CA to form co-op to buy electricity

Businesses, residents could join program

March 01, 2006|By TYRONE RICHARDSON | TYRONE RICHARDSON,SUN REPORTER

The Columbia Association is forming a purchase co- operative that will give residents and businesses in the community the opportunity to buy electricity at a discount rate.

Prices will go up in July when the six-year state regulation on electricity expires. Baltimore Gas and Electric Co. customers reportedly will pay 40 percent to 80 percent more.

The association is expected this month to hire an energy consultant to create, manage and operate the program.

Karen Hawkins, a spokeswoman for the association, said specific details of the co-op, including those who would be eligible, are still to be decided. She said the co-op is expected to begin by early May.

FOR THE RECORD - An article in Wednesday's Howard County section of The Sun incorrectly reported the dates for the hiring of an energy consultant and start of the electricity purchasing cooperative being formed by the Columbia Association. The deadline for energy consultant proposals is March 24, and the consultant would be selected by May 1. The official starting date of the co-op will be determined after the consultant is hired.The Sun regrets the error.

Del. Elizabeth Bobo, a Howard County Democrat, met with Joshua Feldmark, then-chairman of the association, last year to discuss the idea of a co-op for the association. State law permits nonprofit organizations to purchase electricity in bulk on the wholesale market.

"You need a critical mass of utility users to make the numbers work," Bobo said. "Because CA is such a large homeowners association ... it makes the numbers work."

Feldmark and other members of the association's board of directors promoted the co-op's benefit for residents.

"With deregulation, people are going to see huge jumps in their energy bills, not just in the summer," Feldmark said. "... This is a way to provide services to people of Columbia. It's a great fit, and I can't see anything more of a clear-cut service than to cut energy bills."

Last year, the association met with an energy consultant to discuss the cooperative.

The consultant's report said the co-op could save homeowners an estimated 6 percent to 11 percent a year.

Electricity co-ops are nonprofit electric utilities, owned by the members they serve.

Many of the programs were started in the early and mid-1900s in lightly populated areas around the country that were underserved or without electricity, experts said.

"Co-ops operate in a not-for-profit environment, and the whole idea for being is to provide reliable, safe and affordable electricity to the members it serves," said Patrick Lavigne, a spokesman for the National Rural Electric Cooperative Association.

About 900 electricity cooperatives exist nationwide, Lavigne said. He added that most are still in rural areas.

Many organizations in Maryland, including universities and government agencies, have formed electricity-purchasing cooperatives to negotiate a discounted rate.

But some experts believe purchasing wholesale electricity could be a gamble.

"There is no guarantee that [a cooperative] will be favorable," said Steven Estomin, a senior economist for Exeter Associates, Inc., a Columbia-based economic consulting firm. "The problem is you never know when the market is going to go up."

Art Holland, director of power and forecasting for Pace Global Energy Services, an energy consulting firm in Fairfax, Va., said: "It's a price uncertainty, and it's also a volume uncertainty, as well. The volume uncertainty is not knowing what the demand will be with exact certainty."

"If it's hot, people are going to turn up their [air conditioners] ... and it's driven by weather," Holland added. "It's a risk you have to manage effectively, and if they don't, their customers will pay."

tyrone.richardson@baltsun.com

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