In the long term, only a competitive market structure will provide the future assurance of lower energy rates. The Ratepayer Advocate specifically believes that governmental aggregation provides the greatest opportunity to achieve additional long-term rate reductions for county and municipal needs, businesses and residential customers. I am here today to discuss how aggregation can provide consumers, and governmental entities with lower energy costs and improved service offerings. So what I would like to do is highlight a few of the most important issues that will help your efforts to cut your energy rates. Aggregation means consolidating or pooling numerous individual purchases of gas and electricity into a single very large purchase, and thereby being able to purchase energy on favorable terms through the highly competitive markets.
Government aggregation can occur in various ways.
Under this model, the municipality or county puts out an RFP to purchase energy on behalf of committed or anticipated participants in the pool. An analogy for this sort of pooling occurs, for example, when voluntary organizations such as the Knights of Columbus, or the New Jersey Bar Association offer insurance coverage to their members through a preferred provider. It must be remembered that aggregation, at whatever level, will only involve the energy portion of energy purchases, and that control over poles, wires and mains and rates for transmission and distribution service will remain with the local gas or electric utility, furnishing service under tariffs approved by the Board of Public Utilities. You may wonder whether government aggregation is necessary. First, when dealing with the county or municipality's own electric costs, activism in terms of consolidating accounts and soliciting a single total energy solicitation is the only way to maximize the benefits of competition.