Borough makes bulk purchase of energy
Residents will see rate increase next year
BY MICHAEL ACKER
Staff Writer

SAYREVILLE - Residents will see a rise in energy costs next year, when the borough's current bulk purchase contract ends.

The borough is one of eight municipalities in the state that belongs to the Public Power Association of New Jersey, a collective that works together to buy energy in bulk. They then allocate the bulk energy among various municipalities, which are the sole providers of the electric utility service to their residents by state law.

South River's share of the latest bulk purchase will likely be in the $8 million range, according to borough Business Administrator Andrew Salerno. He said that the borough's use of energy is larger than some of the other municipalities in the power association.

"Out of the eight participating municipalities, we are the third- or fourth-largest of the users," Salerno said. "Averaged out, you are looking at a purchase of $63 million to $64 million for all eight [municipalities]."

This bulk purchase was done through a live auction May 9, rather than through a sealed bid as it has been done in the past.

"We participated in a reverse auction," Salerno said.

The bulk purchase will allow the group of municipalities to allocate power starting Jan. 1, 2008, and for 17 months after that. Salerno said the municipalities in the power association have all agreed to the purchase.

The borough's current contract, which expires in December, protected the borough from a recent increase in energy costs. This spike in costs was felt with this year's purchase, he added.

"Now, we will feel the effects of the energy increases everyone else has been getting," Salerno said. "We had a contract that insulated us from the spike for the last 24 months."

The process of attending a live auction helped the group get the best price for bulk power possible under current market conditions, Salerno said. He added that this method is preferable to sealed bids, since bidders get to see the pricing before they make a decision.

"Historically, we have been able to keep the rates under what [other] utilities companies cost," Salerno said. "Because we have a smaller base, we have a smaller infrastructure to maintain, which gives us the advantage on that level.

"We are not subject to certain tariffs, so we are able to stay competitive," Salerno added.

At the latest meeting of the borough council June 11, Councilman John Krenzel noted that rates are rising throughout the state, not just in South River.

"Electric rates are going up and they are going up big time," Krenzel said.

Council President David Sliker said that the borough is able to maintain competitive rates compared to PSE&G.

"We have the third lowest municipal rate in Middlesex County," Sliker said.

Residents will feel the impact of the energy cost increases next year, Sliker said, adding that other municipalities have already been contending with the cost spike.

"Our rates are going to be comparable," Sliker said.