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Board hears competing approaches to energy procurement and a vendor request to start an ESCO audit
Summary
Presenters told the Grand Island town board that partial hedging and targeted fixed contracts can lower municipal energy‑cost risk; a respondent to the RFQ asked the board to authorize a letter of intent to begin an investment‑grade audit and deeper facility analysis.
Jody Spath, a representative of Chautauqua Energy Management, told the Grand Island town board that the municipality should avoid fixing all energy supply at once and instead consider a hybrid procurement strategy that hedges peak months while leaving other components variable. “Don’t buy everything all at once,” Spath said, describing a mix of fixed energy for high‑risk months and indexed or partial‑hedge products for the balance.
The presentation outlined services the firm offers — energy procurement analysis, demand‑response coordination, bill reviews and grant‑search assistance — and recommended an approach that buys portions of the town’s needs across a contract term to limit exposure to price spikes. Spath said Chautauqua would tailor bids to the town’s accounts and provide weekly forward‑price updates for municipal decision‑makers.
Mark Levine, executive director of the Municipal Electric and Gas Alliance (MEGA), described MEGA’s piggyback bid model that allows municipalities to contract off a statewide competitive bid rather than issue their own procurement. “We were created by Tioga and Tompkins County 27 years ago when the state deregulated the energy supply business,” Levine said, explaining the aggregation model and its use by more than 250 local governments and school districts across upstate New York.
Dan Murphy of Constellation and Alex Jurosovich of Priority Power described drivers of recent price volatility, including retiring generation and new transmission that moves lower‑cost power out of the region. Murphy said many municipalities are moving to fixed energy pricing because forward market volatility has increased the risk of sudden monthly bill spikes.
Separately, a vendor responding to the town’s RFQ for energy services (referred to in the transcript as both “Cergy” and “Verigee”) asked the board to select the firm and sign a letter of intent (LOI). The vendor said the LOI would allow an investment‑grade audit — a detailed engineering and financial study that would produce guaranteed savings and enable actual project contracts. The vendor representative said selecting the firm is a prelude to a deeper audit and contract negotiation; board members asked for specifics on scope, bonding and overlap with current consultants.
Why it matters: the board is weighing two distinct procurement paths: engaging consultants or aggregation bids to manage energy price risk, and whether to authorize an ESCO/vendor to perform the detailed audit that could lead to guaranteed‑savings contracts. The LOI would not commit the town to construction but would enable deeper site work and financial estimates.
Board next steps: members requested follow‑up detail on contract language, how partial hedging would be implemented for the town’s specific accounts, and legal review of an LOI. The vendor asked the board to place a formal resolution on a future agenda to authorize the LOI and start the investment‑grade audit.
