Newsletter Article from Phil

As I’m trying to put pen to paper for this Newsletter article, I’m still sort of scrambling to put together the final touches on the Town’s 2019 Tentative Budget.  Even after doing the Budget for so many years, it never ceases to be a challenge.  There are always difficult decisions and choices to be made.  From what I hear as I drive around Town on my day off and visit with people, most feel that they already pay too much in taxes.  That makes putting together the Annual Budget especially difficult because, even though the economy seems to be on an upward trend, prices for things that we can’t do without keep going up as well.  For example, as most of you know, the cost of medical insurance for our employees goes up every year, and not by just a little.  Our employees, legitimately, expect a percentage salary increase each year which, of course, compounds over time.  Salt and sand to fight the cold and snowy Winters we’ve been experiencing are scarce and therefore expensive and just keep getting more so.  Overtime costs are up for that reason as well, as are gasoline and diesel fuel costs for our trucks and other vehicles.  These are but a few examples.

            It doesn’t take a genius to figure out that if we want to keep taxes stable, we have to try to find ways to reduce our costs for the things we need, or find ways to increase our revenues.  In my article for the last Newsletter, I wrote about how we decided to participate in the New York Liquid Asset Fund (the “NYLAF”), which was created to assist participating local governments (mainly school districts and municipal entities) in managing their investment needs, in order to maximize the interest income which we earn on our fund balances and reserves, thereby increasing our overall revenue.   Briefly put, since I went into it in detail in my last Newsletter article, the funds which we want to invest are deposited with the NYLAF and “pooled” with those of other participating local government entities and invested in our choice of one or more of the investment packages offered by the NYLAF.  Essentially, by pooling the resources of numerous local government entities, the NYLAF is able to obtain and offer investment opportunities with higher interest rates than a single government can obtain on its own, or from a traditional banking relationship. 

            This idea of “pooling” our resources available for investment with those of other local governments to maximize our investment revenue brings me to the point of this article.  We recently learned that, in similar fashion, there are opportunities out there which would seemingly allow us to “pool” our demand for natural gas and electricity with that of other local governments so as to obtain a lower price for these necessary commodities than we can obtain on our own directly from the gas and electric utility companies, thereby reducing our energy costs. More specifically, we recently met with representatives of the Municipal Electric Gas & Electrical Alliance, Inc. (MEGA).  MEGA is a Local Development Corporation organized under the laws of the State of New York.  Its purpose is to act as a non-profit community based energy savings program that assists local governments, school districts, and affiliated entities, with their energy needs.  MEGA is not a buyer or seller of electricity or natural gas.  Rather, it is an “energy aggregator”.  It combines the power needs of its participants in each utility service area and goes to the open market seeking bids from energy suppliers to meet that need, thereby resulting in competition and lower costs.  Once a MEGA bid is awarded in a utility service area, following a competitive bidding process, MEGA participants can purchase its gas and/or electricity from the bidder which offers the best pricing.  There is no cost to participate in MEGA.  We would pay only for the power we actually use.  There are options for both fixed and variable prices for our energy needs.  MEGA also provides its participants access to energy consultants, as well as access to power from renewable sources. 

            MEGA states that it currently serves 35 county governments and more than 280 municipalities, in New York State, and that the combined power load of its participants that obtain their power through its bids cover more than 500 million kWh/yr of electricity and 10 million therms of natural gas.  Locally, MEGA participants include the counties of Rensselaer, Albany and Warren, the towns of Clifton Park, Colonie, Lake George, and Rotterdam, and the Albany City School District.                             

            Our initial sense is that participating in MEGA will result in substantial savings in our energy costs.  We are now doing our due diligence, taking a harder look at the program to make sure it is right for us.  We need to be sure because the contracts we will be required to sign with the power supplier to which MEGA awarded the bids for our service area have a three (3) year term and cannot be terminated early without our paying a penalty.  Saving on electricity and natural gas costs is an attractive concept that doesn’t immediately come to mind.   Most of us are accustomed, in our private lives, to simple paying whatever we are charged by the public utility company (e.g., National Grid) which actually delivers our gas and electricity to our homes.    

            In any case, I found it interesting that there are opportunities out there whereby we can both increase our revenue and reduce our expenditures by participating in organizations which manage the pooling of, in one case, the assets, and, in the other, the needs, of many other local governments.  I hope you found it interesting as well.