your contract term, and then contact Direct Energy to opt in to the SEA R-GEA program.

Please note that, if you have an existing contract with a supplier not affiliated with the SEA R-GEA program, neither the Energy Consultant nor the Township are responsible for informing your existing supplier or terminating your agreement with them. However, if you have any difficulty with them, please let us know and we will try to help you resolve issues.

Why is the program set as an opt-out program, rather than an opt-in program?

The ‘opt-out’ model for community energy aggregation is established in the State laws and regulations governing these types of programs. The program is configured this way to ensure that a sufficient number of households will participate to obtain a meaningful bid, and to avoid the costly and time-consuming process of having everyone affirmatively sign up for the program. Starting with a large pool of eligible customers provides for an opportunity that attracts suppliers to bid, which creates robust competition for your business and also allows suppliers to reflect bulk purchasing discounts in their price bid.

The aggregation rules incorporate consumer protections and recognize the logistical challenges of a residential procurement program, while at the same time providing a structure that will attract bidders.

When the retail choice program was originally enacted in NJ in 1999, the rules required that government aggregators be required to obtain a so-called “wet signature” from each residential customer demonstrating the customer’s affirmative consent to join. After several years, it was recognized that this “opt in” approach put such a burden on programs that none got off the ground, and the model set forth in NJ law was changed to “opt-out” for residential customers. Unlike business customers, residential customers represent large numbers and (relatively) small usage/margins for each account. In order for an aggregation of residential customers to work, it is necessary to get large volumes with the lowest transaction costs possible. This results in the opt-out approach, which gives suppliers a firmer basis for the load they are bidding on, but still provides residential customers with the ability to opt out.

What about power outages?

Power outages are not under the control of the third-party supplier. The delivery system is still under PSE&G’s control, and there is no difference in delivery services whether you purchase the power supply from a third-party supplier or from PSE&G under its tariff. In the event of an outage, you still contact PSE&G at 1-800-436-7734 (PSEG).

What if I have a solar panel system

Customers with solar panel systems on their homes, especially those that are larger in size, typically result in solar production in some months exceeding your monthly electric consumption. In such cases, the monthly utility bill is usually very low.

For these customers, the savings attributable to Energy Aggregation programs would be very minimal on average. It is for this reason that solar customers are removed from the SEA R-GEA program.

However, if you believe based upon a review of your past bills that your solar system is NOT producing excess energy that is being ‘banked’ on your PSE&G bill, you may consider opting-in to the SEA R-GEA program. You are encouraged to contact Direct Energy or PSE&G for further information.

Will the LIHEAP and Lifeline Still Apply in the SEA R-GEA?

LIHEAP (Low Income Home Energy Assistance Program) is a federally funded program, administered by the NJ Department of Community Affairs, to assist low income households with paying their heating bills (whether electric, gas, oil, etc.). There should be no impact from participation in the SEA R-GEA program on customers’ eligibility. Lifeline or Universal Service programs are state-funded through State taxes and societal benefits charges, again with eligibility based upon several factors tied to income. Bill credits of up to $225 are provided to assist eligible customers with electric and gas utility bills. The SEA R-GEA will provide consolidated billing through the utility; as such the bill credits would be unaffected

What is Direct Energy's Source of Renewable Energy?

Direct Energy is required to provide an additional 20% renewable energy content above and beyond the level of renewable energy content required by the State of New Jersey’s Renewable Portfolio Standard (“RPS”) – that translates to an average renewable energy content of about 41% over the 17-month term of the SEA R-GEA power supply contract. This renewable energy content is provided through the purchase of renewable energy certificates (“RECs”) by the Direct Energy. Specifically, the current State-required 21% content consists of about 4.3% in-state solar, about 14.2% Class I renewable (primarily wind power but also landfill gas-to-energy and small hydro) located within the regional power grid, and 2.5% Class II renewable (waste-to-energy) located within the regional power grid. Suppliers meet this State-mandated content through the purchase of RECs. In addition, the SEA R-GEA requires that its supplier procure an additional 20% renewable energy above and beyond the RPS requirements, through the purchase of additional Class I RECs (primarily wind power) from renewable projects in the regional power grid. As such, all of the 41% renewable energy content is sourced from renewable energy projects located either in New Jersey or within the regional power grid./p>

Whom do I contact for more information?

For more information, you may contact:

1) Montclair Sustainability Officer Gray Russell – grussell@montclairnjusa.org or phone 973-509-5721.

2) Gabel Associates can be reached through its website at www.gabelassociates.com/GEA, via email at SEA-info@gabelassociates.com or via their toll-free telephone line: 1-855-365-0770.

Gabel Associates is a well-respected Energy Consultant that has been in business in New Jersey for more than 25 years. The company’s offices are located in Highland Park. Gabel was the first energy consulting firm in the State to have successfully implemented a GEA program in the state. The firm has successfully completed GEA programs for numerous municipalities in the State, many of which are in their second, third or even fourth iterations. These programs, implemented by about 50 municipalities statewide, have saved millions of dollars for New Jersey residents.

3) Direct Energy Services (BPU License # ESL-0078) can be contacted as follows:
Toll Free Telephone Number: 1-866-968-8065
Website: www.directenergy.com/aggregations

Direct Energy Services is a retail electric power supplier licensed by the New Jersey Board of Public Utilities. Direct energy has been a retail supplier for many years, and currently serves approximately 4 million accounts nationwide, including about 130,000 residential energy aggregation accounts.