Local governments are always looking to manage property and school taxes. Public education is an expense spread across the entire community, and finding savings in that expense directly benefits residents.
Just as homeowners deal with electric bills that can deliver real sticker shock, school districts face the same challenge.
A 2002 fact sheet from the U.S. Dept. of Energy found that K-12 schools nationwide were spending more than $6 billion annually on energy. In many school districts, the fact sheet states, energy costs were second only to salaries in district expenses.
Efforts to reduce energy costs for schools often focus on additional investments, such as facility upgrades or efficiency improvements. But what if there was another option to reduce costs –– an option on who supplies electricity to schools to secure a better price?
In the business community, companies often create aggregation programs to secure bulk purchasing power, better pricing, and more tailored energy products. This approach helps businesses better meet goals, specifically on cost with better price certainty.
One example of this is the Retailers Association of Massachusetts (RAM) Fixed Rate Electricity Supply Program. RAM partners with a broker and an electric supplier to secure fixed-rate electric supply pricing for program participants, such as independent stores and restaurants.
The program is designed to protect businesses against unexpected price fluctuations commonly experienced in the electricity market, enabling members to confidently budget their annual electricity costs and achieve savings compared to utility rates.
New Jersey school districts applied the same model in hopes of achieving the same results.
In 1999, three major New Jersey education organizations joined together for ACES: the Alliance for Competitive Energy Services.
The New Jersey School Boards Association, New Jersey Association of School Business Organization, and NJ Association of School Administrators joined forces to capitalize on New Jersey’s energy market structure and offer a statewide program for all school districts to benefit from aggregate power purchases.
After experiencing great success procuring electricity at cheaper prices, the Alliance began an aggregate program for natural gas procurement.
Within a decade, the Alliance said ACES saved New Jersey school districts more than $250 million on energy bills.
The key benefit of business aggregation is that it provides entities with the economic benefits of bulk purchasing, such as reduced energy pricing and access to options otherwise only available to massive energy users.
Without a competitive market structure, schools and other public entities cannot leverage collective buying power — limiting cost savings and access to innovative energy solutions.
