Groups scramble to put power co-ops together

Most seek savings for businesses

Columbia explores aid to residents

March 09, 2006|By JENNIFER MCMENAMIN AND TYRONE RICHARDSON | JENNIFER MCMENAMIN AND TYRONE RICHARDSON,SUN REPORTERS

In Columbia, the community association is hiring a consultant to set up a purchasing cooperative to negotiate electricity prices and pass along the savings to residents and businesses.

Area chambers of commerce are working on similar co-ops for business owners - and in one case, perhaps community associations.

And consortiums of school districts, county governments and community colleges that have negotiated lower prices as a group from established utilities are now plotting to buy electricity in bulk directly through a broker, bypassing utility companies altogether.

With Baltimore Gas and Electric customers facing rate hikes of 72 percent for residential customers and about 40 percent for small commercial users, Marylanders have begun scrambling to lessen the blow when the state's legislated rate caps expire in July.

"We're getting a lot of phone calls coming in, with people asking, `Can you help us out?'" said Sherrie Becker, executive director of the Pikesville Chamber of Commerce, which is organizing its second energy co-op in two years for Maryland businesses but does not have a program for residential utility customers.

"The situation for residential customers is really grave. I don't know how people are going to absorb these increases," she said.

Experts say the idea of forming cooperatives has proved popular around the country as state lawmakers deregulate the energy market. In California, several electric cooperatives were formed, said Aaron Jones, President and general manager of Golden State Power Cooperative.

"They reduced their electricity bills by 5 percent or thereabouts," Jones said.

But, experts warn, cooperatives have to guarantee minimum usage levels and lock in long-term contracts that may or may not end up beating the market.

Groups that have organized energy co-ops for businesses and government organizations also say that forming similar groups for homeowners would be much more difficult.

But the Columbia Association, the community association for the unincorporated city of about 100,000 people, is attempting just that.

The association expects to hire an energy consultant by May to plan and manage the program, with the goal of saving homeowners an estimated 6 percent to 11 percent, according to a report presented to the association late last year. Specific details about who would qualify for the co-op have not been worked out.

"To participate, you have to have a critical mass to make it work, you have to be a large association," said Del. Elizabeth Bobo, a Howard County Democrat who proposed the co-op after meeting with the Columbia Association's president.

Eagerly awaiting what the Columbia Association comes up with are Columbia residents Mary and Cabell Greenwood. For years, they have nagged their children to turn off the lights when they leave a room, turn off the TV when they're not watching it, turn off their computers when they go to school.

"It's already expensive to live in this area," said Mary Greenwood, adding that her family will consider joining the association's energy co-op as soon as more information becomes available. "It's just an increase here and an increase there, and the hurt gets more severe."

Some experts say the ideal number of residential customers for an energy co-op is between several hundred and several thousand, but that the key element is the amount of electricity usage.

"It's about the megawatts you are serving that makes ... a co-op more successful," said Art Holland, director of power and forecasting for Pace Global Energy Services, an energy consulting firm in Fairfax, Va.

The Annapolis and Anne Arundel County Chamber of Commerce is researching options for forming a co-op for its 1,200 members, but it might also consider joining forces with community associations, other regional chambers of commerce and industry associations, said Bob Burdon, the chamber's president and chief executive.

Other chambers put together successful co-ops of business owners and municipal governments two years ago when electricity price caps for commercial customers began expiring.

The city of Westminster was the largest of four Carroll County municipalities - and more than 80 businesses, including Carroll Hospital Center, BB&T Bank and Tevis Oil - to join the purchasing group organized by the Carroll County Chamber of Commerce in 2004.

"We absolutely saved money because we had a fixed price as members of the co-op," said Joseph D. Urban, Westminster's budget director. "There were a lot of fluctuations in the price of electricity over the length of this contract."

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