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TO: John Stoffa, Steve DeSalva, Vic Mazziotti, John Conklin and Northampton County Council FROM: Stephen J. Barron, Jr., CFE SUBJECT: Impact of Deregulations thus far on Northampton County s Electricity Deli vered by PP&L
DATE: March 10, 2010
The attached document outlines the impact of deregulation thus far on Northampto n County s electric utility bill. Currently, Northampton County gets electricity from MetEd and PP&L . While PP&L has had their rate caps lifted starting in 2010, MetEd does not have rate caps removed u ntil 2011.
Northampton County entered into an agreement with Liberty Power to purchase powe r for all locations that get electricity delivered by PP&L. We are locked into this rate until later this year and then are free to shop our electrical needs around combining our usage from PP&L and MetEd. This w as a very good agreement and forward thinking by the County Executive and his staff. They shoul d be commended for their hard work. In comparing February 2009 to February 2010, the County s bill wa s 33% higher in 2010 (see attached sheet). While there are several factors involved, and while this w ill not be consistent all year it was a bit alarming. Our consumption appeared to be up on a few accounts this past month which could be explained by temperature or certain projects going on in the buildings that drew additional power.
Currently, the percentage of Northampton County s electric bill paid to PP&L is ab out 37%. When the MetEd rate caps come off in 2011 the remaining 63% could be subject to an increa se.
The Northampton County Executive and his staff have done an excellent job maneuv ering the county into
a position to save the county money. If we did not shop around when they did to get the best rate we could on our electricity, we would be in a much worse position. However, there i s still much work to be done.
The next 9-10 months are critical and Northampton County has a unique ability to negotiate the best deal to 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 fa ctors to consider and usage changes from month to month, but lets take a conservative 20% increase in our el ectricity from 20092010 which has been a commonly accepted estimate. That will mean that we will pa y an additional $114,550.23 to Liberty Power and PP&L in 2010. If we assume that we will pay the same percentage for power to MetEd in 2011 it will mean a $191,258.77 increase. This would mean Nort hampton Count could see their electricity bill increase $305,809.00 in a 24 month period if nothing is done. While this is not a definite 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 o f searching for an energy savings company (ESCo) to conduct an energy audit that will determine what can b e done to save money.
This is a great idea and should be pursued aggressively. However, when the compa ny is selected focus should be placed on looking for ways that the county can become an energy produc er.
In a presentation made by PP&L to local government leaders on 3/9/2010 it was ma de clear that customers must become active participants in finding the best deals. If the coun ty uses their large land holdings, hillsides, and rooftops to place windmills or solar panels we could be gin producing the power that we use and reverse the alarming trend of alarming increases.
There are several energy companies that will provide the equipment to produce en ergy for no cost to the county, as long as they are granted permission and access to our property and bu ildings. The energy company then provides the county with a savings on the electricity used that we produce. These Power Purchase Agreements (PPA) as they are called can be lucrative, and can ultimatel y lead to large savings. There has been a presentation made to the county about a program like this. Whil e this program was interesting there are others out there that should be explored. It is possible t hese programs could lower electrical costs below the rates paid before deregulation. If these agreements c an be pursued and the net cost 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 tha t Northampton County owns. An audit of this type outside an energy savings audit might identify properties that are a drain to the county s energy costs. Options can be discussed when the buildings are assessed, b ut an evaluation would be 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 an d PP&L to take advantage and build new energy conservation programs geared towards savings for the county and municipal governments throughout the Lehigh Valley. PP&L and MetEd will be motiv ated to work with us to meet their compliance goals under Act 129. PP&L must have a 1% reduction i n power use through energy efficiency measures by 5/31/2011. If they fail the company may face fines as low as $1 million all the way up to $20 million. The county and municipal governments have a golden op portunity to work with their electrical distribution companies to gain incentives and savings for changes made that result in
I believe that this is the beginning of a long discussion over several months ab out energy rates for our county and the municipalities within our jurisdiction. I think we have a unique opportunity to work with PP&L and MetEd to maximize savings and possibly move us towards producing energy .
We also need to take positive steps to build a relationship with the corporation s who produce and distribute our power. As a citizen I am frustrated with the record profits and t he recent naming of a soccer stadium in Chester, PA by PP&L. However, moving forward and building partnership s is the best way to save energy costs and taxpayer money. That partnership will g a long way toward making MetEd and PP&L good corporate citizens that are working as our partner in delivering the c ounty and its citizens clean, reliable, and efficient power.