Salem officials watching for better gas prices
SALEM – A broker is currently shopping for a good deal for the city’s gas aggregation program, keeping an eye on prices from four suppliers with plans to hold out for a number lower than the current rate.
At least that’s the explanation given by Salem Service/Safety Director Ken Kenst, who updated city council’s Utilities Committee on the process. He said no resolution or ordinance was required by council. He just asked the committee to indicate to city Law Director Brooke Zellers that the pending contract was discussed.
The current two-year contract with Volunteer Energy at a rate of .03849 per ccf (100 cubic feet) expires on Dec. 31. Kenst reached out to broker AMPO, which the city has used for many years, to seek quotes from suppliers for a new two-year deal.
Another broker had also been contacted, but suppliers only deal with one broker for a community, so the city remained with AMPO. A request for quotes was sent to nine different suppliers and four responded.
Kenst said Zellers has already reviewed the contracts and once AMPO commits to a price, the city will be notified and then Zellers will be told so the number can be placed in the contract for the supplier chosen and then he can approve it.
The numbers change on a daily basis. Councilman Andrew Null, a member of the Utilities Committee, which is chaired by Councilman Sal Salvino and also includes Councilman Steve Faber, questioned the time frame for locking in the number and how the broker knows a good price. He asked if a better price comes along after the number is locked in whether they can change to the better price.
“Once we’re locked in, we’re locked in,” Kenst said.
As of July, he said a price of .03736 per ccf was being quoted by Volunteer Energy. If the going rate gets to that range or below, he’s expecting AMPO to respond quickly. He also pointed out that residents will have the option to opt out of the new deal if they think they can get a lower price, but he also warned that “you have to be aware of what you’re getting into,” noting the deal that comes in the mail may just be for six months and could go up.
The rate for the gas aggregation program will be locked in for two years.
Mayor John Berlin said it’s like when he drives past a gas station and realizes the price is lower than when he bought gas the day before or vice versa. He said AMPO knows when to lock in.
“They have done a good job for us in the past,” he said.
The four suppliers under consideration include the current provider, Volunteer Energy, along with Constellation, AEP Energy and IGS. Kenst expects the price to be locked in by November.