National Grid customers in Hempstead Town would get a lower-cost alternative to that natural-gas provider if the town approves and negotiates an agreement with a new supplier that would guarantee a savings of at least 5 percent, or about $15 million townwide.
Under a state-designated program called Community Choice Aggregation, Hempstead's board expects to vote on an agreement next Tuesday that would authorize Supervisor Laura Gillen’s administration to negotiate a pact with natural gas supply companies for cheaper gas for the town’s 174,000 homes and businesses that now use National Grid.
“By aggregating everyone’s purchasing power in the town, we effectively gain leverage and can negotiate better rates with lower costs,” Gillen said.
The plan was an outgrowth of the town’s Sustainability Leadership Team, a bipartisan panel that is exploring ways to reduce the town’s carbon footprint and increase green energy options. The town may explore Community Choice for electric in the future, she added.
Natural gas savings would amount to about $138 a year for the average residential gas customer, Hempstead said. Total savings could range up to $25 million townwide.
Hempstead, the state's largest town by population, has some experience in using different gas suppliers. For five months it has used Cost Control Associates to deliver gas at a 10 percent discount to National Grid's price, said Michael Fricchione, Gillen's spokesman.
The company would use existing National Grid pipelines to continue gas delivery, and customers would still receive a bill from National Grid each month. But the supply portion of the bill would use the lower negotiated rate, Hempstead said, and customers would see savings as soon as this winter. If market prices dropped below the town’s negotiated rate, or for any other reason, customers would be able to opt out of the new supply program with a phone call, Fricchione said.
Gillen said she expects support from the town board. “I can’t imagine why anybody would be against Town of Hempstead residents saving money on their gas bill,” she said.
Hempstead noted that National Grid delivery rates have risen three straight years, including a 7 percent jump that's under state review. Because those rates apply to the delivery portion of bills, customers would still be subject to the increases, though the supply cost reductions could offset them.
National Grid said in a statement that it “fully supports customers’ right” to choose an alternative natural gas supplier.
“It’s our obligation to secure gas supply at the best possible cost for them,” spokesman Domenick Graziani said. “No matter who the gas supplier is, we will still deliver the gas to customers’ homes and businesses. Customers pay exactly what we pay for supply — it’s just a pass-through cost on their bill. National Grid’s delivery rates, however, would still apply.”
The move, if approved, would make Hempstead the first town on Long Island to pool its buying power for natural gas. Southampton Town’s board in February approved a community choice program for electric supply and is reviewing bids. Westchester County also has a successful community choice power program.