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Natick Eyes Savings Through Electrical Aggregation Program

Consultants recommend using a long-term plan, knowing what NSTAR's rates will be for the first five months.

Selectmen Charles Hughes, left, and Rick Jennett are seen during the Jan. 13 meeting. Staff photo by Robert Fucci
Selectmen Charles Hughes, left, and Rick Jennett are seen during the Jan. 13 meeting. Staff photo by Robert Fucci

Natick is one step closer to possibly saving money via a power aggregation program.

All town leaders have to do now is decide which of the two options presented to them will be best.

At the Jan. 13 Board of Selectmen meeting, Bay State Consultants Paul Gromer and John Shortsleeve said Massachusetts has changed the aggregation rules, allowing Natick to suspend its program if it so chooses.

According to town documents, if NSTAR's rate is cheaper, Natick could start the program later in the year. For the time being, the town has to abide by the full regulatory process of starting a new aggregation program if it wants to resume a program that has ended.

"This was done to create some stability in the marketplace," Gromer said, adding that residents can leave the aggregation program and use NSTAR's services again if they choose.

Town Administrator Martha White said the town is trying to save electric customers money first, adding green options are also possible.

According to town documents, there are two options to consider.

The first is a six-month contract designed to beat the six-month utility rate. Assuming there's a procurement in late May, supply would begin the first week of August.

The benefit of this plan is the NSTAR comparison rate is known for first five months of the six-month supply.

Some of the cons are:

  • Disadvantage as compared to NSTAR rate (aggregation term) is more expensive than July to December (NSTAR term);
  • Requires the supplier’s enrollment, administrative, and customer service;
  • costs to be spread over just six months;
  • Six-month term diminishes supplier interest (reduces competition);
  • Complicates customer service communication with residents;
  • Likely to produce the lowest savings.

Shortsleeve added there would be less competition for the bids.

There would also likely be less competition for bids with a short-term contract, Shortsleeve said.

The second option is a procure supply contract for a 22-month term with the goal to beat the five-month current utility rate and 22-month average utility rate.

Assuming procurement is in late May, the supply would begin the first week of August. If the stepped rate is procured for the first five months of August through December, it would be followed by a single step increase to a higher rate for the 17 months of January 2015 through May 2016.

Among the pros to this plan are:

  • NSTAR comparison rate is known for first five months of the 22-month supply term;
  • Eliminates the seasonal disadvantage of Option 1;
  • Supplier enrollment, administrative and customer service cost can be spread over 22 months, reducing supplier price;
  • 22-month term maximizes supplier interest (increases competition);
  • Enhances customer service communication with residents (avoids on- again off-again confusion, and the longer term supports more robust investment in dedicated customer service).
The disadvantage is the NSTAR comparison utility rate for the last 17 months won't be known at inception.

"It’s our opinion that it is clearly easier to procure and beat (the rates of NSTAR) with this plan," Shortsleeve said, "particularly in a rising market. And we think it’s an easier communication challenge."

Bay State Consultants will search for bids for various lengths of contracts to give Natick options.

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