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City to Save $2 Million with New Gas Supply Contract

For Immediate Release: 12/3/2018 4:04 pm

The City of Worcester has signed a three-year contract with Constellation NewEnergy for 2.6 million therms of gas used across all the City’s municipal facilities each year.

The contract began December 1 and will affect 95 different City and Worcester School Department facilities. Overall, the City is expected to save $2 million over the course of the contract. In the current fiscal year, savings will equate to $395,000 for the Worcester Public Schools and $200,000 for the City. This translates to a 34 percent savings over the previous contract. Worcester Public Schools facilities will realize approximately two-thirds of the overall savings.

“The City administration has worked hard to put in place responsible and efficient financial management practices that best serve the Worcester taxpayers,” said City Manager Edward M. Augustus Jr. “This new gas supply contract is just one way we’re making smart fiscal decisions that benefit all residents.”

As a Massachusetts customer of a regulated gas company (Eversource), the City has a choice to independently purchase gas supply for its municipal operations from gas suppliers or to allow Eversource to procure gas on the City’s behalf. For many years, the City exercised the first option by signing three-year contracts with retail gas suppliers. This strategy typically provided modest savings when compared to Eversource rates as well as budget certainty, since gas prices fluctuate every six months if obtained via a gas company (a default option for many customers).

For the last three years, the City has been buying its natural gas from Direct Energy Business Marketing, LLC via PowerOptions, a nonprofit energy buying consortium. As the contract was nearing expiration, the City worked with its energy consultant to procure a new supplier. In November, the City executed a new three-year contract with Constellation NewEnergy – Gas Division, LLC. The timing of the contract coincides with natural gas futures nearing all-time lows.

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