Co-op awards energy supply pact to Reliant

Government entities expect to save $3.2 million

May 14, 2004|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

As Maryland shifts to a deregulated power market that will initially bring higher rates, Baltimore-area governments, school systems, colleges and attractions are pooling their buying muscle to save a combined $3.2 million annually on electricity.

A group of 23 government entities, including the governments and public school systems of Baltimore City and Baltimore County, the county's three community colleges, Lexington Market and the Baltimore Museum of Art, has awarded a $67.3 million energy supply contract to Houston-based Reliant Energy. Reliant will supply 134 megawatts of electricity over 23 months starting in July.

Such aggregation groups, which try to get the lowest rates for members through cooperative buying, have been forming or seeking new bids in anticipation of the next phase of electric deregulation in Maryland. Electricity rate caps that were imposed four years ago as part of the state's shift to a competitive market will expire June 30 for commercial customers served by Baltimore Gas and Electric Co., and all customers served by Potomac Electric Power Co. and Conectiv Power Delivery.

Nonresidential customers that do not contract with alternative suppliers are facing increases ranging from 17 percent to 20 percent.

"The strategy all along has been to combine as many accounts as we can to buy in larger quantities and get better prices," said Barbara M. Herron, a spokeswoman for the Baltimore Metropolitan Council, which has overseen the bids since the group first began buying electricity cooperatively in 1999. "This time, what they were trying to do is to minimize the impact of rate increases that everyone knows are coming."

The council received bids from three suppliers, Reliant, Pepco and Washington Gas Energy Services Inc., and selected the company offering the lowest price, Herron said. The city Board of Estimates approved the contract Wednesday.

Baltimore-based Constellation NewEnergy, a division of BGE parent Constellation Energy Group, had held the most recent contract, awarded in January 2003. Constellation bid on the new contract but missed the deadline, Herron said.

Robert W. Gould, a Constellation spokesman, acknowledged that the company sent its bid after the deadline but said it wouldn't have won anyway.

"Based on the criteria used by the council for awarding the bid, which was solely based on price, our bid would not have been selected," Gould said.

Mayor Martin O'Malley, chairman of the metropolitan council, said the buying pool is especially beneficial to the smaller local governments, libraries, school systems and small towns.

They "will realize cost savings by being part of a purchasing pool with much larger consumers, such as Baltimore City," he said in a statement yesterday.

Other participating entities include: Anne Arundel County government; Anne Arundel Community College; Baltimore County Revenue Authority; Baltimore County libraries; Carroll County government; Harford County government; Harford Community College; Harford County public schools; Howard County government; Howard Community College; Aberdeen; Annapolis; Bowie; Bel Air; Hampstead; and Havre de Grace.

The group picked up several new members who signed on for the Reliant contract, including Hampstead, Bel Air, the Baltimore Museum of Art and Lexington Market.

Reliant Energy Solutions, a subsidiary of Reliant Energy, supplies electricity and risk management services to large commercial, industrial and institutional clients in Texas and the PJM Interconnection, which includes Maryland and other states. The company hopes to expand into Pennsylvania and the District of Columbia.

Reliant also was recently awarded a contract from the Maryland Department of General Services to supply about 70 megawatts of power to a number of state facilities, including the University of Maryland, Baltimore; Morgan State University; and the Maryland Stadium Authority, which operates Oriole Park at Camden Yards.

Though Reliant will supply the power, the utilities will continue to be responsible for transmission.

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