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Northampton Coungy Energy Deregulation Memo Final[1]

Northampton Coungy Energy Deregulation Memo Final[1]

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Published by BernieOHare
Northampton County Controller assesses impact of deregulation and makes recommendations.
Northampton County Controller assesses impact of deregulation and makes recommendations.

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Categories:Types, Letters
Published by: BernieOHare on Mar 15, 2010
Copyright:Attribution Non-commercial

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03/15/2010

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COUNTY OF NORTHAMPTONINTER-DEPARTMENT CORRESPONDENCETO: John Stoffa, Steve DeSalva, Vic Mazziotti, John Conklin and NorthamptonCounty CouncilFROM: Stephen J. Barron, Jr., CFESUBJECT: Impact of Deregulations thus far on Northampton County
s Electricity Deliveredby PP&LDATE: March 10, 2010The attached document outlines the impact of deregulation thus far on Northampton County
s electricutility bill. Currently, Northampton County gets electricity from MetEd and PP&L. While PP&L has hadtheir rate caps lifted starting in 2010, MetEd does not have rate caps removed until 2011.Northampton County entered into an agreement with Liberty Power to purchase power for all locationsthat get electricity delivered by PP&L. We are locked into this rate until laterthis year and then are free toshop our electrical needs around combining our usage from PP&L and MetEd. This was a very goodagreement and forward thinking by the County Executive and his staff. They should be commended fortheir hard work. In comparing February 2009 to February 2010, the County
s bill was 33% higher in 2010(see attached sheet). While there are several factors involved, and while this will not be consistent allyear it was a bit alarming. Our consumption appeared to be up on a few accountsthis past month whichcould be explained by temperature or certain projects going on in the buildingsthat drew additionalpower.Currently, the percentage of Northampton County
s electric bill paid to PP&L is about 37%. When theMetEd rate caps come off in 2011 the remaining 63% could be subject to an increase.The Northampton County Executive and his staff have done an excellent job maneuvering the county into
 
a position to save the county money. If we did not shop around when they did toget the best rate wecould on our electricity, we would be in a much worse position. However, there is still much work to bedone.The next 9-10 months are critical and Northampton County has a unique ability tonegotiate the best dealto purchase power along with taking steps to conserve and save energy.The 33% increase is not a fair measure of an entire year as there are several factors to consider and usagechanges from month to month, but lets take a conservative 20% increase in our electricity from 2009-2010 which has been a commonly accepted estimate. That will mean that we will pay an additional$114,550.23 to Liberty Power and PP&L in 2010. If we assume that we will pay thesame percentage forpower to MetEd in 2011 it will mean a $191,258.77 increase. This would mean Northampton Count couldsee their electricity bill increase $305,809.00 in a 24 month period if nothingis done. While this is not adefinite figure it is a good conservative estimate of the impact of deregulation.I understand that the County Executive and his staff are beginning the process of searching for an energysavings company (ESCo) to conduct an energy audit that will determine what can be done to save money.
 
This is a great idea and should be pursued aggressively. However, when the company is selected focusshould be placed on looking for ways that the county can become an energy producer.In a presentation made by PP&L to local government leaders on 3/9/2010 it was made clear thatcustomers must become active participants in finding the best deals. If the county uses their large landholdings, hillsides, and rooftops to place windmills or solar panels we could begin producing the powerthat we use and reverse the alarming trend of alarming increases.There are several energy companies that will provide the equipment to produce energy for no cost to thecounty, as long as they are granted permission and access to our property and buildings. The energycompany then provides the county with a savings on the electricity used that weproduce. These PowerPurchase Agreements (PPA) as they are called can be lucrative, and can ultimately lead to large savings.There has been a presentation made to the county about a program like this. While this program wasinteresting there are others out there that should be explored. It is possible these programs could lowerelectrical costs below the rates paid before deregulation. If these agreements can be pursued and the netcost to the taxpayer is nothing, then it is something to be looked at.There also needs to be an evaluation of all the real estate and office space that Northampton County owns.An audit of this type outside an energy savings audit might identify propertiesthat are a drain to thecounty
s energy costs. Options can be discussed when the buildings are assessed, but an evaluation wouldbe helpful as either part of an energy savings audit or as a separate project.Finally, I believe that the county should have ongoing discussions with MetEd and PP&L to takeadvantage and build new energy conservation programs geared towards savings forthe county andmunicipal governments throughout the Lehigh Valley. PP&L and MetEd will be motivated to work withus to meet their compliance goals under Act 129. PP&L must have a 1% reduction in power use throughenergy efficiency measures by 5/31/2011. If they fail the company may face finesas low as $1 million allthe way up to $20 million. The county and municipal governments have a golden opportunity to workwith their electrical distribution companies to gain incentives and savings forchanges made that result in

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