Power companies make pitch to Batavia trustees

April 23rd, 2010    Author: Brett A. Roller    Filed Under: News

The Batavia Township Trustees heard recently from two energy company representatives with proposals to stabilize natural gas and electricity prices for township residents.

Spence Faxton of Energy Alliance Incorporated asked the trustees to endorse his company so that he can begin offering township residents the opportunity to purchase energy through an aggregate, which could save them money in the long run.

“What an endorsement program is, is a community would endorse a supplier and that supplier would make an offer to the citizens,” Faxton said. “The residents aggregating together is going to be quite a bit different than just the monthly offering that you get through the mail.”

Faxton said natural gas aggregates are offered through Integrys Energy. He said Integrys Energy is one of Fortune Magazine's five most prestigious energy companies.

"With natural gas, what you're looking for is price stability and protection," Faxton said. "It really goes up and down quite a bit."

Faxton said his company will monitor the gas prices and when they are at their anticipated lowest, usually in the fall, EAI will send out an offer to buy a certain amount of gas. Residents can either decide to purchase the gas through EAI or to continue purchasing from their current supplier. Faxton said the goal is to purchase enough gas at the anticipated low rate to last through the winter when prices usually spike. Faxton said gas storage facilities are usually full at the end of summer after several months of limited use and after the hurricane season so the price drops.

"We're cheaper in general, but also you know your prices are going to go above a particular level," Faxton said. "We're usually about five percent (cheaper) however if the market falls and prices drop and we have locked in a protection there, then we may even be more expensive for a month or two."

Faxton said his company is usually cheaper because there are fewer regulations for a supplier than for a utility.

"The beauty of it is, some people are going to want to be able to budget," Faxton said. "They're going to want to know that when prices are lower than have been in a long time they can lock in their price and know what they're going pay for this winter."

The bill would still come from Duke and the billing setup each customer has would be the same, but instead of Duke using the money they pass it along to Integrys. Faxton said every time the price changes residents have the option of leaving the program at no cost to them.

"Just getting this tonight, and with my questions and lack of knowledge, I can't even recommend to myself right now so it would hard for me to endorse you to the citizens," Batavia Township Trustee Archie Wilson said.

Paul Smith, VP Duke Energy Retail Sales, presented a proposal for offering unique electric rates for township residents.

Smith said Duke Energy Retail Sales is a separate company from Duke Energy formed to offer rates that are not set by the Public Utilities Commission of Ohio.

"We've got a program now to benefit the residences and the small businesses in the various townships and counties," Smith said.

Duke ERS will offer two different pricing models. The first is a fixed price that customers can lock in through the end of 2011. The second is an 18 percent discount off of the current Duke Energy rate.

"Every customer has a different price for electricity because of their uses throughout the year," Smith said. "The example is, electricity is very expensive in the summer time. If you've got an electric air conditioner and that's the only thing you turn on during the year, your prices is going to be very high because you're buying at the highest point of the year. If you have electric heat you have a very low price because you're buying at the lowest point of the year."

Smith also asked for the endorsement of the trustees and said residents will be unable to take advantage of Duke ERS's services without an endorsement.

Trustee Archie Wilson said he liked Smith's product but wanted more information before he endorsed.

"It sounds like a no-brainer but I haven't read the fine print or heard any legal opinion, I've just heard the two men tonight," Wilson said. "I believe you, but if you fall dead and it doesn't work and I have my name on it...I have to fully understand the negatives, as well as the positives and I don't want to mislead the citizens."

Smith said without the endorsement Duke did not feel the program would be cost effective for them.

"We think your endorsement adds credibility as well. A Duke name won't sell on its own," Smith said. "The percentage of people that are going to take it if we just send (a mailer offering the service) is going to be a whole lot lower than if we send it and you're endorsing it. So we'll move on to the next township and the next county."

Wilson said he did not like Smith's insistence on an endorsement.

"That's my problem here. They came here with their proposal to buy gas and electric and he just told me unless I endorse I can't have their services," Wilson said. "For me to endorse something because I'm going to save 18 percent, to me that's no more than a bribe. Now if I'm saving the money for the township and I choose to do it for the township, that's saving the people money, but whenever you tell me I can't buy it unless I endorse it, I just feel like that would be wrong. To me that's not free enterprise and that's not offering a fair market trade."

Trustee Lee Cornett said he invited Faxton and Smith to come to Batavia Township first because he felt the proposals are a great way to save residents money.

"To me it seems reasonable but I guess every community has to decide on its own," Lee said. "Eighteen percent sounds pretty good to me. I can't see any downside and all we're doing basically is saying it's OK to mail something to our residents."

The trustees tabled the issue while they review the proposals.

"I bet in the next week you'll hear four to five townships agreeing to it, you'll hear one or two cities agreeing to it," Smith said. "We don't want to end up where you're reading in the paper that we haven't come to Batavia and offered it to them."
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