Businesses aim to blunt increase in power rates

Lower prices sought for deregulated electricity

March 04, 2004|By Jennifer McMenamin | Jennifer McMenamin,SUN STAFF

With the end of price limits on electricity for commercial customers months away, more than a dozen Carroll County businesses have signed up with a purchasing group organized by the local Chamber of Commerce in an effort to increase their buying power and potentially save thousands of dollars a year on utility bills.

The Carroll County Chamber of Commerce is accepting applications to join its electricity cooperative through 4 p.m. tomorrow. Applicants must be members of the chamber and pay a one-time, $250 fee.

"The way it works is we pool all of the usage to get a better rate," Chamber President Bonnie J. Grady said. "If you have 10 companies pooling all their kilowatts instead of just one applying on their own, that enables them to negotiate a better price for a longer term.

"I like to call it power in numbers," she added. "The more numbers we have, the better price we get on the power."

Members and nonmember businesses are invited to attend a presentation about electricity deregulation, businesses' options and the chamber's electricity co-op at 3 p.m. today at the county Health Department, 290 S. Center St. in Westminster.

This fast-approaching choice in utility providers has been looming since the Maryland General Assembly passed an electricity deregulation law in 1999, moving away from a system of tightly regulated rates and opening up the industry to competitive pricing.

To smooth the transition and protect against price spikes, state utilities agreed to limit rates for specified periods. While the caps insulated customers from a volatile energy market, they also kept rates artificially low, making it difficult for other electric suppliers to compete with local utilities.

Those caps expire July 1 for commercial customers in Carroll County and other areas served by Baltimore Gas and Electric Co. and by Potomac Electric Power Co. They expire June 1 for customers served by Conectiv Power Delivery on the Eastern Shore. The caps are to be lifted in January for commercial customers in Allegheny Power Co.'s service territory in Western Maryland.

Rate caps for residential customers will end in Pepco's service area at the end of June, followed by BGE's residential customers in 2006 and Allegheny Power's customers in 2008.

Experts have predicted that before customers enjoy any benefits of deregulation-sparked competition, they'll likely see a steep increase in rates, from 9 percent to 15 percent, as the market - rather than regulators - begins setting prices.

Aiming to cushion that blow, chambers of commerce and trade associations in Maryland have organized electricity cooperatives to shop for business operators' electrical power as a group.

Between 15 and 20 Carroll businesses have signed on with the chamber's cooperative, Grady said. Another 150 to 200 business representatives have attended the nonprofit organization's informational meetings about deregulation and the purchasing group.

Municipal leaders in New Windsor have signed up to buy the town's electrical power through the co-op, and the Westminster Common Council unanimously voted last month to join the cooperative on a conditional basis while researching whether a better use of the city's electricity budget can be found. The city has paid about $800,000 for electricity each year.

Roy Carper of LAI Cos., a manufacturing firm in Westminster, said company officials did not hesitate to join the chamber's electricity co-op.

"I've worked as a buyer over the years, and I've bought a lot of commodities, but I've never had to shop for electricity," said Carper, the firm's corporate information officer. "We were coming into it blind, so this gave us some direction."

Carper was "a little nervous" about what might happen to the firm's $10,000 monthly utility bills after deregulation. With 40 employees divided among three shifts, LAI Cos. works around the clock.

Chamber leaders have told members of the co-op to expect their electrical rates to increase between 5 percent and 12 percent after July 1, Carper said. He said he estimated any rate increase likely would have been twice that estimate without the chamber's cooperative.

"It does pool purchasing power and gives us some safety in numbers," Carper said. " ... It's nice to be a part of something a little bit bigger than who you are."

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