$1.75 million savings projected in electricity costs
County’s AAA bond rating helped get the lower bid price
FREEHOLD, NJ – The Monmouth County Board of Chosen Freeholders has adopted a resolution accepting a bid by Hudson Energy Services of Ramsey to supply electricity to all county- owned buildings including Brookdale Community College in Lincroft.
The sale marks the second time that Monmouth County has used the World Energy Online Reverse Auction Platform to purchase electricity. Monmouth County’s Purchasing Director, Gerri C. Popkin, said the online method of buying electricity worked in the county’s favor once again.
“Four reverse auctions were held simultaneously involving both large and small accounts to solicit prices for both 12- and 24-month periods,” Popkin said. “We received favorable pricing from Hudson Energy Services for both types of accounts, so we recommended that the Board lock in prices for a two-year period.”
“Taken together, the savings to Monmouth County over that time will amount to $1.75 million when factoring in estimated costs for electricity in 2012 and comparing the bid amount with the current market price that the county would have paid had it not competed for the best price,” Popkin added. “These savings would not have been realized had we not conducted the reverse online auctions.”
The fact that the county has a AAA bond rating – Monmouth County is one of only 33 counties in the United States to have such an excellent bond rating – also helped lower the electricity bids. “The AAA bond rating gave suppliers the comfort level come in with lower pricing,” said Freeholder Director Robert D. Clifton, who oversees the county’s Finance and Purchasing departments. “Once again, the county’s AAA bond rating is helping save taxpayer dollars.”
The reverse online auction was held May 26 and drew interest from five electricity suppliers. Hudson Energy was the low bidder at $0.09052 per kilowatt hour for a 24-month contract for commercial and industrial accounts for the county and Brookdale Community College. These include the Monmouth County Correctional Institution, the Courthouse and other large energy users. It represents a savings from the prior two years when the county was paying $0.09500 per kilowatt hour.
Similarly, Hudson Energy was low bidder for smaller, so called “fixed price” accounts, including Brookdale Community College, with $0.08988 per kilowatt hour for a 24-month contract. This also represents a savings. The county had been paying $0.11150 per kilowatt hour for smaller energy users.
Factoring in the $1.75 million in savings, the estimated cost for electric supply for the next two years is $10.3 million.
The county has used a similar reverse online auction to purchase natural gas, which was very successful. “The ability to do online reverse auctioning for certain commodities gets you faster locked-in rates and is much more competitive than a sealed bid,” Popkin said.
With electric rates going up this summer for so-called high-end commercial users, the county locked in its rate at just the right time. “This contract begins Aug. 1,” Clifton said. “Had we not been aggressive and shopped for electricity, we would have been paying more, not less. We’re very proud that we were able to save the better part of $2 million over the course of this two-year contract.”