Pepco to supply state agencies, Camden Yards

Electricity contract worth $65 million over 2 years

January 23, 2002|By Dan Thanh Dang | Dan Thanh Dang,SUN STAFF

Pepco Energy Services, a subsidiary of Washington-based Potomac Electric Power Co., was awarded yesterday a $65 million, two-year contract to supply electricity to Maryland state agencies and departments and the Camden Yards sports complex.

Pepco Energy's contract with the Maryland Department of General Services (DGS) is for about 1.6 billion kilowatt-hours - enough to meet the annual electricity needs of 133,000 Maryland households. The contract will begin July 1. All of the customers covered by the contract are in Baltimore Gas and Electric Co.'s retail service area and receive power through BGE.

"This is great for our customers because if they stayed with BGE, they would face volatile and uncertain prices in the future, prices that varied each and every hour," said Mark S. Kumm, president of the asset management group at Pepco Energy.

"That makes it difficult to do any planning and budgeting for the customers. We've been able to offer them a rate that provides them certainty with what their energy costs are going to be and allows them to budget and plan for the future."

The bid from Pepco Energy was one of five received by the state, said spokesman Dave Humphrey. The others were from Washington Gas Energy Services, Community Energy Inc. of Pennsylvania, Cook Inlet Power of Michigan and AES NewEnergy in Virginia.

Under the state's deregulation law, BGE is required to supply electricity to the state's largest commercial and industrial customers who do not choose an alternative supplier - known as Standard Offer Service (SOS) customers - only until July 2002. By July, those large customers must either choose to remain with BGE and pay fluctuating market-based electricity rates or switch to an alternative supplier.

BGE is prohibited from advertising its SOS service, but its unregulated affiliate, BGE Home, is permitted to market services to those customers. BGE Home did not submit a proposal for the DGS contract, Humphrey said.

"When deregulation started, the utility looked at and anticipated the loss of the supply component over time that is naturally occurring in the market place," said BGE spokesman Charles B. Welsh. "Our focus is on the wholesale electric market. At this time, we have a number of contracts with other load serving utilities and municipal co-ops that we are focusing on."

The DGS contract includes agencies and departments located primarily in the Annapolis and Baltimore areas, including the Departments of Corrections, General Services, Health and Mental Hygiene, and Transportation; four state colleges; and Camden Yards.

"In a time of fluctuating energy prices, the stability from the two-year contract will permit Maryland to provide reliable and affordable electricity for state government operations," said DGS Secretary Peta N. Richkus. "Additionally, we have met Governor Glendening's goal that 6 percent of the electricity provided be from green generation sources."

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