Jun. 1–LITCHFIELD — The Litchfield School District is joining a consortium of school administrative units hoping to save big bucks on energy next year.
Litchfield is one of seven SAUs that have hired two energy consultants who will help the districts combine their purchasing power to get better deals on energy commodities such as electricity, heating oil and propane.
The project has the potential to save the Litchfield district thousands of dollars if similar projects around the state are any measure, Business Administrator Stephen Martin said.
“We owe it to the taxpayers to get them the best deal,” Martin said. “We expect if we’re successful, more SAUs will join us.”
The group includes districts covering 19 towns; several of the towns that make up the SAUs have joined, too.
Duane Ford is the business administrator for the Bow School District, which is similar in size to Litchfield, with three schools and about 1,700 students. Bow has been a member of a similar buying group with the Merrimack Valley School District, the Concord School District, St. Paul’s School and the city of Concord for five years.
The Bow district uses about 2.85 million kilowatt-hours of electricity, 194,000 therms of natural gas and almost 10,000 gallons of fuel oil each year, said Ford, who estimates his district has saved more than $100,000 over the “default” rate, which is the retail rate local companies such as Unitil or Keyspan charge.
Ford said the district locked in a rate of 10 cents per kilowatt hour for electricity for two years. In the second year, the default rate increased to almost 14 cents per kilowatt hour, saving the district more than $10,000 last year.
The buying group Litchfield joined has hired two Massachusetts energy consultants — Beacon Integrated Solutions and Axsess Energy Group. The Bow group uses the same companies.
Those groups will lend their expertise in analyzing the energy markets, prepare bidding documents to vendors that take advantage of the SAUs’ combined purchasing power and advise each district on the best purchasing decisions on any given bid, Martin said.
It costs each district $3,600 to join the group. There are also annual charges for preparing electricity bids ($1,500), oil or propane bids ($750) or bids on both ($1,250).
Litchfield budgeted about $500,000 for energy costs next year, Martin said, so a savings of about 1 percent would cover the district’s annual costs. Energy costs account for almost 10 percent of the district’s non-salary and benefits spending, he said.
Martin wouldn’t guess what the district will save, since it’s hard enough to estimate what energy will cost using more typical purchasing methods.
Last month, Martin and Dennis Miller, chairman of the Litchfield School Board, offered free admission into the buying group to the Litchfield selectmen. Since the district is already committed to paying for the next year, Martin said, the town could piggyback on the bids for electricity, heating oil and propane. It would have had to pay for the bids for diesel, though.
The board voted to examine how much the school district saves this year before committing itself to the group — a view advocated by Selectman Al Raccio.
The Milford School District has used the same consultants for about a decade, Business Administrator Michael Trojano said.
“It’s a great deal for the school because we get someone to make a very intelligent judgment about when to buy our natural gas,” he said.
Trojano said the alternative would be for him to check energy prices every couple weeks and do his best to decide the right time to spend the district’s more than $800,000 budget for electricity, natural gas and heating oil.
“I can tell you it wouldn’t be as good,” he said. “When conditions are right, they call me and say, ‘Now’s the time to buy natural gas,” for example. For a very small fee, they are present and knowledgeable about the energy market. It works very well. I’m very pleased.”
Beth Greenblatt, Beacon Integrated Solutions managing director and client project manager, said her company — through its partnership with Axsess — saves customers money by unfettering them from their dependence on local vendors.
Most school districts rely on prices offered by local energy companies because they don’t have the expertise to do more. Beacon and Axsess are skilled at analyzing the market on a much broader scale and procuring energy from a larger group of providers when it makes sense to do so, she said.
But you can’t fight the market. Greenblatt admits the districts will likely pay more for energy next year than they do this year, but the increase should be smaller than usual.
“I can tell you our clients have been very satisfied,” she said.
Another advantage is that even when prices spike, school boards and selectmen have been forewarned, Greenblatt said, which can be invaluable in budget planning.
Such planning is difficult for towns and school districts tied only to local energy providers because those companies guarantee prices in only one-, three- or six-month intervals, she said.