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NJ Sees First Municipality Taking Part in Community Electric Aggregation

Plumsted Township, a small town in central New Jersey, has become the first municipality in the state to participate in community-wide electric aggregation. A decade-old state law allows municipalities to purchase electricity in bulk from a chosen retail electricity provider with the purpose of providing its citizens cheaper electric supply rates.

ConEdison Solutions, a leading retail electricity provider in the nation and a subsidiary of the utility giant Consolidated Edison, was the electric provider of choice. ConEdison Solutions was chosen primarily because of lower electric rates than the default utility, JCP&L, but also because the company has excellent consumer protections, a long-standing reputation, and has no hidden costs.

The move, which will only affect residential customers and not businesses, will save Plumsted citizens about $165 over the year, or about 15% compared to JCP&L’s electric supply charges. The contract began in January and will last until the end of the year. It is likely that Plumstead will send out requests for bids again later this year in order to continue the program into 2014.

Jersey Central Power & Light (JCP&L) will continue to deliver the electricity to residents as well as send bills and maintain the wires and poles and transmit electricity into homes. Typically, it is the utility that purchases electricity in bulk and then sells back to its customers at no profit. Community aggregation laws in the state allow for municipalities to do the bidding on behalf of their residents, with JCP&L having no misgivings since they can’t profit from electric supply.

Significance of Community Aggregation in New Jersey

While the community only has about 8,400 residents, the move to electric aggregation is significant to other New Jersey towns and cities as well as the overall success of deregulated electric markets. The move has already attracted the attention of several other New Jersey municipalities: Toms River, with more than 10 times the number of citizens as Plumsted, is expected to adopt a similar aggregation program in the fall. Furthermore, several towns in Hunterdon and Cumberland Counties are expected to join together for a group-purchasing aggregation agreement.

Plumsted citizens can opt out of the aggregation program and switch back to the utility or choose another retail electricity provider at any time. Of course, citizens have little to no incentive to switch back the utility since they will be paying more. On the other hand, citizens can still find even lower electricity supply rates than ConEdison Solutions by shopping around for a retail electricity provider on their own. Learn more about comparing electric supply rates here.