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Watchung Hills Board OKs Energy Purchase Plan

Members acknowledge programs' failings—but say they have no choice.

The state is encouraging school districts to join in cooperative purchasing programs for buying electricity and natural gas service—and by "encouraging," officials mean the state may withhold aid for not joining.

And whole normally, joining such cooperatives can be helpful, member Peter Fallon says the Alliance for Competitive Energy Services plan is flawed and could prove more expensive than what the school already does.

He urged board members to vote against two resolutions at Monday's board meeting, one providing for electrical service and another for natural gas. He added the state is requiring districts to join—or prove they are doing better than what they would under the ACES program.

"That cannot be shown by anybody because ACES doesn't commit to a price for either of the services," Fallon said, noting failure to prove the case for not joining could result in the loss of state aid.

The program was originated by Highland Park-based Gabel Associates, which provides energy consulting services to New Jersey School Boards Association, which reported an estimated 416 school districts in the state will save over $41 million in electricity costs alone in the 2012-2013 school year. The NJSBA said the "savings will result from one-year contracts that ACES awarded this month to five electric power suppliers through a competitive bidding process."

“The ACES program is a prime example of how local school districts are working together to share services,” said Marie S. Bilik, NJSBA executive director.  “By further reducing energy costs, the new agreements will enable public schools to direct more resources to the classroom next year.  That can help to preserve education programs and control property taxes.”

The savings estimate is based on current utility rates—but as Fallon noted Monday, Watchung Hills has been not been paying "off the shelf" prices for utilities.

"We've been doing quite well with the work (board member) Gerry Binder put in," Fallon said, referring to Binder's ability to negotiate contracts for the services through his work as a commodity trader specializing in energy. "And this has been set to enrich the people at Gabel Associates."

Board attorney Paul Green said that while it's not an "insurmountable burden" to prove savings if not in the program, it is probably impossible to show it "until after the fact." Business Administrator Tim Stys said participating in the program is a condition of receiving state aid.  

"We're damned if we do, and damned if we don't," Board President Robert Horowitz said.

While Fallon urged members to "take a stand against it," only Peter Falzarano joined him in voting against the resolutions. The other members (Binder was absent from the meeting) voted for them "with nose held," as member Chris Collins said. Before the vote, Collins also noted the potential savings would not exceed the amount of aid the district would lose, so it didn't justify not participating.


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