Procurement of Electricity and Natural Gas Through Aggregators (2018-MS-5)

Issued Date

February 01, 2019

Audit Objective

Assess whether local governments and school districts that utilize aggregators for energy purchases are ensuring they are procuring electricity and natural gas at the lowest prices.

Key Findings

Five of seven units reviewed (City of Albany; Counties of Broome, Cortland and Oneida; and North Syracuse Central School District) did not adequately evaluate procurement options or make benchmark comparisons to ensure they received the lowest prices for electricity and natural gas.
Five units (City of Albany; Counties of Broome, Cortland and Oneida; and North Syracuse Central School District) spent approximately $2.4 million (67 percent) more for electricity than a potential benchmark we identified for comparison.
Three units (Broome County, Cortland County and North Syracuse Central School District) spent approximately $391,000 (51 percent) more for natural gas than a potential benchmark we identified.

Key Recommendation

Evaluate procurement options and compare to potential benchmark rates to help ensure the lowest possible prices are procured for electricity and natural gas.

Background

We audited the procurement practices for electricity and natural gas through aggregators in the following seven units: City of Albany; Town of Amherst; Counties of Broome, Cortland and Oneida; and the School Districts of North Syracuse and West Seneca. Each unit’s officials have a responsibility to ensure electricity and natural gas are obtained at the lowest possible prices. This global report summarizes the significant issues at all of the units audited.

Quick Facts
Municipality	Electricity and Natural Gas Costs
City of Albany	$1.7 million^a
Town of Amherst	$1.7 million
Broome County	$2.2 million
Cortland County	$360,000
Oneida County	$2.4 million
North Syracuse Central School District	$1.3 million
West Seneca Central School District	$370,000^b
^a Estimated electric and natural gas costs. See Appendix C for methodology.
^b West Seneca Central School District did not procure natural gas from an aggregator.

Audit Period

January 1, 2016 – May 31, 2017. For certain municipalities, we extended our scope back to July 1998 to review Board resolutions, April 2013 to review contract terms, May 2015 to evaluate cost comparison reports, and September 2015 to review contract correspondences.