Carmel Schools to Look at Methods to Fight Energy Hike
The Carmel Central School District is considering new methods of conserving money when it comes to rising energy costs.
The Board of Education agreed to look into utilizing an Energy Service Company (ESCO) to buy electricity at a discounted cost. The use of an ESCO would not replace the regular utility provider, but adds a relationship with a buying agent who purchases energy based on need.
Paul Christensen, a BOCES cooperative services consultant who was hired to look ways to save money on energy, demonstrated the benefits of using an ESCO at a meeting at a July 1 night.
He explained that, over the last three years, energy costs have skyrocketed due to the incredibly harsh winters, and restrictions on the natural gas pipeline, which resulted in a high demand for natural gas.
“What’s happened in the last few years is not going to stop, that’s the problem. The volatility is going to continue because the pipeline hasn’t been expanded, there’s a huge number of plants that have been taken off line because of the coal burning…so we have a restriction in supply which affects the price because it’s all free market,” said Christensen.
A FERC ordered Lower Hudson Valley district, that was recently created, will also increase energy prices by an additional penny per kilowatt hour.
The district could go about finding an ESCO through a variety of manners, but Christensen recommended that they use the Municipal Energy and Gas Alliance (MEGA), an aggregator, which has partnered with the New York State Association of Counties. MEGA, which began upstate in 1998, aims to bring the most competitive prices for electricity and natural gas to members to minimize the cost of energy.
Using MEGA would prevent the school from going through their own RFP process and will allow them to select from approved providers. There are currently 38 school districts in the state that have adopted an ESCO through MEGA, including the Bedford Central School district which Christensen has previously worked with.
The Carmel board stated that they plan to use MEGA and request a free bid, which would be non-binding, to compare costs between the ESCO and their current energy expenditures. They plan to begin the process right away, to evaluate trends in energy costs and evaluate whether using an ESCO would be the right option for them, and whether a fixed price or an index price, which offers a discount but still rises and falls with the market, would be more appropriate.
“The market goes up and down. When you sign the fixed contract you are paying that [price] all the time. If the market goes down, you could actually be overpaying. The indexed product mirrors the market, but you’re always getting a discount on it, so it’s the safer way to go,” explained trustee Eric Stark.
The Bedford Central School District, which adopted an ESCO through MEGA, was able to save $43,000 last year with the use of an indexed price.
The evaluation process will take a few weeks, but each bid is only good for 24 hours, due to the nature of the market. The board will request their final bid in conjunction with the scheduling of a future Board of Education meeting, so that they could potentially adopt the change.
“I think that we will really benefit from it and I think that if we can put it in an August or early September meeting that we will be able to save dollars that could be spent elsewhere on the kids rather than on electricity,” said Stark.
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