Hempstead to consider outside natural gas supplier for residents

The Town of Hempstead on Tuesday was scheduled to vote on whether to allow a third-party company to secure contracts for the town’s more than 174,000 residents who heat and cook with natural gas in a move that would make it the first in the state to approve the community-choice savings program for gas. 

Approval by the Republican-controlled town board would allow Manhattan-based Good Energy to go into the natural gas market to secure contracts for late February or early March to save customers 5% to 10%, said outgoing Town Supervisor Laura Gillen, who proposed the move. National Grid, the current supplier, would still be responsible for piping the gas to the town's homes and small businesses. 

But late Monday there were indications the vote could be delayed. A spokesperson for the board said they were "planning to table the item" because they felt a decision that will "effect this many residents should have the input of the incoming administration." They expect to discuss it with the new supervisor "in the next couple of weeks," the board spokeswoman said. 

Approval would make Hempstead the first municipality in the state, and perhaps the Northeast, to find its own supplier for natural gas in a state program called community choice aggregation, which would let it pool the buying power of residents and small businesses to seek new contracts, officials said. 

All residents who have natural gas would be automatically signed up for the program, and would have to opt out if they decided they did not want to participate. The town expects savings of 5% to 10% by buying from an outside gas supplier. The town itself is already saving 15% on natural gas costs since it went to an outside energy service company for gas, Gillen said.

Customers who want to opt-opt can do so at any time with no penalties, Good Energy said. Consumers in the program would still receive only one gas bill, from National Grid, with the supply-commodity portion of bills designated to the third party on the bill. The delivery portion of the bill would remain charged by National Grid.

Gillen yesterday said she remained "hopeful the town council won’t try to stall this for political reasons" because it's a "simple, nonpartisan, good-government initiative that will really” save residents money.

Javier Barrios, managing partner with Good Energy, said if the plan is approved, the company will begin holding town-hall-type meetings with customers to explain how the program will work. Good Energy will cover the costs of customer education, he said.

“Consumers will not be operating in the dark,” he said.

Asked why community choice aggregation hasn’t taken off for natural gas in other parts of the state, Barrios said there was a “lack of understanding of how the program works. In some cases, people don’t understand that the choice is being made by the municipality,” alleviating some of the risks. 

Energy service companies in general have had a spotty history in the state, with some criticized for switching customers from their utility without their permission or failing to provide promised savings. In this case, Barrios said, if the savings aren’t there, the town won’t enact a supply contract.

“The only way we move forward is if there’s a minimum of 5 percent savings for all residents,” he said.

Good Energy would still be required to come back before the town board to get approval for a final supply contract, he said. Gillen said the hope is to secure that in the next month or two, so that consumers can still save during this winter’s heating season.

The savings for small businesses won’t be as big as it might have been, after the state this summer eliminated a sales tax exemption for those customers built into a state program for customers who buy their gas or electric supply from energy service companies. Some 3,300 commercial LIPA electric customers who used ESCO’s switched back to LIPA after the move, Newsday has reported.

While Hempstead would be a pioneer on the natural gas community-choice front, other municipalities are lining up to try community choice for electricity. Westchester County already has such a program, and Southampton and Brookhaven Towns are also exploring it. To do so for electricity, they would need LIPA to approve new language in its operating tariff to allow it, as it has been approved for the rest of the state.

Community choice for electricity “hasn’t come to Long Island yet,” Gillen said. “If I was reelected, I would have pushed for it.”

Gillen, who will leave office in January after losing her reelection bid in November, said that even though the program wasn’t in place for the start of the heating season, she said it’s still important to help customers save. 

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

Mark Harrington, a Newsday reporter since 1999, covers energy, wineries, Indian affairs and fisheries.