With the prospect of saving up to 35 percent on utility bills with no impact on the property tax rate, the Sloan Village Board Tuesday authorized a feasibility study on establishing its own municipal gas and electric utility.
The board voted, 5-0, to pay $7,500 to Power Alternatives Inc., a 2-year old consulting firm from East Setauket, to prepare the study. Two laws that were adopted by the board Tuesday establishing the utilities will not take effect unless approved by public referendum.
About 200 residents jammed the Sloan Fire Hall to hear representatives of Power Alternatives explain how the conversion from an independently owned utility to one municipally owned would save the village and taxpayers money at minimal risk.
As its own utility company, the village would have the opportunity to purchase its natural gas and electricity by competitive bid on the open market.
Many of the residents encouraged the board to continue with the study, while others thought the proposal was too good to be true and opposed it.
"Anything we can do to stick it to NYSE&G, I'm for," said a Griffith Street resident. "This is a viable alternative," said a Halstead Avenue resident. "Let's listen to it. Let's not be naysayers."
Other residents such as Henry Ponichtera of Rutland Street expressed doubt about the proposal. "The only reason you're here is to make money," Ponichtera told Power Alternative representatives.
Gary Vegliante, president of Power Alternatives, said residents could save about 15 percent on their gas bills and about 35 percent on their electric bills if the program is implemented. The municipal gas utility could be running within six months while the municipal electric utility could be operational in one year.
The gas utility would be started at no cost, but the electric utility, which requires the creation of a power substation, would cost about $5 million, Vegliante said. The village would pay for the start-up costs through a bond issue.
"You'll be paying the bonds through your utility rates, not through your tax rates," Vegliante told the residents, explaining how additional cents would be added to bills for maintenance, bonds and other costs.
"Virtually every expense will come out of the utility bill," he said. "The tax base of this community will not pay a penny of the bond."
Residents were told electric rates should decrease from the existing rate of 13 cents per kilowatt hour to about 8 cents per kilowatt hour. Residents would realize an annual gas and electric utility savings of $500 to $1,000.
Power Alternatives would assist in starting the utilities and serve as consultants for 10 years. Other than the $7,500, the company's fee would total 50 percent of the rate savings earned by the village government. If the village reduced its current annual street lighting bill to $42,000 from $52,000, Power Alternatives would receive $5,000.
A village commission would oversee the operation of the utilities with consulting help from Power Alternatives.
Mayor Kenneth Pokorski said a public referendum on the matter could be scheduled as early as January. New York State Electric & Gas, which serves the village, sent letters to all homeowners advising them to proceed cautiously on the proposal. The mayor called the letters a "scare" tactic. "They stand to lose profit", he said.
Representatives from National Fuel Gas and NYSE&G spoke at Tuesday's hearing, both agreeing to work with the Village Board and encouraging the feasibility study. The NYSE&G representative did promise residents rate reductions over the next five years.
Pokorski promised residents additional hearings on the proposal and access to the feasibility study before the public referendum.