Municipal Energy Consortium Grows; Almost 100 Mass. Communities Buy From Md. Supplier

Municipal Energy Consortium Grows; Almost 100 Mass. Communities Buy From Md. Supplier

Aug 02 - Patriot Ledger, The; Quincy, Mass.

The Patriot Ledger

While most residential consumers in Massachusetts are still buying power from their traditional utility companies, nearly 100 cities and towns have signed deals with a Baltimore firm that can freeze their electricity prices for a set time period.

An increasing number of towns are participating in a program sponsored by the Massachusetts Municipal Association that allows them to buy their electricity from Constellation NewEnergy.

South Shore towns participating in the "MunEnergy" program include Carver, Cohasset, Duxbury, Hanover, Milton, Norwell, Rockland and Scituate. Halifax Executive Administrator Charles Selig said his town plans to join the consortium shortly.

"In terms of joint purchasing, we should be able to get better rates for our electricity," he said. "My hope would be we'll be able to do better over the long run."

Constellation doesn't promise immediately lower prices, but it does offer cities and towns the ability to predict their electricity costs through the length of their contracts, which typically range from six months to several years.

"Every customer we've signed up over the past three years that had a (contract) length of three years or longer eventually made a lot of money in savings," said Erik Everton, a senior business development manager for Constellation in Boston.

Everton has had an easier time making his company's case since March. That was the expiration date of the so-called "standard offer," a price-protection system built into the 1998 electricity restructuring law for most power customers.

Now, the once-protected electric utility customers are exposed to greater fluctuations in pricing during shorter periods of time. The only way to guarantee predictability is to sign a contract with a competitive supplier.

For now, Constellation suggests towns look at a relatively short timeline. Everton said he's recommending that towns sign six-month contracts while the industry waits for a set of major power market rules to be settled.

"We think there are opportunities today for communities to stabilize their pricing through the end of the year," said Geoff Beckwith, executive director of the Massachusetts Municipal Association.

The association since 1998 has been offering programs through which towns can purchase electricity competitively. They have not always run smoothly. For example, Canton wound up suing its former supplier, Select Energy, for canceling its contract and forcing the town to buy higher-priced electricity from its utility company.

Beckwith says the association chose Constellation because it was confident such problems wouldn't be repeated with the Baltimore- based company.

"(MunEnergy) is designed to provide stability and to have a high- quality supplier who will work with communities," he said.

Selig of Halifax said that along with long-term savings, it's critical that the program be easy for towns to use. He said Halifax dropped out of a previous group purchasing program because it was too complicated and it wasn't clear whether the town was saving money.

"We're not just strapped for cash, but for (staff), as a result of being strapped for cash," Selig said. "If I can make a decision and leave some of the work to somebody else, I'd rather do that."

Julie Jette may be reached at jjette@ledger.com .

For far more extensive news on the energy/power visit: http://www.energycentral.com .