Energy co-op twice as big as expected

Chamber plans bulk buy to ease deregulated costs

Carroll County

March 30, 2004|By Hanah Cho | Hanah Cho,SUN STAFF

An electricity cooperative organized by the Carroll County Chamber of Commerce has accumulated about $3.5 million in buying power in an effort to solicit the best price possible when energy prices are deregulated in a few months.

The chamber has acquired 82 members for its electricity purchasing group, which is double the number of participants expected, said chamber President Bonnie J. Grady. Among the cooperative's members are four municipalities -- Westminster, Sykesville, Manchester and New Windsor -- and a major local bank.

"We believe by accumulating $3.5 million of bargaining power, we'll be able to get our members the best possible deal," Grady said. "That tells me that people understand the concept of buying in bulk. And it also tells me the chamber has value for these folks."

Eight energy suppliers have expressed interest in submitting bids during a daylong process in May, when cooperative members will evaluate and choose a supplier or decide to find other utility providers on their own, Grady said.

Energy deregulation, approved by the Maryland General Assembly in 1999, moves away from a system of tightly regulated electricity rates and opens up the industry to competitive pricing.

State utilities agreed to limit rates for specified periods to smooth the deregulation process and protect against price spikes. Although the caps -- which begin to expire in June -- insulated customers from a volatile energy market, they also kept rates artificially low, making it harder for other energy suppliers to compete with local companies.

Starting in July, commercial customers in Carroll County and other areas served by Baltimore Gas and Electric Co. and by Potomac Electric Power Co. will no longer see electricity rates that have been frozen for the past three years.

For customers served by Conectiv Power Delivery on the Eastern Shore, the caps expire June 1. The caps are to be lifted in January for Allegheny Power Co.'s commercial customers in Western Maryland.

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

Before customers see the benefits of deregulation competition, they are likely to see steep increases in energy prices, experts said. The Carroll cooperative's consultant said the price increases could be between 6 percent and 18 percent, Grady said.

At least three Maryland chambers of commerce have organized electricity cooperatives, drawing mom-and-pop businesses and larger organizations into a purchasing group to buy electrical power.

Among them are Carroll County's chamber, the Ocean City Chamber of Commerce and Baltimore/Washington Corridor Chamber of Commerce.

The Baltimore/Washington Corridor Chamber of Commerce, which includes Anne Arundel, Howard, Montgomery and Prince George's counties, has solicited 330 accounts into the cooperative, amounting to nearly $3 million in purchasing power, said chamber President Walt Townshend.

The chamber, Townshend said, didn't want to leave its members without options when they start receiving higher electric bills in July.

"What we're saying is we want to get the best rate we can in a competitive basis and as long of a term as we can get, so they could have price stability," he said. "We can't make any guarantees, but collectively, you are in a better bargaining position than individually."

The Carroll chamber's Grady said there also might be interest among members whose businesses fall under Allegheny Power's service area.

The Carroll County and the Baltimore/Washington Corridor chambers expect to create another group in the cooperative to include businesses that missed the first deadlines.

"Those businesses that didn't get involved, they'll get their July bill in August, and it'll be obvious that there has been a substantial increase," Grady said.

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