Bordentown Sewerage Authority Case Study

 

BACKGROUND

In 1986, the Bordentown Sewerage Authority was formed to provide a centralized wastewater treatment system for Bordentown City and Bordentown Township. Its mission: to protect the waters from pollution, and to reduce and ultimately abate public health issues associated with pollutants in wastewater. The Bordentown SA plant represents the consummation of more than 25 years of local effort aimed at improving the environment of the Bordentown area. The average amount of wastewater flow the sewerage plant processes per day is 1.8 million gallons, and the plant’s rated capacity is 3.0 million gallons per day.

 

THEIR CHALLENGE

Because the Bordentown Sewerage Authority is funded with rate payer dollars, the agency’s leaders are constantly vigilant in making decisions that avoid unnecessary expenditures. With energy costs being a substantial line item in the sewerage authority’s budget, and most of the plant’s electricity being on a floating index rate, the need to effectively control and manage these costs is especially sensitive. In 2012, Bordentown Sewerage Authority was part of a Purchasing Cooperative, which made energy procurementdecisions for all of its members. After receiving bills with less-than-anticipated savings, Bordentown SA leaders decided to take control of its own energy budget and find a firm they could count on to assist them in making their next energy procurement choice. Their criteria for finding the right firm were the following:

 

1. Unbiased Advice. 

Finding an energy consultant who would actively put Bordentown Sewerage Authority’s interests first.

2. Open Communication. 

The energy business is highly complex, with copious amounts of data available that requires market expertise to understand and then translate into a concrete procurement strategy. Bordentown SA knew it would need a qualified consultant firm who could analyze their data and break it down into a report that would be tailored to their needs, with a logical, easy-to-understand format.

3. Market Knowledge. 

While any analyst can compare prices to evaluate the best rate at any given time in the market, Bordentown SA was insistent that the firm they chose understood the fundamentals controlling underlying market conditions. This included understanding the overall market structure, being familiar with generation assets and the patterns of any particular market, and the potential impact of upcoming regulatory changes. All of this requires years of expertise and an ongoing commitment to staying on top of the latest developments in the energy sector.

 

OUR SOLUTION

Summer 2012: EMEX, LLC, was chosen by Bordentown Sewerage Authority to provide the unbiased advice that it needed in order to mitigate the risks involved in its energy hedges. The strategy recommended by EMEX for Bordentown SA revolved around obtaining an optimized, two-year fixed-rate contract through an EMEX Reverse Auction at a considerably lower price than what was available through the utility. EMEX also made the data-driven assessment to not switch Bordentown’s Large Power and Light Primary (LPLP) meter away from the utility, as that meter was enjoying a very favorable rate on the Day Ahead Index that was lower than any third-party supplier option. 

Utilizing in-house, cutting-edge technology and analytical tools, EMEX assessed Bordentown’s energy usage patterns and determined that the EMEX® Reverse Auction platform delivered an estimated 17% cost reduction for Bordentown’s General Light and Power (GLP) meters compared to the utility tariff.

 

CONTINUED PARTNERSHIP

Summer 2013: Bordentown’s Large Power and Light Primary (LPLP) meter, which represents 80% of its total electricity consumption, was still on a floating tariff rate from its local utility that consistently provided lower energy costs compared to any other option. However, Bordentown SA noticed a significant jump in that meter’s energy expense in July 2013 and, at Bordentown’s request, EMEX investigated the root causes behind this unexpected cost increase. After careful analysis, EMEX determined that the increase was due to volatile market conditions, although the analysis also suggested this was a transitory event. EMEX worked with Bordentown SA to explore current market prices to determine if the agency could mitigate its future energy price risk-exposure.

EMEX sent an RFP to all BPU-approved third-party energy suppliers for the LPLP meter to determine the current market conditions and hosted a Reverse Auction to uncover the actual market prices available for the meter. Using the results of the auction, EMEX performed a cost-savings analysis with customized cost-projections and an assessment of forward market conditions. After an hour-long collaborative review with Bordentown SA, EMEX recommended that Bordentown SA not enter into a third-party electricity supply agreement for its LPLP meter.

Rick Eustace, Executive Director at Bordentown Sewerage Authority, felt very comfortable with the decision. “EMEX took a lot of information and turned it into a format that was easy for me to understand and that empowered me to make the best decision possible at the time. They did not pressure me to sign a contract and really had Bordentown’s best interest at heart. The unbiased advice they gave me confirmed that I can rely on them for honest advice going forward when it comes to managing Bordentown’s energy costs.”

EMEX continues to provide ongoing market analysis and energy risk management for Bordentown Sewerage Authority to ensure future cost-saving opportunities are methodically taken advantage of.

 

PRODUCTS AND SERVICES:

• EMEX® Reverse Auction

• Energy Risk Management Consultation

SAVINGS:

• 17% cost reduction for General Light and Power (GLP) meters

• Recommendation to stay with Utility on Large Power and Light Primary (LPLP) meter

• Overall Energy Risk Management Services provided at no-cost resulted in avoiding approximate 20% cost increase

 

LOCATION:

Bordentown, NJ

 

UTILITY:

PSEG

 

TERM:

• 24-Month Fixed Rate for GLP Meters

• Month-to-Month Utility Rate for LPLP meter

 

ANNUAL ELECTRICITY USAGE:

GLP Meters: 2.4 Million kWh

LPLP Meters: 2.0 Million kWh