Union County is set to realize a savings of at least $330,000 in costs for natural gas over the next three years as the result of a newly introduced “reverse auction” bidding process. The new procedures were introduced for the first time earlier this year.
“I would like to thank all involved for making this inaugural process go smoothly and successfully for Union County and our partners,” said Union County Freeholder Chairman Alexander Mirabella. “This is a great demonstration of the savings potential when local governments pool their resources and their buying power.”
In the new process, Union County served as the lead agency for the Mid Jersey Energy Cooperative Pricing System, a buying cooperative that also includes the counties of Ocean, Middlesex, Warren and Somerset, the City of Elizabeth, the Kenilworth Library and the Borough of Winfield Park.
“Union County has a long and successful history in cooperative purchasing and I’m proud that we are able to lend our in-house experience to help other localities reduce their costs,” said Mirabella.
Union County uses natural gas primarily for heating it facilities, including the Union County Courthouse and Administration Building in Elizabeth, the Ralph Froehlich Public Safety Building and the County Services Building in Westfield, and the Trailside Nature and Science Center in Mountainside, along with other recreation and maintenance facilities. Last year’s usage totaled almost 151,000 dekatherms (one dekatherm equals ten therms or one million British thermal units).
The new contract saves money by pegging the price that the County pays to just $1.03 per dekatherm above the commodity price. Under the previous contract the difference was almost double, at $2.03.
Union County and other members of the cooperative also have the option to lock into a commodity price for one to three years. That would provide a buffer from upward spikes in gas prices during that time, resulting in additional savings.
In a reverse auction, the bidder with the lowest price wins the contract. The auction was arranged by Birdsall Services Group as authorized by the State of New Jersey. The winning bid went to the Hess Corporation.
Later this spring a similar reverse auction for electricity will be conducted by Union County on behalf of the buying cooperative, which could result in additional energy savings.
Mirabella noted that Union County’s energy budget will also benefit over the long run from federally funded energy upgrades to its buildings.
“Getting a lower price for the energy you consume is important, but to build more stability and predictability into our energy budget Union County is also focusing on conservation, and we are taking advantage of new opportunities for generating clean, renewable energy,” said Mirabella.
The federally funded upgrades include efficiency retrofits at various County buildings and the installation of solar panels at the Trailside Nature and Science Center in Mountainside, the Juvenile Detention Center in Linden, Runnells Specialized Hospital in Berkeley Heights and the Ruotolo Justice Center building in Elizabeth.