Decisions, Decisions Choosing an ESCO

Saving money is always a top concern of any association board, but with tough economic times and high fuel prices, saving on energy costs can be a challenge that requires some tough choices.

Since 1999, New Jersey businesses and residents have been able to choose the utility company from which they purchase gas, electricity, and heating fuel; but with choice often comes challenge. Along with their new options and the predicted benefits of a more competitive marketplace, New Jersey residents have also had to deal with the changes and questions raised by the state government's deregulation of energy providers. Choosing the best energy service company (ESCO) for an HOA is a task that benefits both from research and the input of experienced professionals.

Big Changes

In 1999, the New Jersey Board of Public Utilities (NJBPU)—the governing body for the state's electric, oil and natural gas services—introduced a bill to deregulate the state's energy industry for residential customers. (New Jersey's commercial energy market had been opened up earlier in what some say was an attempt to keep local corporations happy and committed to staying put.)

The goal of the Electric Discount and Energy Competition Act (EDECA) was to enable New Jersey energy consumers to shop around and choose the energy provider that best suited their budget and service requirements. A bit of background: New Jersey's licensed electric and natural gas suppliers are, as their names indicate, suppliers. They provide the hardware—the lines and cables—and once those are in place, they also provide the power that flows to New Jersey commercial and residential customers. That power may have been purchased from companies several states away, or it could come from oil, coal or renewable energy sources. Energy may even be bought and sold much like the stocks in an investment portfolio. It's important for customers to know where the cool flow from their central air system comes from, or the juice that runs the building elevator. Post-deregulation, the customer now has a say in where their particular energy supply comes from.

The free-market rationale hinged on the prediction that enough healthy competition between providers would keep prices down while offering better service and reliability to customers. Under the auspices of the federal Department of Energy, New Jersey took measures to safeguard free market competition for electricity and gas, including the requirement for the NJBPU to "unplug" power stations with higher costs than other available energy sources.

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