The key benefits of an REA program, often referred to as CCA (Community Choice Aggregation) are:

• Reduces residents’ and businesses’ costs for electricity by utilizing the combined purchasing power of many customers and purchasing from low cost third party providers;
• Protects customers from price increases over the fixed contract period;
• Reduces air pollution and associated risks of disease, increased health care costs and premature death (200,000 deaths/year in the US from fossil fuel air pollution);
• Increases the portion of our electricity from clean renewable energy technologies such as wind and solar, automatically lowering our carbon footprints;
• Increases residents’ and businesses’ choices and options for electricity purchase;
• Removes the risks of misleading contract terms from third party providers;
• Utilizes market forces, not government mandates, to increase the use of clean energy;
• Provides the Parsippany Town Council and Administration with total control over the decision to accept any third party offers for electricity;
• Requires no action from residents who wish to participate.

WHY IS PARSIPPANY CONSIDERING A RENEWABLE ENERGY AGGREGATION PROGRAM?

Burning fossil fuels creates two enormous problems – air pollution and climate change. In order to address these problems we must increase our use of energy from renewable technologies such as solar, wind and hydropower. New Jersey and Parsippany suffer from both problems. Consider the following facts:

• New Jersey air is among the most polluted in the US;
• Morris County has been rated ‘F’ for ground level ozone by the American Lung Association for years;
• Parsippany’s location and density make its air the worst in Morris County;
• Municipal costs and effects of climate change include excessive heat, storm destruction, power outages, flood prevention/stormwater utility costs, drought, lake algae, insect infestations, vector borne diseases, increased insurance costs, increased public health costs, increased crime and prevention costs (statistically shown that crime increases with temperature rise);
• Consumer costs and effects of climate change include rising insurance costs (life, health property), health care costs, loss of income from sick days, increased crime, property devaluation, increased energy costs and increased frequency/longer duration power outages.

REA IS A SAFE, PRACTICAL, COST EFFECTIVE, RISK FREE SOLUTION TO THESE PROBLEMS

Growing market demand for clean renewable energy is one of the most important strategies for developing a more sustainable approach to energy generation. By law, all New Jersey energy providers must source at least 21% of their electricity from renewable energy sources, which is what JCP&L offers today. Third party providers offer much higher renewable energy content, up to 100%.  When municipalities, such as Parsippany, aggregate their energy usage and ask for bids with high renewable energy content options they are communicating to the market that there is a strong preference for renewable-based energy.  As more communities take this step to purchase clean energy it encourages the production of more clean renewable electricity, drives out dirty fossil fuel-based electricity from the electric grid and reduces air pollution and the impact of climate change across the region.

If 100% of Parsippany residents participated and all chose to use 100% renewable energy, this would reduce the total carbon footprint of all residents by 26% as shown in the chart shown. Considering that the total carbon footprint includes the use of gas for heating/cooking and gasoline for transportation, this would be an extremely significant reduction.

There are absolutely no risks to residents and businesses that participate in an REA program.

• Parsippany aggregates its energy demand and asks third parties to provide bids through auctions held under the auspices of the NJBPU and PJM Interconnect (the organization
  that manages the power grid in NJ and many nearby states);
• Contracts have fixed rates for their duration (maximum duration is 24 months) and cannot increase;
• Contracts have no hidden fees or other charges;
• Any REA customer issues are handled by a consultant hired by Parsippany;
• The basic offer to residents must, by law, be below JCP&L rates;
• Customers can easily opt out at any time with no charge and no legal obligations;
• All residents will have sufficient time to opt out before the changeover takes place;
• Third party providers never see any customer names or records (Parsippany’s consultant handles all interactions with JCP&L);
• There is no increased risk of blackouts from the use of renewable technologies. Electricity is provided from a network of utilities whose objective is to ensure all customers have sufficient electricity at all times. (Local JCP&L distribution network integrity is not affected by this program);
• Customers are alerted when new contracts start and old contracts are ending;
• The Parsippany Town Council and Administration are under no obligation to accept any unsatisfactory bids. If there are no satisfactory bids JCP&L will continue to supply our electricity and the municipality may choose to wait until market conditions become more favorable before requesting another round of bids.

PROGRAM RULES

New Jersey law requires REA participation to be structured as an “opt out” program for residential customers and as an “opt in” program for commercial customers.  The “opt out” approach makes participation very convenient.  Residential customers are automatically enrolled in the program unless they elect to “opt out” of the program, or are already with a third party supplier.  Residential customers are able to easily “opt out” of the program at any time prior to or during the term of the contract without penalty via a variety of media (prepaid return mail, email, 800#, web sites).  Commercial companies are also able to “opt out” of the program at any time without penalty.  The “opt-out” approach is the only way to bring the significant benefits of such a program to residents.

POTENTIAL COST SAVINGS

Examples of cost savings other municipalities have achieved from their REA programs are:

• Livingston offers residents 100% renewable electricity. Residents expect to see a total of $1.125 million in savings;
• Maplewood, Montclair, Glen Ridge, Millburn, Verona and South Orange formed the Sustainable Essex Alliance. In Maplewood, the 8,000 households enrolled will save $1M. Montclair residents expect to save $1.8M.
• Glen Rock offers residents 100% renewable energy for less than the current PSE&G rate for the area.
• Every town has continued its participation after its first contract expired.

The savings described above are significant but market conditions vary over time and savings in JCP&L areas are expected to be more modest than those in PSE&G territory. Nevertheless, Parsippany’s program will always offer prices below JCP&L’s average annual rate.

Once approved, Parsippany will put out a bid for a consultant experienced with this program and the electricity market.  The consultant will prepare Parsippany’s offer on which third party providers will bid.  The consultant is the only entity, other than the third party provider, who will receive compensation.  There will be no door-to-door salespeople or any other third party salespeople involved.  There will be no commissions paid to anyone.

Municipalities do not pay energy consultants.  Their fees are included in the monthly electric bills paid by residents and businesses.  Even with this fee, the basic plan price for electricity under REA will still be less than the price charged by JCP&L.

BOTTOM LINE

Many of us are very aware of the threats from climate change and look for ways to reduce our carbon footprints.  We know this is not often easy or cost-free and takes some effort.  Convincing every resident to take such actions is virtually impossible.  By contrast, we can achieve the carbon footprint reductions described above and save money by doing absolutely nothing when asked if we want to “opt out” to the REA program. It is hard to imagine a more elegant solution than this, to the problem of convincing each individual to take action on climate change.

NEXT STEPS

The first step needed to start the REA program is enactment of an ordinance creating the REA entity by the Parsippany Town Council. The council will not act until it receives significant town support for the program, so it is crucial that residents provide their feedback by taking this short survey.

Other actions that residents should take are:

• View a recent REA video presentation 
• Speak to neighbors and friends about the REA program
• Contact members of the Town Council via email to express your view on the program
• Express your views at Town Council meetings
• Submit letters to Parsippany Focus & Patch
• Invite the Parsippany Green Team to speak to your organization
• Attend a presentation on the REA program. Information on the next session can be found below